Antitrust Battle: Apple vs Epic Games​

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By Robyn Ma​


The Story

On Friday 10 September 2021, a judge ruled in the legal battle between Epic Games and Apple that Apple can “no longer force developers to use in-app purchasing” (CNBC).

Apple’s App Store has traditionally taken a 15 to 30% fee from apps purchased on its platform and forbidden app developers from implementing their own payment system (BBC). Unhappy with the size of this cut, Epic Games launched their own alternative payment system in the game Fortnite in 2020. This led Apple to remove Fortnite from its App Store and to the current legal debate.

It was Apple's case that all apps should use the App Store’s payment options. However, Judge Yvonne Gonzalez-Rogers ruled that Apple “cannot stop app developers directing users to third-party payment options” (BBC). This bodes well for app developers; the New York Times interviewed one developer who pays a $1.5 million fee to Apple for hosting his app. The recent injunction will allow him to hire more employees and ultimately create more value for consumers.

Another argument put forward by Epic Games was that the App Store was monopolistic. However, Judge Gonzalez-Rogers decided that “while the court finds that Apple enjoys considerable market share of over 55 percent [...] these factors alone do not show antitrust conduct”, adding that “success is not illegal” (Verge).

The court also found that Epic Games was in breach of its contract with Apple when it implemented its alternative payment system. They must pay the tech giant 30% of the revenue collected, which amounts to $3.5 million (Verge).

What it Means for Businesses and Law Firms

The decision means that app developers are likely to increase revenue and cut costs - gaming stocks, like mobile technology company AppLovin, have rocketed. Similar share price rises were seen by companies such as Spotify and Match Group (the owner of dating apps Tinder and Hinge). Apple’s shares, however, fell by 3.31% (CNBC).

How did Epic Games fail in claiming Apple as a monopolist? That mainly falls to their definition of ‘marketplace’. Judge Rogers views the relevant market as digital mobile gaming transactions - not “gaming generally” (Verge). Epic Games did not focus specifically on this market in its claims, and will be appealing the judge’s decision. Apple may also follow suit.

With regulators around the world reigning in the company’s influence, no doubt, Apple will be instructing antitrust lawyers. Japan and South Korea have already introduced measures to tweak the company’s management of the App Store. In America, the Senate implemented new antitrust rules for “app store competition” (Verge). Dispute lawyers will also play a role in mitigating or mediating future legal challenges.

Law Firms Involved: In this case, Apple was represented by Gibson Dunn & Crutcher while Epic Games was represented by Cravath, Swaine & Moore (Apple Insider).