Apple Crosses Swords with Epic Games in Dueling Antitrust Appeals

Apple Inc. submitted arguments to the Ninth Circuit Court of Appeals last Thursday, arguing in a 135-page brief that the district court correctly decided most of the case below except its ruling as to California’s Unfair Competition Law (UCL) that found certain third-party app developer guidelines unfair. The filing attacked Epic Games Inc.’s appeal as “dangerously unmoored from established law and irreconcilable with the district court’s factual findings.”

The 2020 antitrust case brought by sole plaintiff Epic, maker of the hugely popular video game Fortnite, argued that Apple is a monopolist in the market for the distribution of iOS mobile applications and accordingly, charges supracompetitive prices for apps sold in its Apple App Store by assessing developers a 30% commission.

After a 16-day bench trial, the court issued a ruling largely siding with Apple. The parties cross-appealed. Epic filed its opening brief in January, asking the court to reconsider key rulings about its proof of Apple’s Sherman Act Section 1 and 2 liability. Thereafter, amici joined the debate, with some including the United States, Microsoft, and third-party developers advocating on behalf of Epic.

In last week’s filing, Apple took aim at Epic’s allegedly revisionist narrative. The tech company accused Epic of cherry-picking excerpts from the record to “caricature” the district court’s 180-page opinion.

The brief also claimed that Epic’s legal challenge was brought as part of a “global crusade” through which it sought to “influence courts, regulators, and legislators to fundamentally change Apple’s App Store so that Epic can make more money selling virtual currency to gamers.”

Substantively, the opposition brief contended that Epic’s arguments in favor of reversal are unsupported by the fact record and settled law. “Epic ignores the deferential standard of review applicable to the court’s factual findings, on which every one of its antitrust theories foundered,” the filing said.

Apple also claimed that the district court’s UCL holding, finding a violation of state antitrust law with regard to the “anti-steering” provisions of its app developer agreement, merits reversal by the panel. Previously, the trial court denied Apple’s request to stay the mandate requiring it to eliminate those provisions. Undeterred, Apple sought a stay from the Ninth Circuit and prevailed.

In the brief, Apple argued that the UCL ruling cannot stand because Epic lacks standing to bring the claim, UCL liability is foreclosed as a matter of law, and the injunction is beyond the authority of the court. 

Apple’s final argument asserted that Epic is contractually obligated to pay its legal fees in the matter because the game developer indemnified Apple for all losses incurred in connection with Epic’s breach of the parties’ agreement. The lower court’s contrary conclusion misconstrued the indemnity provision, rendering it meaningless, Apple said.

Faegre Drinker Biddle & Reath LLP and Cravath, Swaine & Moore represent Epic Games, while Gibson, Dunn & Crutcher LLP represents Apple.