Antitrust battle over iPhone app store goes to appeals court

SAN FRANCISCO — Apple is headed for a courtroom showdown against the company behind the popular video game Fortnite, reviving a high-stakes antitrust battle over whether the digital fortress protecting the iPhone’s app store illegally enriches the world’s most valuable company while stifling competition.

Oral arguments Monday before three 9th Circuit Court of Appeals judges are the latest flurry in a legal battle over an app store that offers a wide range of products to more than 1 billion iPhones and serves as a mainstay of Apple’s $2.4 trillion empire.

It’s a dispute that will likely remain unresolved for a long time. After hearing arguments Monday in San Francisco, the appeals court is not expected to rule for another six months to a year. The issue is so important to both companies that the losing side is likely to take the fight to the US Supreme Court, a process that could stretch as late as 2024 or 2025.

The fight dates back to August 2020 when Epic Games, the maker of Fortnite, filed an antitrust lawsuit in an attempt to destroy the walls that have given Apple sole control over the iPhone app store since its inception 14 years ago. .

That iron grip on the app store has allowed Apple to impose commissions that give it a 15% to 30% cut on purchases made for digital services sold by other companies. By some estimates, those commissions pay Apple $15 billion to $20 billion annually, revenue that the Cupertino, California-based company says helps cover the cost of technology for the iPhone and a store that now houses nearly 2 Millions of apps, mostly free.

US District Judge Barbara Gonzalez Rogers sided almost entirely with Apple in a 185-page ruling issued 13 months ago. That followed a closely watched trial that included testimony from Apple CEO Tim Cook and Epic CEO Tim Sweeney, as well as other top executives.

Although he declared that Apple’s exclusive control over iPhone apps was not a monopoly, González Rogers opened a loophole that Apple wants to close. The judge ordered Apple to allow apps to provide links to payment alternatives outside of the app store, a requirement that has been postponed until the appeals court rules.

Arguments on Monday are expected to begin with Epic’s attorney, Thomas Goldstein, trying to persuade the trio of judges — Sidney R. Thomas, Milan D. Smith Jr., and Michael J. McShane — why González Rogers should have looked into the iPhone app store and payment. system as clearly separate markets rather than lumping them together.

A Justice Department attorney will also have the opportunity to explain why the agency believes González Rogers interpreted federal antitrust law too narrowly, jeopardizing future enforcement actions against potentially anticompetitive behavior in the technology industry. Although the department isn’t technically taking sides, it is hoped that his arguments will help Epic make its case that the appeals court should overturn the lower court’s decision.

Another attorney from the California Attorney General’s office will argue in defense of the law González Rogers cited in ordering Apple to provide links to alternative forms of payment outside of its app store.

Apple’s attorney, Mark Perry, will have a chance to make closing arguments, giving him the chance to tailor a presentation intended to answer some of the questions judges may ask the lawyers before him.

Much of what Perry says is likely echoing the successful case Apple brought in the lower court.

During his testimony in a lower court, Cook argued that forcing Apple to allow alternative payment systems would undermine security and privacy controls prized by consumers who buy iPhones instead of devices that run on Google’s Android software. That scenario would create “a type of toxic disaster,” Cook warned on the witness stand.

Even as he criticized Apple’s tight grip on the app store, Sweeney acknowledged that he owns an iPhone himself, in part because of its security and privacy features.

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