Judge unlikely to stay order limiting Apple’s sales commission

A federal judge signaled Tuesday she's unlikely to suspend an order requiring Apple to end rules that prohibited developers from directing users to avenues that allow apps to bypass sales commissions.

Apple moved to pause enforcement of the ruling until appeals are decided, but U.S. District Judge Yvonne Gonzalez Rogers said she's skeptical of granting the stay because resolving the appeals could take years.

In Epic Games' antitrust challenge against the world's most valuable company, Gonzalez Rogers found that Apple's rules restricting communications about alternative payment options that don't go through its in-app payment system violate California's competition law. She enjoined Apple from barring buttons or links in apps that inform consumers of payment methods in which developers are not subject to a toll of up to 30%.

Apple attorney Mark A. Perry, a partner at Gibson, Dunn & Crutcher LLP, argued Apple would be irreparably harmed without a stay. These injuries, he said, include interference with Apple's ability to collect commissions, prevent fraudulent transactions and avert risks to privacy and security.

"This will be the first time Apple has ever allowed live links in an app," he said. "It'll take months to figure out the economic, business and other issues."

"You didn't ask for a few months or six months," Gonzalez Rogers responded. "You asked for an across the board stay, which could take three, four, five years."

Perry replied that Apple would be ready to implement the changes required by the court's order in six months to a year. He added, however, "We're going to win the appeal."

Challenging Apple's arguments on how it would be injured if the injunction is not suspended, Epic attorney Gary A. Bornstein argued Apple can't have it both ways. He noted that one of its defenses during the trial was that it does not have a monopoly on app commerce because it already competes against transactions that occur outside of its in-app purchasing system.

"Having described that as competition, it can't now claim to be irreparably harmed by the fact that people might be more aware about taking advantage of those choices," the Cravath, Swaine & Moore LLP partner said.

Bornstein pushed back against Apple being allowed to "sort this out on its own." He said that it cannot be trusted because it only takes action in response to court, regulatory and legislative intervention.

Apple pointed to implementation of part of the judge's order to allow developers to use contact information obtained from users who sign up for their apps to inform them of alternate payment methods, but Bornstein responded that it's created a rule to limit the effect of the change.

While contacting users through email is now permitted, he said developers are not allowed to make features or services of their apps provisional on getting contact information.

"What that provision does is take away with one hand what Apple purports to be giving with the other," he said. "While purporting to comply with the injunction, they're playing games."

Among Apple's primary arguments was that Epic no longer has standing to demand the company end its anti-steering rules because it's no longer on the App Store.

"Epic, having been removed from the App Store with no live apps and no possibility of applying for reinstatement until this lawsuit is over, cannot benefit from the injunction going forward," Perry said.

Gonzalez Rogers questioned whether "someone can have standing throughout the entire case and then lose it after the fact."

The judge took the matter under submission.

After a 16-day trial in May, Gonzalez Rogers found that Apple didn't violate any federal or state antitrust laws but concluded that some of its rules governing payments inside of apps violate California's Unfair Competition Law. Epic Games v. Apple Inc., 20-cv-05640 (N.D. Cal., filed Aug. 13, 2020).