ICLE Brief to the 9th Circuit in Epic Games v Apple
INTEREST OF AMICUS CURIAE
The International Center for Law & Economics (“ICLE”)[1] is a nonprofit, non-partisan global research and policy center aimed at building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law and economics to inform policy debates and has longstanding expertise evaluating antitrust law and policy.
ICLE has an interest in ensuring that antitrust law promotes the public interest by remaining grounded in sensible rules informed by sound economic analysis. That includes fostering consistency between antitrust law and other laws that proscribe unfair methods of competition, such as California’s Unfair Competition Law, and advising against far-reaching injunctions that could deteriorate the quality of mobile ecosystems, thereby harming the interests of consumers and app developers.
SUMMARY OF ARGUMENT
The District Court has issued an order, No. 4:20-cv-05640-YGR (N.D. Cal. Apr. 30, 2025), ECF No. 1508 (“Order”), that would, permanently and nationwide, prohibit Apple from charging “any commission or fee” on various purchases facilitated by Apple’s platform and in-app purchasing (IAP) mechanism. Further, the Order would intrude on various of Apple’s business practices including, inter alia, steps Apple might take to protect the integrity and security of its platform and IAP and, not incidentally, the privacy and data security of consumers who use the Apple ecosystem. These permanent, nationwide injunctions are required, according to the order, to prevent Apple from “maintaining an anticompetitive revenue stream,” “reap supracompetitive operating margins” or “profits” that are “not tied to the value of its intellectual property, and thus . . . anticompetitive.”
These permanent, nationwide injunctions are required, moreover, despite the following: (1) neither the pricing nor the business practices enjoined here were enjoined in the District Court’s prior order in this matter; (2) no violation of the federal antitrust laws was found at trial in this matter, in which the only finding of liability was the finding of a violation of the “unfair prong” of California’s UCL; and (3) California courts have held that, because the purpose of both “federal and state antitrust laws is to protect and promote competition for the benefits of consumers,” it follows that when “the same conduct is alleged to be both an antitrust violation and an ‘unfair business act or practice for the same reason—because it unreasonably restrains competition and harms consumers—the determination that the conduct is not an unreasonable restraint of trade necessarily implies that the conduct is not ‘unfair’ towards consumers” Chavez v. Whirlpool Corp., 113 Cal. Rptr. 2d 175, 184 (Cal. App. 2d Dist. 2001).
As we explain below, the District Court’s Order misapplies basic principles of antitrust in ways that will harm consumers and competition. If upheld and followed by courts in other cases, the Order will set a dangerous precedent—one that will dampen firms’ incentives to create and improve groundbreaking new platforms. The Order would enjoin Apple from charging “any commission or fee” on various purchases facilitated by Apple’s platform and in-app purchasing (IAP) mechanism. Epic Games, Inc. v. Apple Inc., No. 4:20-cv-05640-YGR (N.D. Cal. Apr. 30, 2025), ECF No. 1508 (“Order”). The Order claims this is required to prevent Apple from “maintaining an anticompetitive revenue stream,” id. at 75, or “reap[ing] supracompetitive operating margins” or “profits” that are “not tied to the value of its intellectual property, and thus … anticompetitive.” Id. at 2. But such profits are not unlawful.
In brief, the Order would impose numerous and complex duties to deal that were not identified in the previous injunction and have not been shown necessary to prevent foreclosure. Instead, the Order reflects a maximalist interpretation of the initial injunction—requiring micromanagement of Apple’s platform and dictating that Apple must offer business users free access to its ecosystem.
At the same time, the Order would effectively obviate various of Apple’s legal business practices, including steps Apple might take to protect the integrity and security of its platform and IAP, the privacy and data security of consumers who use the Apple ecosystem, and the value of its intellectual property, all of which were previously identified by this Court as legitimate. See Epic Games, Inc. v. Apple, Inc., 67 F.4th 946, 971 (9th Cir. 2023), cert. denied, 144 S. Ct. 681 (2024).
