Implications of Epic’s antitrust suit against Apple

Epic Games filed a civil antitrust suit against Apple today in the U.S. District Court for the Northern District of California after Apple removed the mobile version of Fortnite from its App Store.

Apple removed Fortnite after Epic decided to bypass the Apple store for its in-app currency purchases, a move that Apple argued violated its terms of service. Regardless of how the suit started, losing this case could have the potential to break up Apple’s monopoly on iOS app distribution or at the very least force the company to change its developer monetization rules. 

The scrutiny over the iOS App Store

Apple’s App Store oversaw an estimated $519 billion in sales and billings in 2019 alone, according to a study published in June 2020 by the Analysis Group. This number was great news for Apple’s investors, but the scale and exclusivity of the App Store has raised eyebrows among regulators. In late July, Apple CEO Tim Cook appeared before Congress to testify at an antitrust hearing along with the CEOs of Facebook, Google, and Amazon. Among other topics, congressional committee members focused on Apple taking 30 percent of some application’s revenue.

Apple takes 30 percent of in-app purchases for any application that operates as a “service.” These services include things like Spotify, YouTube, Fortnite, and most other major applications. With no other options for getting onto iPhones, Epic and other developers have argued that the App Store is run like a monopoly. If you want to operate on iPhones, you have to fork over a third of your app revenue.

“Apple has a monopoly in the iOS App Distribution Market,” according to Epic’s lawsuit. This is because the App Store is the sole means by which apps may be distributed to consumers in that market. Apple’s anti-competitive conduct forecloses all potential competitors for entering the iOS App Distribution Market.”

Epic’s specific complaint about Apple’s practices is that all payments on iOS apps must run through Apple’s payment system. “Apple is able to unlawfully condition access to the App Store on the developer’s use of a second product—In-App Purchase—for in-app sales of in-app content,” the suit reads.

The lawsuit goes on to systematically lay out the case for why Apple’s various practices violate the Sherman Act of 1890, which “prohibits activities that restrict interstate commerce and competition in the marketplace,” according to the Cornell School of Law

Epic claims that Apple violated the Sherman Act on nine separate counts, including denial of essential facility, unlawful monopoly maintenance, and unreasonable restraints of trade. 

“Epic agreed to the App Store terms and guidelines freely and we’re glad they’ve built such a successful business on the App Store.” Apple said in a statement. “The fact that their business interests now lead them to…

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