AP

Battle over the iPhone app store spills into appeals court

Nov 12, 2022, 4:00 PM | Updated: Nov 14, 2022, 5:12 pm

Judges Milan D. Smith Jr., from left, sits on a panel with Sidney R. Thomas and Michael J. McShane ...

Judges Milan D. Smith Jr., from left, sits on a panel with Sidney R. Thomas and Michael J. McShane before hearing arguments at the Ninth Circuit Court of Appeals in San Francisco, Monday, Nov. 14, 2022. Apple is heading into a courtroom faceoff against Epic Games, the company behind the popular Fortnite video game, reviving a high-stakes antitrust battle over whether the digital fortress shielding the iPhone's app store illegally enriches the world's most valuable company while stifling competition. (AP Photo/Jeff Chiu)

(AP Photo/Jeff Chiu)

SAN FRANCISCO (AP) — Apple and the company behind the popular video game Fortnite squared off Monday before three federal appellate judges who will render the next decision in a high-stakes battle over whether Apple created an illegal monopoly via its exclusive control of its iPhone app store. Such monopolies typically stifle competition and drive up consumer prices.

The oral arguments laid out in the Ninth Circuit Court of Appeals by lawyers from Apple and Fortnite maker Epic Games follow a September 2021 lower court ruling that largely preserved Apple’s sway over the apps it allows on more than 1 billion iPhones worldwide. The 75-minute session was a prelude to an expected ruling by the appeals court, likely to be issued sometime next year.

A so-called “walled garden” protecting the iPhone app store includes a payment system that funnels Apple commission revenue ranging from 15% to 30% on the purchases of some subscriptions and other digital services through its storefront. The setup generates an estimated $15 billion to $20 billion for Apple every year, which has helped lift its market value to nearly $2.4 trillion.

Epic lawyer Thomas Goldstein depicted Apple’s walled garden as a pretext for increasing its profits at the expense of the companies making the apps that have helped make iPhones so popular.

“The only thing that is kept out by Apple’s walled garden is competitors,” Goldstein said.

Apple lawyer Mark Perry defended that walled garden as an indispensable feature prized by consumers who want the best protection available for their personal information. He also described the barrier as a way for the iPhone to distinguish itself from devices running on Google’s Android software, which isn’t as restrictive and is licensed to a wide range of manufacturers.

“Apple made the decision to make this the safest, the most secure, the most private computing device that the world has ever known,” Perry boasted to the three judges. He added: “What is kept out by walled gardens is fraudsters, ‘pornsters’ and hackers.”

Perry pointed to previous sworn testimony provided by Epic CEO Tim Sweeney, who attended Monday’s arguments. As a witness in last year’s trial, Sweeney acknowledged that he owns an iPhone himself, partly because of its security and privacy features.

During their questioning, two of the three judges — Milan D. Smith Jr. and Michael J. McShane — seemed to be struggling with whether Epic had done enough to prove its case in the first place.

At various times, Smith wondered whether Epic had even been able to successfully define the market in question — a key factor in antitrust cases — while McShane asked whether Epic had proven that Apple had made it too cumbersome and expensive for consumers unhappy with the iPhone to switch to an Android device.

While questioning Epic’s Goldstein, Smith at one point observed that Apple seemed to “have made a pretty good case for ‘failure of proof'” in the lower court trial. Signaling he didn’t believe Epic’s contention that Apple has locked consumers into keeping their iPhones, McShane pointed out that isn’t why he doesn’t change the kind of smartphone he uses. “I am too lazy to switch,” McShane said. “There are a lot of reasons people don’t switch phones.”

The third judge on the panel, Sidney R. Thomas, asked only one question about a complex issue that provided little insight into which way he might be leaning.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

juneteenth shooting texas...

Associated Press

2 killed and 6 wounded in shooting during a Juneteenth celebration in a Texas park

A shooting in a Texas park left two people dead and six wounded, including two children, on Saturday, authorities said.

1 day ago

Photo: Israeli soldiers drive a tank near the Israeli-Gaza border, in southern Israel, Wednesday, J...

Jack Jeffery, The Associated Press

8 Israeli soldiers killed in southern Gaza in deadliest attack on Israeli forces in months

An explosion in Gaza killed eight Israeli soldiers, the military said Saturday, making it the deadliest attack on Israeli forces in months.

2 days ago

Juanita Beach Kirkland...

Kathy McCormack and Nick Perry, The Associated Press

‘Tis the season for swimming and bacteria alerts in lakes, rivers

With summer about to start, many people flocking to their favorite swimming holes may also want to read up on bacteria warnings.

3 days ago

Image: Members of the Makah Indian tribe paddle away from the rising sun as they head from Neah Bay...

Associated Press

Washington’s Makah Tribe clears major hurdle toward resuming traditional whale hunts

The U.S. granted the Makah Indian Tribe a long-sought waiver that helps clear the way for its first sanctioned whale hunts since 1999.

4 days ago

jerry west...

Tim Reynolds, The Associated Press

Jerry West, a 3-time Hall of Fame selection and the NBA logo, dies at 86

Jerry West, a three-time Basketball Hall of Fame inductee whose silhouette is considered to be the basis of the NBA logo, died Wednesday morning.

5 days ago

Photo: Construction vehicles are parked outside of the Station U & O building on Tuesday, June 11, ...

Haleluya Hadero, The Associated Press

Amazon adds $1.4B to affordable housing fund for regions where it has corporate offices

Amazon is adding $1.4B to a fund for building more affordable housing in regions where the company has major corporate offices.

6 days ago

Battle over the iPhone app store spills into appeals court