While the original injunction did not interfere with “Apple’s business justifications [which] focus on other parts of the Apple ecosystem and will not be significantly impacted by the increase of information to and choice for consumers,” Epic Games, Inc. v. Apple Inc., 559 F.Supp.3d 898, 1057 (2021) (“Epic v. Apple”), the Order is premised on an interpretation of the initial injunction that is no longer a “limited measure [that] balances the justification for maintaining a cohesive ecosystem with the public interest….” Id. Rather, it imposes complex, long-running duties to deal that are unsupported by the record and inconsistent with the relevant jurisprudence and the Supreme Court’s repeated caution that antitrust courts are not central planners.
ARGUMENT
I. Antitrust Courts Are Not Central Planners or Price Regulators
The Order misapplies key Supreme Court rulings, like Trinko and Nat’l Collegiate Athletic Ass’n v. Alston, which caution against the use of compelled access remedies. The Supreme Court’s decision in Trinko is the lodestar here. In that case, the Court made clear that antitrust law does not, as a general matter, require even a monopolist to aid its competitors by sharing infrastructure or data, warning that such forced sharing “may lessen the incentive for the monopolist, the rival, or both to invest” in valuable innovations. Verizon Comm’ns Inc. v. Law Offices of Curtis v. Trinko, LLP, 540 U.S. 398, 408 (2004) (“Trinko”). Court has, therefore, long cautioned against such remedies. See, e.g., Nat’l Collegiate Athletic Ass’n v. Alston, 141 S.Ct. 2141 (2021) (“Alston”); Pac. Bell Tel. Co. v. linkLine Comm’ns, Inc., 555 U.S. 438 (2009) (“linkLine”).
The Trinko Court warned against enforced sharing precisely because it would require “courts to act as central planners, identifying the proper price, quantity, and other terms of dealing—a role for which they are ill suited.” Trinko, 540 U.S. at 408. Antitrust law does not generally require a monopolist to aid its competitors by sharing infrastructure or data because such forced sharing “may lessen the incentive for the monopolist, the rival, or both to invest” in valuable innovations. Trinko, 540 U.S. at 408. The linkLine Court clarified that Trinko encompasses pricing obligations like those imposed here, noting that enforcement of such a duty “would require courts simultaneously to police both the wholesale and retail prices” while “aiming at a moving target….” linkLine, 555 U.S. at 453 (citing Trinko, 540 U.S. at 408).
Courts must be cautious in fashioning remedies that impose such duties, lest they “wind up impairing rather than enhancing competition, impose costs that ‘exceed efficiencies gained,’” and “suppress procompetitive innovation.” Alston, 594 U.S. 69, 102 (2021) (quoting Trinko, 540 U.S. at 415).
II. The Order Ignores the Supreme Court’s Repeated Repudiation of Complex and Burdensome Duties to Deal
Such risks plainly are raised by the Order, which enjoins Apple from, inter alia, “[i]mposing any commission or any fee” on linked transactions, Order at 75, notwithstanding that “the Court did not select a rate,” Id. at 58, and that “Apple is entitled to … guard against the uncompensated use of its intellectual property.” Epic v. Apple, 559 F.Supp.3d at 1042. The factual recitations in the Order reveal the uncertainty Apple confronted in identifying a price for linked-out transactions that would comport with the original injunction. See, e.g., Order at 21.
The purported justification for a zero-price requirement is that the District Court had “found that ‘Apple’s 30% commission … allowed it to reap supracompetitive operating margins’ and was not tied to the value of its intellectual property, and thus, was anticompetitive.” Id. at 2. While imposing a specific commission might resolve the uncertainty, the District Court’s analysis largely serves to highlight both the difficulty of administering such duties-to-deal and the arbitrariness of its zero price mandate.
The Order notes that Apple “never correlated the value of its intellectual property to the commission it charges.” Order at 7. But what would such a correlation entail, and why would it be required of Apple? Typically, the price system tests the value of intellectual property. Antitrust law recognizes that even monopoly can arise “as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 571 (1966). For that reason, antitrust law does not condemn monopoly itself. Id. at 570–71; see also Trinko, 540 U.S. at 407–08.
