The walled garden is the 'beating heart' of Epic's case against Apple

It's also, according to Apple, what keeps out "fraudsters and pornsters and hackers and malware and spyware and foreign governments."

From "Apple, Fortnite Battle Moves Before Appeals Court Over App Store Monopoly Claims" in Tuesday's Wall Street Journal:

A two-year legal battle between Apple Inc. AAPL -0.95%decrease; red down pointing triangle and “Fortnite” maker Epic Games Inc. over how apps are distributed on the iPhone took its next steps before the Ninth U.S. Circuit Court of Appeals on Monday...

Tom Goldstein, a partner at Goldstein & Russell P.C. arguing on Epic’s behalf, said that the “beating heart” of the case is whether Apple’s walled garden approach to its iPhone App Store hurts competition.

“The only thing that is kept out by Apple’s walled garden is competitors,” he said at the hearing. “I haven’t been able to conceive of a theory of the case in which Apple should legitimately be immune from antitrust scrutiny,” he said.

One of the three judges, Milan Smith Jr., asked Apple’s lawyer about the differences between Apple’s more closed approach with its mobile operating system and the more open ecosystem of the Mac operating system...

Apple’s walled garden approach makes the iPhone more secure than the Mac, PC and Android platforms, [Apple representative Mark] Perry argued, and gives Apple a competitive differentiation.

“What’s kept out by walled gardens is fraudsters and pornsters and hackers and malware and spyware and foreign governments who wish to hijack the phone and GPS and microphone feature of the device,” he said.

My take: Law 360's Dorothy Atkins, better equipped than most at reading the body language of appellate courts, went with this headline:

9th Circ. Judge Open To Apple's Take On Epic Antitrust Trial ($)

11 Comments

  1. Craig Doran said:
    I’ve always seen this question as “Should anyone have the right to set up a lemonade stand inside the Magic Kingdom?”

    19
    November 15, 2022
    • Fred Stein said:
      Yes, I’ve made this case before. Walled gardens are the norm, be it sports arenas, symphony halls, basically all stores and restaurants (except food courts), shopping malls, airports, golf courses, airplanes, and more.

      Unlike the above venues, iPhone and Android, offer a free tier for Apps that provide free services or that monetize outside the smartphone OS. For example all travel Apps, nearly all fintech Apps, and more.

      9
      November 15, 2022
  2. David Emery said:
    Of course, it takes 3 to rule in an Appeals court, and then Apple could either go for en-banc (getting the entire court to hear and rule) or take the case to the Supreme Court.

    What’s not clear to me is what legal issue the Appeals Court is actually looking at. Both sides have thrown lots of stuff against the wall to see if anything sticks.

    5
    November 15, 2022
  3. Daniel Epstein said:
    There is no “beating heart” in Epic’s claims against Apple. This is a blatant attempt to benefit from other’s work without paying. Apple’s ecosystem doesn’t exist in a vacuum. There are plenty examples of why Apple’s wall garden makes sense for its customers. If Epic had suffered from specific abuse from Apple compared to other developers then maybe they would have had a point. The original judge’s decision shows you how weak the underlying logic Epic used was. I haven’t heard any new information to change that. If the judges want to write new law they are overstepping themselves.

    6
    November 15, 2022
  4. I just keep imagining the judges who own one looking at their iPhones thinking, “do I really want to rule in favor of fraudsters and pornsters and hackers and malware and spyware and foreign governments?”

    14
    November 15, 2022
  5. David Emery said:
    IANAL, but it seems to me the core of the issue is whether the Appeals Court will overturn the Trial Court ruling on ‘the relevant market’. If Appeals rules that a single vendor’s “ecosystem” can be ruled a market for antitrust purposes, that would have significant impact beyond just Apple (or Google.) And if that’s the ruling, I’m sure Apple would appeal to Supreme Court.

    3
    November 15, 2022
  6. Michael Goldfeder said:
    The Ninth Circuit Court of Appeals is tasked with finding legal errors in the trial judge’s decision. Given that this was a bench trial as opposed to a jury trial limits the relief that Epic can be expecting. They fell short in their burden of proof of at trial, and that ruling by the finder of fact (trial judge) is a huge obstacle to overcome given the abuse of discretion standard that is in play in this appeal.

    Despite what all of the Apple haters are putting forth in their articles, this is nothing more than oral argument before the three judge panel. It’s not a brand new trial. Just part of the appellate process that IMO is being overblown by claiming it’s a second trial of sorts. Absolute legal gibberish.

    6
    November 15, 2022
  7. Fred Stein said:
    Most revealing is the whole quote from Epic’s lawyer; “The only thing that is kept out by Apple’s walled garden is competitors,” he said at the hearing. “I haven’t been able to conceive of a theory of the case in which Apple should legitimately be immune from antitrust scrutiny,”

    He’s trying this case in the media court, a kangaroo court. His first assertion is false, the only things kept out are predators, child predators, etc. or squatters like Epic who seek squatter’s rights (sell rent-free) in Apple’s gorgeous, well maintained virtual real estate.

    3
    November 15, 2022
  8. Tom Farris said:
    @ Fred Perhaps I’m misunderstanding…Don’t you mean “the whole quote from Epic’s Lawyer…”?

    1
    November 15, 2022

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