In 2020, Epic Games sued Apple for antitrust violations. It’s been years since the trial ended and the judgment was rendered, but in recent weeks, Apple and Epic Games have found themselves once again before Judge Yvonne Gonzalez Rogers. Gonzalez Rogers came out largely in favor of Apple last time. Things might not go as well for the company this time around.
As a reminder, this whole thing started when Epic challenged Apple’s fees of up to 30% to developers for in-app purchases via a splashy campaign in which it basically ignored Apple’s App Store guidelines and integrated its own mobile payment processing system in its popular game. Fortnite. This got the Fortnite The app launched on the App Store, creating the perfect scenario for Epic to sue Apple over its rules. Apple filed a countersuit, accusing Epic of breaching its contract.
Ultimately, Gonzalez Rogers found that Epic had breached its contract with Apple with its stunt and ordered it to pay Apple 30% of the revenue collected through its external payment system, or approximately $3.5 million.
Although Apple won in most cases, Gonzalez Rogers also ordered the company to allow developers to use purchasing mechanisms other than Apple’s for in-app purchases. After the Supreme Court refused to consider appeals from Epic and Apple earlier this year, Apple was forced to implement this change.
But Apple did it the Apple way. The company created a way for developers to connect to external payment methods for in-app purchases, avoiding the up to 30% cut Apple takes when payments are made through its own system. But the external linking system also came with a commission of up to 27% for Apple, leading Epic CEO Tim Sweeney to call the plan “bad faith compliance.” Epic has challenged Apple’s compliance plan, sending them both back to court in recent weeks to participate in a series of evidentiary hearings.
During these hearings, attorneys for Apple and Epic questioned witnesses, including Apple employees and outside experts, about the rationale for and reasons for Apple’s compliance plan decisions. for which they believed she would comply with the court order.
While it’s too early to tell how the judge will rule, Gonzalez Rogers asked Apple some pointed questions throughout the hearing. For example, earlier this month, while discussing the button styles Apple requires for links to external payment systems, Gonzalez Rogers said she couldn’t “think of a logical reason why Apple would require this of competing applications… Other than to stifle competition, I don’t see any other answer.
On May 16, she seemed impatient at times with Carson Oliver, Apple’s senior director of business management for the App Store. Yonatan Even, a litigation associate at Cravath representing Epic, asked the executive if he understood that the concern expressed by the court in its injunction “was that the anti-steering rules made it impossible to communicate lower prices outside the “application, which prevented leaks”. Oliver said he “generally” understood that to be the case.
“Did you understand that the main thing was to increase competition?
But when asked if Oliver understood that one of the purposes of the court injunction “was to increase the threat of leaking so that IAP (Apple’s in-app purchasing system) would feel the pressure “Competitive and transactions outside of the app,” Oliver responded that he “understands it’s different. This elicited an exasperated response from the judge, who asked Oliver directly: “Did you understand that the fundamental point was to increase competition?” Oliver said yes, and after a brief intervention from Even, Gonzalez Rogers said, “That doesn’t seem likely, but go ahead,” before questioning resumed.
Throughout the day, Oliver described the analysis his team commissioned from an outside consulting group, and Epic’s lawyer pressed on why they did or did not evaluate certain aspects of the IAP and the compliance with the court order. Later, the judge told Oliver: “I don’t recall seeing any slides until now identifying the value to a single developer. She said Apple’s proposed model “basically has one group of developers subsidizing everyone else, because you’re not charging many developers anything other than the application fee or developer fee.” Oliver said the consultant’s analysis represented value to individual developers, but the judge seemed unmoved by his response.
During the next day’s session, Gonzalez Rogers continued to press Oliver for information his team had collected on the effectiveness of his proposal in response to the court order. At various points, she asked whether Oliver had any documents or contemporaneous notes to support his statements and seemed frustrated when Oliver did not take notes on the conversations.
Later, another Epic lawyer began questioning Apple staffer Phil Schiller, whose responsibilities include the App Store. The judge appeared to challenge an element of Apple’s compliance plan that allows the company to collect a commission from apps that install an “external purchasing link” within the first seven days after a user clicks the link. Apple says this balances its “entitlement to a commission” with the “more attenuated” connection of an in-app purchase to the App Store, further removed from “Apple’s facilitation of the purchase.”