Apple Inc.
AAPL 2.27%
said a judge’s ruling that it was violating California’s unfair-competition law should be overturned because she had already found the iPhone maker’s in-app payment system was competitive.
It is the Cupertino, Calif., company’s first full-throated filing laying out its argument in the appeals fight over its high-profile legal battle with “Fortnite” maker Epic Games Inc.
Apple’s filing Thursday with the Ninth US Circuit Court of Appeals comes weeks after Epic gave its own reasons for its appeal in the case that mostly swung in Apple’s favor. US District Judge Yvonne Gonzalez Rogers had previously ruled against nine of Epic’s 10 claims. A hearing before the appeals court is expected later this year, with a decision unlikely for several months afterward.
Apple said the earliest it expects a decision is the summer of 2023. Meanwhile, it has already won a reprieve from the appeals court in rolling out changes to the App Store ordered by Judge Gonzalez Rogers.
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While she found that Apple wasn’t violating antitrust laws in mobile gaming transactions, the judge ruled that its conduct enforcing anti-steering restrictions was anticompetitive under California law. She had instructed Apple to allow developers to communicate with users inside of their apps about alternative payment methods outside of Apple’s App Store.
“This Court already recognized that Apple is likely to succeed on the principal issue—whether conduct that does not violate the antitrust statutes can be enjoined as ‘unfair’ under California law—in staying the injunction pending appeal,” Apple said in its filing Thursday .
At this phase of the fight, as the two sides argue over Judge Gonzalez Rogers’s ruling, they are trying to prove legal errors in the decision. It is a less dramatic battle than last May, when the companies’ lawyers faced off in an Oakland, Calif., courtroom for 16 days, a drama that saw the CEOs of both companies take the witness stand.
At the core of Epic’s original argument were the claims that Apple held an improper monopoly over the distribution of third-party software on its iPhones and forced apps to use its own in-app payment system, which takes as much as a 30% commission.
In January, Epic filed its own argument with the appeals court, saying the judge had erred in her interpretations of the law and that the ruling should be reversed. “The district court’s factual findings make clear that Apple’s conduct is precisely what the antitrust laws prohibit,” Epic said in its filing.
Their tussle began in August 2020, when Epic slipped in an alternative payment system into its popular “Fortnite” videogame, violating Apple’s App Store rules. In response, Apple kicked “Fortnite” out of the App Store and Epic filed its lawsuit against Apple.
Except for the aspect of the ruling that went against the iPhone maker, Apple wants the September decision upheld. “Epic did not lose the trial due to any legal error,” Apple said Thursday in its more-than-120-page filing. “Epic lost because it ‘overreached’ by asserting claims on the ‘frontier edges of antitrust law,’” he wrote, citing the judge’s September decision.
The videogame maker’s case was bolstered by a number of outside groups filing friendly briefs on Epic’s behalf. Notably, 35 state attorneys general took issue with the lower court’s findings, as did the US Justice Department, which also weighed in with its own brief. The Justice Department has been looking into the power of big tech companies, including Apple.
“The district court committed several legal errors that could impair effective antitrust enforcement, especially in the digital economy,” the Justice Department said in its January filing.
Apple responded on Thursday that the Justice Department and states were advocating “new legal positions that, if accepted, would make it easier for them to win antitrust laws.”
Write to Tim Higgins at Tim.Higgins@WSJ.com
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