A few hours ago, Apple filed its response to Epic Games' Ninth Circuit appeal. The document has been published in many places, such as here.
Just a few quick observations. If you wish to go straight to the glaring contradiction I reference in my headline, you can just click on this anchor link.
It's a 135-page PDF, and federal appeals courts rarely get such lengthy submissions, but it admittedly has an even higher information density, or signal-to-noise ratio, than Epic's opening brief. This does not mean that I agree with how Apple portrays the facts and suggests legal conclusions. There's much in it that I completely reject. But the focus is definitely on substance (right or wrong) rather than rhetoric--to a noticeably greater degree than in Epic's case, parts of which read like a policy paper.
I previously already felt that Epic's realistic best-case scenario is a remand. That view has been reinforced. Apple has several paths to affirmance, and Epic has no convincing path to an outright reversal because it would overstep the limits of what an appeal can reasonably achieve. While I, as an app developer, would view a wholesale reversal as beneficial, I would still consider it a miscarriage of justice if it happened on that basis.
This also applies to the question of whether Apple's dealings with developers must be analyzed as concerted action (Section 1) or unilateral conduct (Section 2). I've previously disagreed with Epic and many of its amici on this one, even though it would be good for us app developers. Apple's appellate brief explains very well why this is a Section-2-only case. I concur 100% with that part.
Where Apple's positions are extreme (and its statements at least potentially misleading) is what implications the "clear error" standard of review has here. Apple points to the Ninth Circuit's 2020 citation to the Seventh Circuit's 1988 "dead fish" metaphor:
"To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong; it must, as one member of this court recently stated during oral argument, strike us as wrong with the force of a five week-old unrefrigerated dead fish....the decision must be dead wrong."
A 2018 article published on the website of the Morrison Mahoney firm explains that the standard is indeed "formidable," yet "all hope is not lost." That article particularly stresses the "difficult demarcation, if any, between whether the issue for appeal is one of law or fact." It is a distinction that Apple's brief not only seeks to blur but almost appears to deny.
In a way that is at least misleading, Apple makes it sound like Epic failed to prove all of the essential facts. But most if not all of the failures the district judge criticizes Epic for involve mixed questions of law and fact or even the ultimate legal conclusions (which of course always involve facts, but that doesn't mean the logic that led to the conclusions is reviewed for clear error).
It is true that Epic has a problem with factual findings by Judge Yvonne Gonzalez Rogers that the appeals court may deem dispositive. Epic may also have had the weaker expert witnesses. Still, it's not like multiple factual findings would have to be deemed clearly erroneous in order for Epic to get at least a remand.
Apple's denial of market power is just wrong. It says that its effective App Store commission has only gone down, not up--conveniently ignoring the impact of Search Ads, and especially Tim Cook's testimony. Apple's CEO, quizzed by the judge, admitted that it was because of regulatory pressure and litigation, not competition, that Apple came up with, for example, the Small Business Program.
Now, finally the part of which I just don't understand how this happened. Like in so many antitrust cases, market definition is the key battle. The way to win such battles is to take positions that are both compelling and consistent. How in the world could it happen that Apple ended up contradicting itself in that critical area? I don't get it.
I don't see much value or merit in Epic's case without a single-brand market definition. That's been my view for some time. That one depends on a foremarket and an aftermarket. Apple's appellate brief agrees with the district court's rejection of a "mobile operating systems" foremarket because "it is illogical to argue that there is a market for something that is not licensed or sold to anyone." That was a quote from the district court's judgment. Like Judge YGR, Apple says the foremarket would have to be phones, not operating systems. Let's not even talk about the fact that Apple makes not only phones but also tablets (and the same App Store serves both product categories). The key thing here is that Apple disputes the existence of a mobile operating system market because it doesn't license iOS to other OEMs or sell it separately to end users.
But on page 82 of its brief (PDF page 97), Apple says this:
"Apple's iOS also performs better in this respect [i.e., on security] than its 'main competitor' in the relevant market: Android."
What? Android and iOS suddenly are the main competitors in the relevant market? RELEVANT MARKET? If there's any relevant market in which iOS competes with Android, that would be the mobile operating system market. In that case, the district court was wrong on the first part of its single-brand market analysis (and not only Epic but also the Biden DOJ and some others are right).
It's almost insane. Was that passage a Freudian slip? But how can there be a Freudian slip in a document created by an army of lawyers (of which "only" nine are listed on the front page)?
Sure, Apple does agree with the district court that there's a market for mobile game transactions: the relevant market. But the passage that has me completely puzzled talks about a mobile operating system market and overall app security. It talks about iOS competing with Android, not Apple with the likes of Samsung and Xiaomi.
As you can see, I have more questions here than answers. It's not a habit of mine to scratch my head, but if I encounter more such contradictions in ultra-high-stakes high-profile contexts, who knows what habits I will ultimately develop...
I reiterate my position that the appeals court should reverse on market definition and remand because a single-brand market would be a total game changer that would require reconsideration of virtually every issue in the case.
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