Apple picks fight with Epic’s ‘friend,’ as major App Store change looms

The Apple logo is displayed at an event at the company’s headquarters in Cupertino, California, U.S. September 10, 2019. REUTERS/Stephen Lam

A court-ordered injunction is set to bring major changes this Thursday to the Apple App Store: The tech giant will have to allow app developers to offer links within Apple-run apps that permit users to exit Apple’s system to pay for digital content.

Apple regards the looming injunction – imposed by U.S. District Yvonne Gonzalez Rogers of Oakland, California, in Epic Games Inc’s antitrust case against Apple – as a disaster that “will harm customers, developers and Apple itself.” The company failed last month to persuade Rogers to stay her order pending Apple’s appeal. So on Nov. 16, Apple asked the 9th U.S. Circuit Court of Appeals for a stay.

In Apple’s stay brief to the 9th Circuit, the company’s lawyers at Gibson, Dunn & Crutcher argued that the injunction threatens the security and privacy of App store users, who could be exposed to scams when they venture out of Apple’s carefully protected realm. That uncertainty, Apple said, will discourage users, which, in turn, will hurt app developers when customers decide not to make purchases.

Some of those developers disagreed with Apple’s doomsday scenario. In a proposed amicus brief filed at the 9th Circuit on Nov. 29, the Coalition for App Fairness and four individual app developers, including the online dating giant Match Group Inc, told the 9th Circuit that app developers are raring for Rogers’ injunction to take effect “as a vital cure for an extremely harmful and anticompetitive practice in a mammoth sector of the United States economy.” With the new rules in place, the proposed amici said, app developers will finally be able to help consumers free themselves from Apple’s in-house payment system, with its commission-bloated costs.

Here’s where Apple’s appeal gets interesting: Even as the company wrangled with Epic over who will eventually win the appeal over the injunction and whether Epic, whose leading game was booted from the App Store, even has standing to seek the injunction, Apple also picked a fight with Epic’s proposed amici.

Their brief, at least according to Apple, was not at all an objective portrayal of how the injunction will impact app developers. According to Apple, the Coalition for App Fairness is actually an Epic alter ego – a sort of Frankenstein monster, created by Epic for the very purpose of influencing this litigation.

CAF’s genesis was the subject of trial testimony before Rogers, Apple said in its brief opposing the amicus filing. The evidence at trial included material from a presentation to Epic board members on the company’s planned “Project Liberty” attack on Apple – including Epic’s proposal to create a group of like-minded developers that would lead the campaign against Apple’s App Store commissions.

“CAF is the product of Epic’s litigation strategy,” Apple said in the Nov. 30 filing. “CAF is not independent of Epic. Yet CAF chose not to disclose to this court even that Epic is a member, much less that Epic created and controls CAF.”

Rogers adopted Apple’s depiction of the coalition in her post-trial findings of fact. Epic had created the coalition in anticipation of a campaign against Apple, she said. It had also hired a consultant, Rogers said, to “establish a reason for [the coalition] to exist (either organic or manufactured).”

In the heat of a case, there’s always a risk for a party that kicks up opposition to an amicus brief. By opposing the brief, you might draw more attention than the filing would otherwise receive. But Apple and Gibson Dunn, which declined to provide a statement in response to my query on the amicus spat, clearly thought that bringing extra attention to the coalition’s origin would benefit their side.

If the coalition and its lawyers at Lowey Dannenberg were meanwhile hoping to gloss over questions about Epic’s involvement with the group, that plan went awry with the brief CAF filed in response to Apple’s opposition to the proposed amicus involvement. The Coalition for App Fairness and the other app developers first submitted a Dec. 2 brief that said Apple had misrepresented the facts: “It is simply untrue that CAF … is in any way controlled, funded, or influenced by Epic.”

Pretty definitive, right? But then Lowey Dannenberg deleted that brief and filed a revision. This one said only that Apple had mischaracterized the Coalition for App Fairness, which was not “singularly controlled by Epic.” The revision, in other words, seemed to walk back amici’s original assertion that Epic had absolutely nothing to do with the coalition it had founded.

Epic counsel Gary Bornstein of Cravath, Swaine & Moore referred me to an Epic spokesperson, who, in turn, referred me to the Coalition for App Fairness. CAF counsel Peter St. Phillip of Lowey Dannenberg said the coalition followed the Federal Rules of Appellate Procedure in its disclosures. Those rules do not require amici to disclose when a party in the case is a member of the organization seeking to appear as an amicus. Epic, he said, did not fund the 9th Circuit brief, nor did Epic’s counsel write it.

As for the walk-back in amici’s revised response to Apple, St. Phillip said the change was “to correct an error in the way we phrased” the first draft’s account of Epic’s role in the coalition. “The second brief is more accurate,” said St. Phillip, who described CAF as an independent group led by a board of directors with final decision-making authority.

I don’t know if any of this will matter at the 9th Circuit, which has just a few days to decide whether to stay the App Store injunction. But I’d say it’s not likely that the developers’ amicus brief will carry the day for Epic.

Opinions expressed here are those of the author. Reuters News, under the Trust Principles, is committed to integrity, independence and freedom from bias.

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