Apple declared “a resounding victory” Friday after a federal judge in California ruled it could maintain steep commissions and tight rules for game developers. But the decision is already increasing pressure on Apple in another arena: Washington.
The lawsuit from Fortnite-maker Epic Games is only one of multiple efforts to use antitrust to rein in the world’s most profitable company. The Justice Department has an ongoing antitrust investigation expected to wrap up within months. And lawmakers are pushing legislation to let developers to use alternative app stores. Apple critics say Epic’s unsuccessful suit is fuel for action on those fronts.
“This ruling reaffirms what we heard in our Senate hearing last spring: app stores raise serious competition concerns,” said Sen. Amy Klobuchar (D-Minn.), the top Democrat on the Senate Judiciary’s antitrust panel. “We need to pass federal legislation on app store conduct to protect consumers, promote competition and foster innovation.”
U.S. District Judge Yvonne Gonzalez Rogers in Oakland, Calif., ruled Friday that Epic didn’t prove that Apple has an illegal monopoly over smartphone apps, rejecting the Fortnite-maker’s challenge to Apple’s 30 percent commissions and restrictions on developers using other payment models in the app store. She did, however, strike down Apple rules that bar developers from informing consumers about cheaper options online.
But on the very first page of her decision, Gonzalez Rogers left open the possibility that someone else might be more persuasive if they took another shot at Apple’s dominance over smartphone apps.
While “the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws …the Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist,” she wrote.
That kind of additional evidence may already be in the hands of the Justice Department, which has been investigating Apple on antitrust for roughly two years.
Public Knowledge’s John Bergmayer, who advocates for Apple and Google to change their app stores, argued the ruling could offer a roadmap for DOJ’s antitrust prosecutors on what they’d need to show to win her over in their own antitrust suit.
The decision is “going to be influential for regulatory and legislative efforts,” he said. “I don’t even think the finding that Apple is not a monopolist under federal antitrust law is good for Apple. That’s evidence for people on the other side to say that’s why we need” legislation.
Gonzalez Rodgers also appeared to express frustration that the Apple app store issue has been left to the courts.
“Nothing other than legal action seems to motivate Apple to reconsider pricing and reduce rates,” she said.
Gonzalez Rogers has spent the past decade thinking about antitrust and Apple, making her conclusions about the company all the more relevant. In 2012, she dismissed a class action by consumers who alleged the company’s commissions have led to inflated prices on apps. That decision got overturned by the Supreme Court two years ago and is now back before her again (antitrust cases notoriously take forever). She also presided over a 2014 antitrust trial related to Apple’s iTunes and iPod where a jury sided with the company.
In a call with reporters, Apple’s general counsel Kate Adams declared the decision a “resounding victory” for the company, despite the order forcing Apple to allow communications about cheaper options.
A number of lawmakers were quick to argue that the decision was only the beginning of the fight against Apple’s app store rules.
Rep. Hank Johnson (D-Ga.), cosponsor of an app store bill, H.R. 5017 (117), called Gonzalez Rogers’ requirement for Apple to allow developers to communicate other options “a good first step for developer’s rights” as they work on legislation to force further changes.
“How a judge could look at the evidence and rule that Apple is not a monopoly defies logic,” tweeted Rep. Ken Buck (R-Colo.), the top GOP member of the House Judiciary’s antitrust panel and cosponsor of a legislative package aimed at reining in the tech giants.
The Trump Justice Department opened a probe into Apple back in 2019, but chose to prioritize a separate case against Google. And when Epic Games filed suit against Apple last summer, antitrust prosecutors felt they had a reprieve: a well-funded plaintiff had hired some of the United States’ top antitrust litigators and economists to take on Apple. Maybe DOJ, woefully underfunded on antitrust and battling another of the tech giants in court, could take a backseat on the fight and let Epic do the heavy lifting.
DOJ antitrust prosecutors quietly continued their probe, attending every day of Epic’s three-week antitrust trial in May. The agency reassigned additional lawyers to the probe this summer in the hopes of wrapping up the investigation by the end of this year.
Gonzalez Rogers made clear that the Justice Department could take action during closing arguments on May 24.
“There’s nothing stopping the United States government from doing something,” she said then.
Of course, Epic’s case is also still far from over. The Fortnite-maker has always said it would appeal a loss.
After the ruling, Epic CEO Tim Sweeney said the ruling “isn’t a win for developers or for consumers.”
Apple representatives acknowledged the injunction would require them to allow developers to provide links to cheaper online options, but they maintained the details still needed to be worked out. The company also declined to rule out its own appeal of Gonzalez Rogers’ injunction, saying it was still reviewing the decision.