Appeals court largely sides with Apple on ‘Fortnite' antitrust case

Washington CNN

The federal appeals court on Monday sided largely with Apple in a closely-watched case about Apple's app store policies. This decision could complicate future attempts to regulate app store operators, and frustrate claims of Apple acting monopolistically.

The ruling in the case of Epic Games, the maker of the popular video game "Fortnite," upholds an earlier court decision that found Apple was not a monopoly in the distribution and sale of iOS apps. It also determined that Apple had not violated antitrust laws when it required app developers to use Apple’s proprietary in-app payments systems.

A three-judge panel of US Court of Appeals, Ninth Circuit concluded that Epic Games had failed to demonstrate how Apple could have used 'alternative methods for Apple to achieve the procompetitive reasons supporting iOS's walled yard ecosystem.

Apple bases its app store restrictions on security and privacy reasons that differentiate it from other mobile OS makers, such as Google. The court stated, creating "a heterogeneous market for app transaction platforms, which increases interbrand competition" between iOS and Android.

Apple issued a statement in which it said that the court had given it a "resounding win."

Apple has been found to be in compliance with antitrust laws on both the federal and state levels for the second time within two years by a federal court. Apple said that the App Store continued to drive innovation and increase opportunities, as well as promote competition. We are proud of the profound contribution it has made to users and developers worldwide. We respectfully disagree on the ruling of the court regarding the remaining claim under the state law, and we are considering a further review.

Epic stated that Apple won at the 9th Circuit Court. It said: "Though the court upheld that Apple's restrictions have a'substantial anticompetitive impact that harms consumers,' they found that we did not prove our Sherman Act claim."

This ruling comes at a time when policymakers around the world have started to scrutinize app store providers' practices with legislation and investigations. Apple and Google have been accused by app developers of charging excessive fees and imposing restrictive policies. They also accuse them of bullying those who object to the policies. Epic and Google have been involved in a separate legal battle over similar issues.

Epic Games v. Apple began in 2020 when Epic Games tried to provoke a legal dispute with Apple. Epic told Fortnite players that they could buy the virtual currency of the game, V-Bucks at a cheaper price by purchasing them directly through Epic's website, rather than the iOS app. Apple removed Fortnite from its iOS App Store. Epic had anticipated this move, which prompted Epic Games to sue. Apple counter-sued Epic accusing it of breaching contract.

The appeals court ruled on Monday that Apple was entitled to Epic to cover the legal fees arising from the countersuit. This decision reversed a previous ruling.

The appeals court agreed, however, with the lower court that Apple had violated California's unfair-competition law by preventing Epic from informing iOS customers about alternative ways to pay for virtual currency in-game besides Apple's in app payment system. The Monday ruling confirms an injunction which, if allowed into effect, will prevent Apple from interfering with developers who include "buttons, external hyperlinks or other calls to actions that direct customers to purchase mechanisms" apart from Apple's channels.

Contrary to the ruling of the lower court, the court also ruled that agreements between developers such as those Apple signs with app creators are subject to anti-monopoly legislation in the country. This finding may give critics of app stores ammunition.