• by Wendy Davis  @wendyndavis, April 24, 2023

Largely siding with Apple in an antitrust battle with Epic Games, a panel of the 9th Circuit Court of Appeals on Monday upheld a lower court's decision dismissing claims that Apple's tight control over iPhone and iPad apps violated anti-monopoly laws.

The decision comes in a battle dating to the summer of 2020, when Epic began offering gamers a way to make purchases directly, in violation of an Apple policy requiring developers to use its payment platform for in-app purchases.

Apple responded to Epic's move by removing Fortnite from the iOS app store, after which Epic sued Apple for allegedly monopolizing the iOS app distribution market, and unlawfully forcing developers to use Apple's payment platform. Apple takes a commission of up to 30% of purchases made through its platform.

U.S. District Court Judge Yvonne Gonzalez Rogers, who presided over a 16-day trial in 2021, concluded that Epic failed to prove that Apple's app-store policies -- including its refusal to allow consumers to download apps from sources other than the official app store -- violated antitrust law.

A majority of the appellate panel largely agreed with that part of the ruling.

“Epic failed to establish ... the existence of any substantially less restrictive alternative means for Apple to accomplish the pro competitive justifications supporting iOS’s walled garden ecosystem,” Circuit Judge Milan Smith wrote in an opinion joined by District Court Judge Michael McShane.

“With Apple’s restrictions in place, users are free to decide which kind of app-transaction platform to use,” Smith wrote. “Users who value security and privacy can select (by purchasing an iPhone) Apple’s closed platform and pay a marginally higher price for apps. Users who place a premium on low prices can (by purchasing an Android device) select one of the several open app-transaction platforms, which provide marginally less security and privacy.”

Apple CEO Tim Cook testified during the 2021 trial that the company's policies boost privacy and security for iPhone and iPad users.

The industry-funded policy organization Chamber of Progress, which sided with Apple in a friend-of-the-court brief, praised the decision.

“Ultimately, it should be up to consumers whether they buy a phone with an open experience or a walled garden that’s closed to cyberthreats,” Chamber of Progress CEO Adam Kovacevich stated Monday.

But consumer advocacy group Public Knowledge said the decision shows that Congress should revise antitrust laws, including by passing the Open App Markets Act, which would require Apple to allow consumers to download apps from sources other than its app store.

"Epic has been fighting long and hard to empower users and software developers in a mobile app environment dominated by two gatekeepers, Apple and Google,” Public Knowledge legal director John Bergmayer stated. He added that Epic's loss “shows how current antitrust law, and how courts apply it, is not always fit for the challenges posed by dominant digital platforms.”

Monday's ruling wasn't a complete victory for Apple. The panel affirmed Rogers's decision that Apple's anti-steering policy -- which prohibited developers from offering in-app links to outside payment platforms -- violated California's unfair competition law.

The panel also upheld Rogers's injunction requiring Apple to allow developers to add in-app links to payment options outside Apple's platform.