Apple Urges Ninth Circuit to Undo Calif. Ruling in Antitrust Spat with Epic Games

Apple Inc. filed its reply brief in its cross-appeal against Epic Games Inc. arguing that there is nothing wrong with its “anti-steering provisions,” guidelines that supposedly curtail certain freedoms of app developers and limit their communications with app buyers. Apple argues that the district court wrongly decided the California Unfair Competition Law (UCL) issue, remarking that it is the first time a court enjoined conduct it found unfair under the UCL but reasonable under federal antitrust laws.

The case, initially brought by Epic in August 2020, avers that Apple has illegally monopolized the iOS app distribution market, exacting a supracompetitive fee from its third-party developers for the privilege of offering their apps for sale in the Apple App Store. 

Last Thursday’s brief follows an initial appraisal by the Ninth Circuit that considered the trial court’s UCL ruling worth reviewing. Judge Yvonne Gonzalez Rogers’ decision called Apple’s app distribution system a “black box,” and struck down the anti-steering provisions to enhance competition, transparency, and consumer choice and information while preserving Apple’s iOS ecosystem.

By contrast, the appellate court said, in agreeing to stay the lower court’s UCL injunction after the trial court itself declined to do so, that the decision raised serious questions. Apple now puts those skepticisms front and center in its reply brief.

First, Apple asserts that the Epic failed to prove harm from the anti-steering provisions, not once but on three occasions. “Epic did not prove that it will suffer injury-in-fact from the anti-steering provisions, while Apple proved that Epic cannot receive redress from the injunction,” the brief says, concluding that there is no case or controversy for the Ninth Circuit to review.

Next, the company argues that Epic failed to prove harm to competition, a requirement of UCL liability. Apple faults the lower court’s finding as an outlier: “no court—state or federal—has imposed UCL liability for conduct found not to be anticompetitive under the antitrust laws,” the filing says, adding that arguments to the contrary misapprehend UCL caselaw. In its third contention, Apple argues that the trial court exceeded its authority by imposing an injunction applicable to all developers, broader in scope than even what Epic proposed.

Lastly, Apple presses the Ninth Circuit to make Epic pay for the attorneys’ fees it expended defending and appealing the suit. To this end, Apple says that Epic signed a developer agreement indemnifying Apple from harm in the event of breach and now must be held accountable.

Epic Games is represented by Faegre Drinker Biddle & Reath LLP and Cravath, Swaine & Moore and Apple by Gibson, Dunn & Crutcher LLP.