• by Wendy Davis  @wendyndavis, January 21, 2022

Epic Games has asked a federal appellate court to rule that Apple monopolizes the iPhone and iPad app distribution market, and unlawfully forces developers to use its payment processing system.

“Apple has made itself the exclusive distributor for all apps by prohibiting distribution of apps outside Apple’s proprietary 'App Store,' deploying software that blocks any other apps, and threatening to evict developers that fail to comply,” the Fortnite developer argues in papers filed Thursday with the 9th Circuit Court of Appeals.

“Additionally, Apple requires developers to use Apple’s payment solution to sell digital content through their apps, and charges a 30% commission on each sale. These restrictions are unnecessary to further any legitimate procompetitive purpose,” Epic adds.

The gaming company is asking the 9th Circuit to reverse the bulk of a decision by U.S. District Court Judge Yvonne Gonzalez Rogers, who ruled last year that Epic failed to prove Apple violated federal or state antitrust laws.

The battle between Epic and Apple dates to the summer of 2020, when Epic began offering Fortnite players the ability to make purchases directly from Epic, in violation of Apple's policies. Apple requires game developers to use its payment platform for in-app purchases, and charges a 30% commission to developers that take in more than $1 million in revenue. Smaller developers pay only a 15% commission.

Apple responded to Epic's move by removing Fortnite from the iOS app store, after which Epic sued Apple for allegedly violating federal and state antitrust laws, as well as a California law regarding unfair competition.

Gonzalez Rogers, who presided over a 16-day trial, ruled last September that Epic didn't prove that Apple was a monopolist.

“While the court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal,” she wrote.

Epic is now asking appellate judges to reverse that ruling, arguing that Apple's contracts with developers represent an anti-competitive restraint on trade.

“It is undisputed that Apple entered into contracts with developers requiring them to distribute iOS apps exclusively through Apple’s App Store and to handle in-app payments for digital content exclusively through Apple’s [platform],” the company writes.

Epic adds that if it prevails, developers and consumers will be able to choose between competing services.

“Such competition will lower prices, improve quality, increase innovation, and enhance consumer welfare -- the objectives of antitrust law,” the company writes.

Gonzalez Rogers ruled against Apple on one key point: She said the company's anti-steering policies (which prohibit developers from offering in-app links to outside payment platforms) violated California's unfair competition law, and ordered Apple to allow developers to point users to outside payment platforms.

Apple appealed that portion of the decision to the 9th Circuit, which lifted that order last month.