Aside from Google Play, Apple’s App Store is where the majority of apps are downloaded from across the world. Recently, Apple has faced scrutiny for its management of the App Store and the control Apple has over the market due to the lack of competition. Additionally, developers have criticized the 30% fee Apple charges them for in-app purchases. The recent ruling by the Northern District of California in Epic Games, Inc. v. Apple, Inc., 559 F. Supp. 3d 898 (N.D. Cal. 2021) addressed this issue and issued an injunction allowing the possibility for developers to direct consumers to external links to subscribe or make purchases which could allow the developers to circumvent Apple’s high commission rates.
In Epic Games, Inc. v. Apple, Inc., the court held Apple was not an antitrust monopolist in the market of mobile gaming transactions under the Sherman Act; however, Apple’s anti-steering restrictions were held to be anticompetitive and unlawful under the unfair prong of California’s Unfair Competition Law. This Comment analyzes how the Northern District of California correctly applied prior law in its holding that Epic Games failed to satisfy the rule of reason test to prove Apple’s app distribution restrictions were anticompetitive effects that were harmful to consumers and unlawful under § 1 of the Sherman Act. While Apple’s app distribution restrictions did have anticompetitive effects, Apple was able to validate the anticompetitive effects with security, interbrand competition, and intellectual property as valid procompetitive justifications since the justifications enhance consumer appeal and make Apple more competitive to brands like Google. Additionally, this Comment focuses on how the court correctly ruled Apple’s anti-steering provisions threaten an incipient violation of an antitrust law under California’s Unfair Competition Law since the anti-steering provisions lack a valid procompetitive rationale and block communications about lower prices on other platforms to consumers. Going forward, this case provides implications on how future developers should structure their arguments when pursuing litigation against companies with significant market power, namely Apple and Google. The fact Apple was granted an injunction for its anti-steering provisions under the California Unfair Competition Law but was not considered to be in violation of § 1 of the Sherman Act may reveal that developers are better off framing their arguments as “incipient violations of antitrust law” rather than more broadly through the Sherman Act § 1 unfair restraint of trade.
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