Last year’s Epic Games versus Apple ruling left both sides unhappy with the result, each filing its own appeal. An appeals hearing took place on Monday, and the intention and effect of the Apple ecosystem – aka the “Apple walled garden” – was the core issue debated.
Apple made the case that the ecosystem is designed to keep iPhone users safe from malware and scams, while Epic argued that the iPhone maker is simply afraid of competition …
Background
Epic Games sued Apple for not allowing it to use its own payment platform instead of in-app purchases through the App Store, with Apple taking a 30% cut.
The court ruled that Apple must allow developers to steer app users to external payment platforms, but concluded that the company did not meet the legal tests to be considered a monopoly – and thus did not have to permit competing app stores for iOS apps. Both Apple and Epic Games filed appeals on different aspects of the ruling.
Epic is appealing the ruling that the App Store is not a monopoly, arguing that there is no other way for developers to sell iPhone apps other than through Apple. The iPhone maker, in turn, is arguing that the court made a legal error when considering the anti-steering issue.
The Department of Justice antitrust division filed what’s known as an amicus brief – a statement from an uninvolved party that is intended to help the court reach the correct decision. Although technically neutral and labeled as “in support of neither party,” the DOJ’s submission favors Epic’s argument that Apple does have monopoly control of the iOS app market.
Additionally, the attorneys general of 35 US states have also joined forces to submit an amicus brief that again argues that Apple does have monopolistic powers.
Purpose of the Apple walled garden
Arstechnica reports that the purpose and intent of the Apple walled garden – of which the App Store is a key element – was at the heart of the conflicting arguments.
In defending Apple’s position, counsel Mark Perry argued that the company’s restraints on iOS app distribution were put in place from the beginning to protect iPhone users. Based on its experience managing software security and privacy on Macs, Apple decided it “did not want the phone to be like a computer. Computers are buggy, they crash, they have problems. They wanted the phone to be better.”
Perry said that the App Store kept iPhone owners safe from “fraudsters and pornsters and hackers and malware and spyware and foreign governments.”
Apple did acknowledge that the App Store created “minor anti-competitive effects,” but said that the security issues outweighed these.
From Epic’s perspective, though, the security justification for Apple’s App Store policies is nothing more than an “excuse to remove all competition” in the market for iOS app transactions. It’s an excuse that conveniently lets Apple rake in tens of billions of dollars in “supercompetitive profits” from a billion iPhone users, Epic counsel Tom Goldstein argued.
Goldstein allowed that Apple should be permitted to offer its “walled garden” App Store and could even urge users to take advantage of its vaunted security and privacy protections. What Apple shouldn’t be allowed to do, Goldstein argued, is use “contract and technology” to “not even allow a competitive alternative” to that App Store on iPhones.
Competing app stores could not only offer better deals for developers and consumers, but could even increase safety. Epic gave the example of a hypothetical Disney-run app store, which might clamp down even more on sketchy content. iPhone owners should, argued Goldstein, be free to choose the store which best met their needs.
No early clues, and no decision date as yet
Arstechnica said that the judges gave no indication of finding either argument more persuasive, asking pointed questions of both Apple and Epic.
They will now consider the arguments, and present a final ruling sometime next year. As with the ruling itself, the judges gave no clue as to exactly when they will announce their decision.
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