It is conceivable that some price could be found exclusionary, foreclosing competition to an extent prohibited by, e.g., Section 2 of the Sherman Act. But given the benefits of Apple’s platform and IAP and the need to maintain incentives for future investment, competition cannot require a rate of zero percent. Apart from a conclusory declaration that a 27% commission for linked purchases is anticompetitive, neither the Order nor Epic v. Apple provides any analysis of a price threshold at which a commission would become exclusionary.
Further, attempting to maximize profits within the confines of an injunction cannot be a violation. Yet the District Court concluded that Apple’s efforts to do so were inherently anticompetitive. See, e.g., Order at 17. This Court has admonished such conflation of “the desire to maximize profits with an intent to ‘destroy competition itself.’ … [T]he goal of antitrust law is not to force businesses to forego profits or even ‘[t]he opportunity to charge monopoly prices,’ which is ‘what attracts business acumen in the first place.’” Fed. Trade Comm’n v. Qualcomm Inc., 969 F.3d 974, 990, 994, fn. 15 (9th Cir. 2020) (internal quotation and citation omitted)) (“Qualcomm”).
Seeking to ground its conclusion that Apple’s compliance efforts were anticompetitive, the District Court contends that summing Apple’s 27% rate and other costs entails that linked-out commission costs would exceed Apple’s 30% IAP commission. It thus finds that Apple’s linked-out commission “forecloses competitive alternatives.” Order at 60 (emphasis in original). The Court bases its conclusion of a violation on a “price squeeze” claim—asserting that, by pricing its own alternative (IAP at 30%) lower than the effective price required by its linked-out commission, Apple effectively eliminates the linked-out option as a competitive alternative.
But “[r]ecognizing price-squeeze claims would require courts simultaneously to police both the wholesale and retail prices to ensure that rival firms are not being squeezed.” linkLine, 555 U.S. at 453. This would compound the enforcement problems inherent in duties to deal because “courts would be aiming at a moving target, since it is the interaction between these two prices that may result in a squeeze.” Id.
The Order exemplifies the problem: the District Court contends that Apple’s linked-out commission violates its prior injunction because of the interaction between Apple’s commission and developers’ other costs. To determine when that interaction effectively forecloses linked-out transactions thus depends on external payment processing (and other) costs over which Apple has no control—costs that are certain to vary across developers, apps, and times. It also depends on app developers’ choice of payment processors. For virtually any commission Apple might set, a developer could choose a payment processor with fees that, combined with Apple’s commission, exceed 30%. This moving target precludes Apple’s ability to identify the price that would comply with the Order—precisely the scenario that the linkLine Court found “perhaps most troubling.” Id. at 453.
LinkLine explains why that is untenable: “[H]ow is a judge or jury to determine a ‘fair price?’ Is it the price charged by other suppliers of the primary product? None exist. Is it the price that competition ‘would have set’ were the primary level not monopolized? How can the court determine this price without examining costs and demands, indeed without acting like a rate-setting regulatory agency, the rate-setting proceedings of which often last for several years? Further, how is the court to decide the proper size of the price ‘gap?’ Must it be large enough for all independent competing firms to make a ‘living profit,’ no matter how inefficient they may be? … And how should the court respond when costs or demands change over time, as they inevitably will?” Linkline, 555 U.S. at 454 (internal citation omitted).
These concerns apply in spades when a duty to deal arises from a judicially-ordered injunction, the violation of which threatens criminal contempt. “‘No court should impose a duty to deal that it cannot explain or adequately and reasonably supervise. The problem should be deemed irremedia[ble] by antitrust law when compulsory access requires the court to assume the day-to-day controls characteristic of a regulatory agency.’” LinkLine, 555 U.S. at 453 (quoting Trinko, 540 U.S. at 415).
