A PYMNTS Company

An Epic Fail or an Epic Win for Tech Antitrust?

 |  September 30, 2021

By: Ankur Kapoor (Constantine Canon)

On September 10, the court issued its judgment in the trial of Epic Games, Inc. v. Apple Inc., ruling in Apple’s favor on nine out of Epic’s ten claims and on Apple’s counterclaims, but in Epic Games’ favor on its claim under California’s Unfair Competition Law.  Judge Yvonne Gonzalez Rogers’ 180-page, single-spaced findings of fact and conclusions of law are the first exposition, by a U.S. court, of antitrust issues involving the digital media platforms that have recently been the focus of legislators and antitrust enforcers.  The implications of the court’s analysis are myriad, and a full discussion of them is beyond the scope of this (or any) blog.  But there are four important lessons from the court’s judgment.

First, as the court made clear, Epic’s failure at trial was in its evidence of competitive harm, not in its theory that Apple could be a monopolist in the market for mobile-gaming platforms:

Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws.  While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct.  Success is not illegal.  The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market.  The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.[1]

Epic’s principal theory was that Apple was the monopolist in each of two “aftermarkets” consisting of: (1) the distribution of iOS apps; and (2) payment processing for in-app purchases in iOS apps.[2]  Such antitrust claims, which assert a manufacturer’s monopoly over aftermarket services provided for the manufacturer’s own products, were recognized by the Supreme Court in the landmark 1992 case of Eastman Kodak Co. v. Image Technical Services