In a high-stakes antitrust dispute over whether the virtual wall enclosing the iPhone’s app store improperly enriches the most valuable corporation in the world while restricting competition, Apple is set to square off in court with the maker of the popular Fortnite video game.
The Ninth Circuit Court of Appeals heard oral arguments on Monday from three judges in the latest round of the legal conflict involving an app store that supports more than 1 billion iPhones and is a cornerstone of Apple’s $2.4 trillion business empire.
It’s an issue that won’t be resolved for a very long time. The appeals court isn’t anticipated to make a decision for another six to twelve months after hearing the arguments on Monday in San Francisco. Because the matter is so crucial to both businesses, the losing party is likely to appeal the case to the US Supreme Court, which might drag on into 2024 or 2025.
The dispute began in August 2020 when Fortnite creator Epic Games filed an antitrust lawsuit in an effort to tear down the barriers that have given Apple sole control over the iPhone app market since the shop’s establishment 14 years prior.
Apple has been able to enforce commissions that give it a 15%–30% cut of purchases made for digital services offered by other businesses thanks to its unrivaled control over the app store. According to some estimates, these commissions bring in $15 billion to $20 billion for Apple every year. The Cupertino, California-based Corporation claims that this money goes toward paying for the iPhone’s hardware as well as the store’s almost 2 million primarily free apps.
In a 185-page decision handed down 13 months ago, U.S. District Judge Barbara Gonzalez Rogers sided almost exclusively with Apple. That came after a carefully observed trial in which key executives like Tim Cook, CEO of Apple, and Sweeney, CEO of Epic, testified.
Gonzalez Rogers exposed a gap that Apple wants to fix notwithstanding her declaration that Apple’s monopoly over iPhone apps isn’t one. The judge ordered Apple to comply with the requirement, but until the appeals court determines, has postponed it. The judge ordered Apple to permit apps to provide links to payment options outside the app store.
Epic’s attorney Thomas Goldstein is anticipated to begin Monday’s arguments by attempting to convince the three judges Sidney R. Thomas, Milan D. Smith Jr., and Michael J. McShane that Gonzalez Rogers should have treated the iPhone app store and the payment system as two distinct markets rather than bundling them together.
The Justice Department’s legal representative will also have the opportunity to discuss why the department thinks Gonzalez Rogers read the federal antitrust law too narrowly, endangering future enforcement proceedings against possibly anticompetitive behavior in the technology industry. Even though the government isn’t officially supporting a cause, its arguments are anticipated to support Epic’s claim that the appeals court should reverse the lower court’s ruling.
Gonzalez Rogers ordered Apple to disclose links to additional payment options outside of its app store, and another attorney for the California Attorney General’s office will defend that ruling.
The Apple attorney Mark Perry will get the opportunity to deliver the closing arguments, allowing him the ability to craft a presentation with the goal of responding to some of the questions the judges may have for the attorneys who came before him.
A large portion of Perry’s remarks are likely to restate Apple’s persuasive argument made in the lower court.
Cook testified in a lower court that forcing Apple to accept different payment methods would erode the security and privacy features those customers who choose to purchase iPhones over devices running Google’s Android operating system value. Cook cautioned on the witness stand that this scenario would result in “a toxic kind of mess.”
Sweeney admitted he has an iPhone himself, in part because of its security and privacy features, even as he blasted Apple for having such a tight hold over the app store.