The District Court’s rationale for what is manifestly rate setting is opaque. Antitrust law does not prohibit supracompetitive pricing in itself; and it recognizes that intellectual property rights are predicated on the promise of supracompetitive pricing—or, at least, the potential for profits—which provide incentives to make fixed-cost investments in research and development. See Trinko, 540 U.S. at 407-08; Qualcomm, 969 F.3d at 994. The District Court’s stipulation of a zero-price commission ignores the difficulty of setting any price that will remedy prior (allegedly exclusionary) conduct, compensate for Apple’s intellectual property, or account for an allegedly anticompetitive price differential (the extent of which is partly determined by the pricing decisions and conduct of non-parties).
III. The Order Is Not Tailored to the Harm Found at Trial
As the D.C. Circuit has observed, “relief should be tailored to fit the wrong creating the occasion for the remedy.” United States v. Microsoft, 253 F.3d 34, 107 (D.C. Cir. 2001) (“Microsoft”); and it “must base its relief on some clear ‘indication of a significant causal connection between the conduct enjoined or mandated and the violation found directed toward the remedial goal intended.’” Id. at 105 (citation omitted).
The District Court insists that its order “require[s] no affirmative action on Apple’s part,” Order at 76, implying that no further findings are required. But this strains credulity. First, the practices enjoined—including the charging of any positive price for linked-out payments—were not found unlawful at trial, and there is no explanation in the Order of how they remediate the finding of a UCL violation. At the same time, there is no practical way for Apple to comply with the Order without undertaking numerous and considerable affirmative actions, or to do so without risk to its IAP, its platform, and the consumers who choose to use them. In addition, the Order goes significantly further than the original injunction: It not only requires that Apple eliminate practices that prevent competition with IAP, but, in effect, requires the creation of a frictionless steering experience for the benefit of competitors—and to do so for free. Order at 75-6.
Remedies should target specific anticompetitive acts without deterring the competitive process that benefits consumers. See, e.g., Microsoft, 253 F.3d at 107; see also Herbert J. Hovenkamp, Structural Antitrust Relief Against Digital Platforms, 7 J. LAW & INNOVATION 57, 64 (2024). To ignore this principle risks doing more harm than good. “Fashioning appropriate equitable antitrust relief requires that courts balance the benefit to competition against the hardship or competitive disadvantage the remedy may cause.” Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1235 (8th Cir. 2010).
The history of antitrust remedies shows that they fail precisely when they overindex on harms and ignore the benefits that may also arise from ambiguous conduct and complex market structures. See generally Robert W. Crandall & Kenneth G. Elzinga, Injunctive Relief in Sherman Act Monopolization Cases, 21 RES. LAW AND ECON. 277, 335–37 (2004) (studying effects of behavioral remedies imposed in ten major monopolization cases). “Without a firm grasp of the economic forces that are driving changes in market structure, [courts] cannot be expected to design ‘relief’ that will result in increased competition, lower prices, and consumer benefits.” Id. at 335.
IV. The Order Ignores the Competitive and Consumer Benefits of Apple’s Relatively “Closed” Distribution Model
Anti-steering provisions can be procompetitive. At issue in Amex, for example, were various anti-steering provisions American Express had placed in its contracts with merchants. Ohio v. Am. Express Co., 138 S.Ct. 2274 (2018). The plaintiffs had alleged that the anti-steering provisions violated Section 1 of the Sherman Act. 138 S. Ct. at 2283. But the Court recognized that “there is nothing inherently anticompetitive about . . . antisteering provisions.” Id. at 2289. Such vertical provisions can, among other things, prevent merchants from free-riding, thereby increasing the availability of “‘tangible or intangible services or promotional efforts’ that enhance competition and consumer welfare.” Id. at 2290 (quoting Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 890-91 (2007)).
That general observation is entirely consistent with this Court’s limited affirmation of the District Court’s narrower, initial finding that certain of Apple’s anti-steering provisions violated the UCL to the extent that they might diminish consumer information. Yet the Order sweeps much more broadly than that finding implies.
