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Apple Seeks to Pause Judge’s Order in Epic Games Case, Cites Irreparable Harm

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Apple has requested that the 9th U.S. Circuit Court of Appeals temporarily halt a federal court ruling that mandates major changes to how it operates its App Store, arguing the company will suffer “irreparable harm” if key provisions are enforced during its legal challenge.

Key Points:

  • Contempt Ruling: The motion follows U.S. District Judge Yvonne Gonzalez Rogers’ April 30 ruling, which found Apple in contempt of a 2021 antitrust injunction originally stemming from Epic Games’ lawsuit. She ordered Apple to end new App Store rules that allegedly circumvented the original order.

  • Apple’s Argument: Apple claims the ruling interferes with core business operations and that the company is being forced to give away access to its ecosystem without proper compensation. It specifically objected to:

    • A ban on Apple’s 27% commission for out-of-app purchases.

    • Restrictions on where developers may place external payment links.

  • Epic’s Response: Epic Games labeled Apple’s motion a “last ditch effort” to avoid competition and maintain what it called “junk fees.” The company said developers have already begun offering better deals and alternative payment methods since the injunction.

Context:

  • The Lawsuit: The legal battle began in 2020 when Epic challenged Apple’s dominance over iOS app distribution and in-app payment systems, claiming anti-competitive practices.

  • 2021 Injunction: A prior order from Judge Gonzalez Rogers required Apple to allow app developers to direct users to alternative payment platforms. Epic argued Apple had not complied in good faith.

  • Criminal Referral: In her recent ruling, the judge accused Apple of misleading the court and referred the company and an executive to federal prosecutors for a possible criminal contempt investigation.

What’s Next:

The appeals court must now decide whether to pause enforcement of the contempt ruling as Apple’s legal challenge proceeds. If denied, Apple would have to immediately comply with the injunction, potentially reshaping the App Store’s fee model and developer guidelines.

Google Appeals to Overturn App Store Verdict in Legal Battle with Epic

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Alphabet’s Google and Epic Games faced off in a U.S. appeals court on Monday, as Google sought to overturn a jury verdict and a judge’s order requiring it to modify its app store policies.

During the hearing before the 9th U.S. Circuit Court of Appeals in San Francisco, Google’s attorney argued that the trial judge had made legal errors that unfairly benefited Epic Games. The lawsuit, initially filed in 2020, accused Google of monopolizing app distribution and in-app payment systems on Android devices. A jury ruled in favor of Epic in 2023, leading U.S. District Judge James Donato to order Google to implement reforms, including allowing users to download competing app stores via the Play Store.

Google has appealed the decision, which is currently on hold. Jessica Ellsworth, representing Google, contended that the company faces strong competition from Apple’s App Store and that the trial judge had improperly limited Google’s ability to present that argument. However, Judge Danielle Forrest of the 9th Circuit challenged Google’s stance, emphasizing differences between the Android and Apple ecosystems.

Epic’s attorney, Gary Bornstein, urged the court to uphold the previous ruling, arguing that Google’s app store policies had harmed competition for years. He also dismissed Google’s claims that the required changes would compromise user privacy and security.

The case has attracted support for Epic from Microsoft, as well as the U.S. Justice Department and the Federal Trade Commission. A decision from the 9th Circuit is expected later this year, with the possibility of further appeal to the U.S. Supreme Court.

 

Legal Hurdles Loom Over U.S. Push for Google Chrome Sale

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Key Highlights

Antitrust Proposals and Challenges

The U.S. Department of Justice (DOJ) has proposed significant measures to curb Google’s market dominance, including:

  1. Forcing the sale of Google Chrome.
  2. Requiring Google to share search data and results with competitors.
  3. Potentially divesting Android software.

These steps follow an August ruling that found Google guilty of illegally monopolizing the search market. However, legal experts and industry analysts anticipate substantial hurdles due to the sweeping nature of the remedies and the likely legal battles that could stretch for years.

Legal Precedents and Potential Roadblocks

  • Historical Context: The DOJ previously sought to break up Microsoft over browser market monopolization in the early 2000s. That ruling was overturned on appeal, leading to a settlement instead of a breakup.
  • Proportionality Concerns: Critics argue the remedies may overreach and lack a direct causal link to the antitrust violations. Divesting Chrome, for instance, might not address Google’s search monopoly, as Chrome can run non-Google search engines.
  • Trump’s Stance: President-elect Trump’s administration may adopt a pro-business approach, potentially tempering aggressive antitrust actions to avoid weakening U.S. tech competitiveness, particularly against China.

Implications for Google

Chrome’s Strategic Value

Chrome, which commands about two-thirds of the global browser market, serves as a critical component of Google’s ad and search businesses by providing valuable user data. As a standalone entity, its value would significantly diminish.

Financial Impact

Google’s search ads, which rely on data gathered through Chrome, account for more than half of Alphabet’s quarterly revenue, which recently stood at $88.3 billion. A forced sale would disrupt this synergy and reduce overall profitability.

Criticism from Google

Google has labeled the DOJ’s proposals as unprecedented overreach, citing potential harms such as:

  • Reduced user privacy.
  • Financial challenges for smaller developers and businesses, like Mozilla, which benefits from featuring Google Search.

Wider Industry Concerns

Impact on Competitors and Partners

  • Search Licensing: Proposals for Google to license its search results at nominal costs could provide smaller competitors and news publishers with audience insights.
  • Apple Partnership: The DOJ seeks to ban Google from offering financial incentives, such as the billions paid annually to Apple to remain the default search engine. Analysts argue Apple may still choose Google as the default due to its widespread popularity.

Market Reactions

Alphabet’s stock dropped nearly 5% following the DOJ’s proposals, reflecting investor concerns about prolonged legal battles and regulatory uncertainty.

Expert Opinions

  • Kevin Walkush, Jensen Investment Management: Views the proposed Chrome divestiture as an “over-ask,” with little probability of materializing.
  • Gus Hurwitz, University of Pennsylvania Carey Law School: Argues that divesting Chrome does not directly address Google’s search monopoly, raising doubts about its legal validity.
  • Megan Gray, Former General Counsel at DuckDuckGo: Suggests Chrome’s value is intertwined with Google’s ad and search businesses, making its forced sale ineffective in resolving antitrust concerns.

Outlook and Challenges

Legal and Administrative Delays

The lengthy appeals process and potential changes in political priorities under the incoming administration could delay or dilute the enforcement of antitrust measures.

Impacts on the Tech Industry

While the proposed measures aim to reshape the digital landscape, their feasibility and effectiveness remain in question. Prolonged legal battles could create uncertainty for Google, its competitors, and the broader tech sector.