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Fortnite Parent Epic Games wants to limit the ‘dark cloud’ of iPhone Maker app control

Epic Games Inc. has urged a court to force Apple to allow more competition in mobile apps, calling the iPhone maker’s control of its App Store a “dark cloud.”

Epic Games Inc. has urged a federal appeals court to force Apple Inc. to allow more competition in the mobile app market, calling the iPhone maker’s rigid control of its App Store a “dark cloud.” Thursday’s filing escalates a battle that began in 2020 after Apple removed the game Fortnite from the App Store because Epic created a workaround to pay customers 30% fees on in-app purchases.

Epic told the San Francisco Ninth Circuit Court of Appeals that a trial judge was wrong to conclude in a September decision that the App Store’s rules and restrictions did not violate antitrust laws.

Apple is facing a series of antitrust lawsuits inside and outside the United States seeking to open up the App Store to competition. Apple is also dealing with hoarding enforcement investigations by federal and state agencies, and legislative bids to restrict its business practices.

An Apple spokesperson said the company is confident the rulings challenged by Epic on appeal will be upheld.

“In its ruling last year, the district court confirmed that Apple is not a monopoly in any relevant market and that its deals with app developers are legal under antitrust laws,” the spokesman said. “The court recognized the value of Apple’s growing innovation and commitment to privacy and security, which benefits both users and developers.”

Epic said the apps are a force for good because they enable so many different activities on a phone, from social networking to gaming to car sharing. But the apps operate “under a dark cloud: contractual and technological restrictions that Apple imposes to maintain its monopoly position and restrict competition,” Epic said in its filing.

The appeals court should overturn U.S. District Judge Yvonne Gonzalez Rogers’ decision in Oakland, California, to leave the App Store’s business model intact, Epic said.

“If not reversed, this decision would upset established principles of antitrust law and, as the district court itself acknowledged, undermine sound antitrust policy,” according to the filing.

Gonzalez Rogers found that Apple had engaged in anti-competitive behavior and ordered the Cupertino, California-based tech giant to allow app and game developers to direct consumers to non-web payment methods. All developers could for the first time include a button and web links in their apps to allow users to pay for transactions online, avoiding Apple’s fees.

Apple is appealing this part of the judge’s decision. Dueling appeals could take years to resolve and could end up in the US Supreme Court.

Epic, which took in more than $5 billion from Fortnite in 2020, has also filed lawsuits against Apple in the European Union, the United Kingdom, and Australia, and the game maker is suing Google over its Google Play store.

The lower court case is Epic Games Inc. v. Apple Inc., 20-cv-05640, US District Court, Northern District of California (San Francisco).

More stories like this are available at bloomberg.com

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