[Update] The Biden Administration is also supporting Epic. [/Update]
Apple just reported record numbers. Its luxury-goods business model and its abuse of market power against suppliers and app developers are wildly profitable. The former is legit; the latter must be stopped, and it is under pressure around the globe. "Pressure" is an understatement. Change is coming, the question is just when and where, with Match Group's Dutch case so far having the greatest potential of all enforcement actions under existing law (as it could have EU-wide ripple effects and easily apply to all--not just dating--apps).
Epic Games faces an uphill battle (here's my take on its opening brief), but it's getting some amazing support:
35 U.S. states led by Utah and Microsoft have officially thrown their weight behind Epic's appeal through amicus curiae briefs filed with the United States Court of Appeals for the Ninth Circuit.
Those filings are not just a "nice to have." This kind of support is mission-critical, as I explained a few days ago. And a few hours before those filings, I was already impressed with the fact that "the Dean of American Antitrust Law" (as the New York Times called him), Professor Herbert Hovenkamp, signed a world-class amicus brief submitted by Professor Michael Carrier.
The state attorneys-general ("state AGs") supporting Epic here are basically the ones suing Google alongside Epic in the Northern District of California. The states--led by the Beehive State--are (in alphabetical order): Alaska, Arkansas, Colorado, Connecticut, Delaware, D.C. (I'm not taking a position on the controversial question of statehood here), Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah (submitter), Vermont, and Washington.
All of the most populous states except California--which might still support Epic, though probably just with respect to the state Unfair Competition Law consolation-prize part--are on that list of signatories. Interestingly (but this doesn't weaken the effort in the slightest) Epic's home state of North Carolina is not among them.
Here's the 35 state AGs' amicus brief (this post continues below the document):
22-01-27 Utah Et Al. Acb Is... by Florian Mueller
As for the states' legal argument, it's largely about Section 1 of the Sherman Act. The district held (very reasonably in my view) that Apple's conduct must be analyzed under Section 2--which is about unilateral conduct--with its higher hurdles, as Apple imposes contract terms on developers, so it's not like there's an Apple-plus-developers cartel in play, which would be a Section 1 case if developers acted voluntarily. I understand that some say Section 1 should apply even to unilaterally-imposed contracts, but come down on the same side as the district court (and believe Apple should be held in violation of Section 2).
The states' focus on Section 1 is motivated by their Google case, which involves business terms Google imposes on Android device makers on the one hand and on developers on the other.
Epic wouldn't automatically win the case if Section 1 applied. The second and shorter part of the states' amicus brief addresses the rule-of-reason analysis that would still have to be reversed for Epic to win. The professors' brief (previous post) has the same focus, and does a superb job. The states make fairly similar arguments (interestingly also citing to NCAA v Alston a few times), but that's still helpful.
A submission by Microsoft is perfectly complementary to the other filings because it shows that even another "Big Tech" company is profoundly concerned over, and negatively impacted by, Apple's conduct--and because of the arguments Microsoft's very well-crafted brief makes (this post continues below the document)
22-01-27 Microsoft Acb Iso ... by Florian Mueller
Those who have read my previous commentary on the issues in that case can easily see why I like Microsoft's brief so much. First, while Microsoft does not specifically urge reversal of the market definition (which is what I'd like to see happen), its argument about "Apple's extraordinary gatekeeper power" as well as its arguments on tying come pretty close to it. Microsoft even cites to Eastman Kodak, though not as a high priority and only with respect to tying. In my commentary on Epic's opening brief I clearly stated that I believe Epic is right on tying, though I worry about whether the appeals court will want to set a tying precedent that Apple will argue would allow tying theories to apply to indivisible service offerings.
Microsoft's testimony at last year's trial led Apple to contradict itself: Apple argued that Epic was a Microsoft puppet, but also that Microsoft was somewhat dependent on Epic (which is absurd because Epic, with the greatest respect for Fortnite's success, isn't that powerful). Epic can't be in Microsoft's pocket and Microsoft simultaneously in Epic's. That illogicality just showed Apple's concern over the impact of Microsoft's testimony.
Also, the Electronic Frontier Foundation (which agrees with Google on most issues, but not on all, and this here is a relatively rare exception) made a submission, and that one actually overlaps with my take to the greatest extent of all the briefs I've seen. The EFF makes the single-brand market argument, it explains why Epic is right on tying (app distribution and payments are separate markets; this is, by the way, also key with a view to cases in the European Union), and addressed the rule-of-reason analysis, which Epic must win regardless of market definition and everything else.
Here's the EFF's brief (this post continues below the document):
22-01-27 EFF Acb Iso Epic G... by Florian Mueller
Other amici could still make submissions, but even if nobody did, the kind of support Epic got is about a 9 out of 10. It would only have made the case stronger if companies like Facebook or even Tesla (Elon Musk is clearly on Epic's side, though Tesla would have had to come up with a good explanation as to why it cares), or maybe Activision-Blizzard, had made submissions. And let's not forget that California still has the chance to declare itself in support of the 35 other states' brief when it makes its own submission at a later stage with a view to state UCL.
Epic's appeal is very much alive. Apple will use its market power and money to get support from all sorts of "friends of the court" as well, possibly even ridiculous astroturfing organizations. But it won't be able to counterbalance the support Epic received from 35 states, Microsoft, the EFF, and America's most cited and most authoritative antitrust law professor. It will probably be easy to see for the Ninth Circuit that those who support Epic do so because it's the right and necessary thing to do, while those who will support Apple are just going to have reasons to do Apple a favor.
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