Apple’s “closed” distribution model also allows the company to curate the App Store’s apps and payment options. By categorically and permanently enjoining Apple from excluding “certain categories of apps and developers from obtaining link access,” the Order inhibits Apple’s ability to exclude apps that pose data security threats, threaten to impose physical harm on users, or undermine child-safety filters.
Prohibiting Apple from placing any restrictions on apps that “pass[] on product details, user details or other information that refers to the user …” ignores the risks to privacy and personal data that such practices can entail. Likewise, prohibiting Apple from requiring “anything other than a neutral message apprising users that they are going to a third-party site” prevents Apple from excluding undesirable or harmful language on its platform. Apple’s App Store guidelines address these concerns by excluding apps that pose data security threats, threaten to impose physical harm on users, or undermine child-safety filters.[2]
In addition, Apple’s rules increase trust between users and previously unknown developers, because users do not have to fear their apps contain malware. They also reduce user fears about payment fraud. More broadly, Apple’s closed business model also enables it to maintain a high standard of performance on iOS devices by excluding apps and payment systems that might slow devices or crash frequently. Users may not know when device performance is affected by a given app or purchase mechanism, so an open system would mean the potential for apps that crash the entire device. Apple’s closed model ensures that unscrupulous developers cannot impose negative externalities on the entire ecosystem.
The Order also presents a serious risk of freeriding. Rivals could mimic Apple’s curation while undercutting it on price. This would not enhance competition on the merits, but eviscerate it, by eroding Apple’s incentives to develop, refine, and enforce such rules. To impose a zero price on linked-out transactions effectively assumes that the appropriate level of curation is itself zero. But that cannot be correct: Apple’s closed business model enables it to maintain a high standard of performance on iOS by excluding apps and payment systems that might impair it, ensuring that unscrupulous developers cannot impose negative externalities on the entire ecosystem. Yet the Order does not weigh the costs and benefits of such restrictions or question whether they are necessary to remedy a violation of California law.
CONCLUSION
The District Court’s Order undermines sound application of the federal antitrust laws and the procompetitive and pro-consumer policies protected by the antitrust laws and the UCL.
[1] Pursuant to Federal Rule of Appellate Procedure 29(a)(4)(E), amici further state that no party’s counsel authored this brief in whole or part; no party, counsel for a party, or any person other than amici curiae or their counsel made a monetary contribution toward the preparation and submission of this brief.
[2] Such concerns are illustrated by, for example, complaints by the Federal Trade Commission that the Plaintiff-Appellee, Epic Games, violated both the Children’s Online Privacy Protection Rule by, inter alia, knowingly collecting personal information about children without parental consent and “matchmaking children and teens with strangers while broadcasting players’ account names and imposing live on-by-default voice and text communications . . . .[and that] Children and teens have been bullied, threatened, and harassed within Fortnite, including sexually.” Separately, the FTC alleged that Epic had violated Section 5 of the Federal Trade Commission Act by unfair practices, charging consumers for items without first obtaining consent,” and that it has then “banned consumers from accessing previously paid-for content when they have disputed unauthorized charges with their credit card providers.” Although the FTC reports that it “has secured agreements requiring Epic Games, Inc., creator of the popular video game Fortnite, to pay a total of $520 million in relief,” the relevant settlement agreements, following established practice, do not incorporate allocutions of liability by Epic. ICLE here does not allege that Epic violated COPPA and the FTC Act as represented in the FTC complaints. Rather, we note the FTC’s allegations, based on substantial staff investigations, to illustrate the types and scale of consumer harm that are at risk if Apple cannot exclude bad actors for its app store and IAP. Press Release, Fed. Trade Comm’n, Fortnite Video Game Maker Epic Games to Pay More Than Half a Billion Dollars over FTC Allegations of Privacy Violations and Unwanted Charges (Dec. 19, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/12/fortnite-video-game-maker-epic-games-pay-more-half-billion-dollars-over-ftc-allegations (last accessed June 27, 2025).