Apple Antitrust Appeals Court Is Skeptical of Epic's "Lack of Evidence"

Epic Games on Monday asked a three-judge federal appeals panel to overturn portions of a previous court's antitrust ruling that favored Apple Inc (NASDAQ:AAPL) and its multibillion-dollar App Store payment business.

The attorneys involved anticipate a nine-month wait for a ruling from the panel, which raised issues about Epic's appeal and noted they would have to traverse the lower court's conflicting reasoning.

In 2020, Epic launched a lawsuit against Apple, alleging that the iPhone manufacturer improperly requires software developers to pay it commissions of up to 30% on in-app purchases made by consumers.

A year ago, following a three-week trial, a judge refrained from dubbing Apple a "illegal monopolist" and said that Epic failed to demonstrate that the privacy and security benefits of the commissions and related policies outweighed the costs to consumers.

Monday, a panel of the U.S. Ninth Circuit Court of Appeals questioned attorneys for Epic, Apple, and the U.S. Department of Justice over whether the trial judge contrasted these outcomes appropriately.

Epic recognized that several assertions were unsupported by appropriate evidence. Apple emphasized that the commissions help pay the evaluation of apps to ensure users are not exposed to fraudulent, pornographic, or privacy-invasive apps.

Near the end of the hour-and-fifteen-minute discussion, Judge Milan Smith informed Tom Goldstein, the attorney for Epic, "The only thing that actually concerns me is the absence of evidence. The evidence suggests that (Apple's attorneys) have produced a compelling argument."

Then, Smith and Goldstein concurred that the lower court's judgment ultimately communicated contradicting signals about the legality of Apple's "walled garden" technique for administering the App Store, which the Ninth Circuit must now resolve.

Smith observed, "It's difficult to square the circle."

Since Apple's contracts with developers were non-negotiable, they did not violate antitrust rules; developers either consented or could not use the App Store. Epic argues that these standard contracts are susceptible to investigation anyway.

The Justice Department participated in the hearing because, according to its statement, the lower court's decision might "severely impede antitrust enforcement outside the context of this particular case."

The panel of appeals is also reconsidering the lower court's ruling that Apple must permit developers to inform clients on how to obtain apps using means other than its proprietary payment mechanism.