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Judge demands months of documents to determine if Apple violated App Store injunction

Apple will likely spend months producing documents for a federal judge who must decide if the tech giant's new App Store policies are anticompetitive.

OAKLAND, Calif. (CN) — A federal judge must decide after a Friday hearing whether to hold Apple in contempt for violating her injunction to stop its practices restricting how app developers offer products in the App Store, which she says was anticompetitive.

As part of a monthlong series of hearings, the parties first came to court May 8 before U.S. District Court Judge Yvonne Gonzalez Rogers to analyze Epic Games’ claim that Apple violated her 2021 injunction on its policy preventing developers from adding external links and buttons in apps.

Epic Games wants Rogers to order the tech giant to remove all anti-steering provisions in its developer guidelines, saying that its requirements amount to “a de facto prohibition on external links."

Rogers on Friday said that she still needs many documents from Apple from the period when it explored and confirmed its new App Store policies, before she rules on the matter.

“I want all of Apple’s documents relative to its decision making process with respect to the issues in front of the court,” Rogers told Apple attorney Mark Perry. “All of them. If there is a concern, then be overly broad.”

Epic Games originally brought antitrust claims against Apple in 2020, claiming the tech giant engaged in anticompetitive practices by forcing companies to use its proprietary tools to develop and distribute apps on its App Store.

Not only do all apps move through the App Store, but Apple requires app developers to use its in-app purchase system to conduct transactions. Epic Games called Apple’s system a “walled garden,” locking iPhone users into a closed platform where they can only download apps from Apple.

In a May 10 hearing, she accused Apple executive and fellow Philip Schiller of not having data on Apple’s reasons for changing its business strategy following her injunction order.

“It sounds to me like the goal was to maintain the business model and the revenue that you had in the past,” she said.

In another hearing May 22, Epic said that Apple tries to dissuade developers from taking advantage of the policy change resulting from the injunction. Apple denied that characterization, saying that its policy does not impede users from going to external links to choose other ways to purchase outside the App Store. 

Rogers said that day that Apple's decision seem to be made to ensure that developers operate within a system with as little competitive “friction” as possible, to maximize its advantage for profit.

On the hearing’s final day Friday, attorney Gary Bornstein — representing Epic Games — called witness and software engineer Benjamin Simon, who submitted a declaration on behalf of his yoga fitness app Down Dog. He said his company charges customers less if they purchase directly from Down Dog, versus if they purchase on the App Store, since they get discounts on the company website. 

Asked why Down Dog does not pocket the difference and charge customers the same price as on the App Store, Simon said it makes more sense to offer customers lower prices for direct purchases. He said his company found that users who created an account were 28% less likely to subscribe to services if they didn’t see a link to the external website within the App Store.

This shows that Apple’s removal of the link to Down Dog’s website may have driven up the number of customers purchasing in the App Store, increasing Apple’s commission profits, he said.

Perry, for Apple, said on cross-examination that Down Dog could place an external link alerting customers to discount offers available on its website.

Apple said that Epic Games does not have data measuring how many users decline to make external purchases when confronted with alerts from the App Store, which Epic Games’ witnesses did not deny. The company also said that most people clicking on an external link should understand that they are getting a reminder that a purchase outside the App Store gets managed by the developer.

Perry said Friday that Apple will produce a large number of documents for the judge, which could take about three months to produce.

The judge said the parties will return to court Tuesday to discuss.

“The question is if you are trying to hide something — we obviously don’t want people to use wiggle room to hide things,” Rogers said. “Decisions were made, analysis was apparently done. All of it is concerning.”

In January, the Supreme Court declined to review the case following Epic Games’ failed appeal of Rogers’ 2021 order. Epic had argued the Ninth Circuit’s ruling to leave Rogers’ order in place went against Supreme Court precedent and had applied the wrong test, resulting in serious harm to iPhone users and developers.

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Categories / Business, Courts, Technology

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