Fortnite parent Epic Games wants to curb iPhone maker's ‘Dark Cloud’ of app control

Epic Games Inc. urged a federal appeals court to force Apple Inc. to allow more competition in the market for mobile applications, calling the iPhone maker’s rigid control of its App Store a “dark cloud.”  Thursday’s filing escalates a battle that began in 2020 after Apple removed the Fortnite game from the App Store because Epic created a workaround to paying a 30% fee on customers’ in-app purchases. 

Epic told the San Francisco-based Ninth Circuit Court of Appeals that a lower-court judge erred in concluding in a September ruling that App Store rules and restrictions aren’t antitrust violations. 

Apple faces a number of antitrust lawsuits in and outside the U.S. seeking to open up the App Store to competition. Apple is also contending with monopolization enforcement investigations brought by federal and state agencies, and legislative bids to restrict its business practices.

An Apple spokesperson said the company is confident that rulings challenged by Epic on appeal will be upheld.

“In its ruling last year, the district court confirmed that Apple is not a monopolist in any relevant market and that its agreements with app developers are legal under antitrust laws,” the spokesperson said. “The court recognized the value of Apple’s ever-increasing innovation and commitment to privacy and security, which benefit users and developers alike.”

Epic said apps are a force for good because they enable so many different activities on a phone, from social media to gaming to hailing ride-share cars. But the apps function “under a dark cloud: contractual and technological restrictions that Apple imposes to maintain its monopoly position and restrain competition,” Epic said in its filing.

The appeals court should overrule the decision by U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, to leave the App Store business model largely intact, Epic said. 

“If not reversed, this decision would upend established principles of antitrust law and, as the district court itself recognized, undermine sound antitrust policy,” according to the filing.

Gonzalez Rogers found that Apple has engaged in some anticompetitive conduct and ordered the Cupertino, California-based technology giant to allow app and game developers to steer consumers to outside payment methods on the web. All developers for the first time could be able to include a button and web links in their apps to let users pay for transactions online, circumventing Apple’s fees.

Apple is appealing that part of the judge’s ruling. The dueling appeals could take years to resolve, and may end up before the U.S. Supreme Court. 

Epic, which took in more than $5 billion from Fortnite in 2020, also has filed complaints against Apple in the European Union, U.K. and Australia, and the game maker is suing Google over its Google Play store.

The lower-court case is Epic Games Inc. v. Apple Inc., 20-cv-05640, U.S. District Court, Northern District of California (San Francisco).

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