In a recent session before the United States Court of Appeals for the Ninth Circuit, Apple presented its case to overturn previous injunctions issued by Judge Yvonne Gonzalez Rogers in the protracted legal battle with Epic Games. The appellate court appeared receptive to Apple’s arguments, particularly concerning the contentious zero-commission rule.
Background of the Legal Dispute
The conflict between Apple and Epic Games began when Epic introduced its own in-app payment system within the popular game Fortnite, circumventing Apple’s standard 30% commission on in-app purchases. This move led Apple to remove Fortnite from the App Store, prompting Epic to file a lawsuit alleging antitrust violations. In 2021, Judge Rogers issued an injunction requiring Apple to allow developers to include external links to alternative payment methods. Apple’s subsequent implementation of a 27% commission on these external transactions was met with criticism and further legal challenges.
Apple’s Appeal and Court’s Response
During the recent appellate hearing, Apple’s attorney, Gregory Garre, focused on the zero-commission rule, which prohibits Apple from collecting any fees on purchases made outside its ecosystem. Garre argued that this rule imposes an undue penalty on Apple, depriving the company of fair compensation for its platform’s value. He emphasized that Apple’s ecosystem offers developers access to a vast user base, advanced tools, and a secure marketplace, all of which justify a reasonable commission.
Judge Milan Smith Jr. engaged with Garre’s argument, inquiring about the methodology Apple would use to determine an appropriate commission for external transactions. Garre suggested that experts could assess the value provided by Apple’s platform to establish a fair fee structure. He also assured the court that Apple is motivated to resolve the issue promptly to avoid prolonged litigation.
Epic Games’ Counterarguments
Representing Epic Games, attorney Gary Bornstein contended that Apple had not previously proposed a lower commission rate during the litigation. He argued that allowing Apple to revisit the issue at this stage would be unfair and inconsistent with the case’s progression. Bornstein also highlighted that Epic’s initial actions were aimed at fostering competition and providing consumers with more choices.
Court’s Perspective and Potential Outcomes
The appellate court appeared to lean towards Apple’s position, noting that the zero-commission rule could result in significant financial penalties for Apple, potentially amounting to billions of dollars. The judges acknowledged that while the injunction does not explicitly prevent Apple from charging a commission, the zero-commission mandate effectively imposes a substantial penalty.
The court is now deliberating on whether to grant Apple’s requests to reverse the injunctions or to assign a new judge if the case returns to the district court. The outcome of this appeal could have far-reaching implications for App Store policies and the broader app development ecosystem.
Broader Implications for the Tech Industry
This case underscores the ongoing tension between platform owners and developers regarding revenue sharing and control over digital marketplaces. A ruling in favor of Apple could reinforce the company’s ability to set and enforce its App Store policies, while a decision favoring Epic could pave the way for more flexible payment options and potentially lower costs for consumers.
As the tech industry closely watches this legal battle, the final decision will likely influence future interactions between developers and platform operators, shaping the landscape of digital commerce and app distribution.
