Wednesday, October 7, 2020

Congressional report on competition in digital markets will have political impact, but judiciary remains independent: Epic Games v. Apple and Epic Games v. Google

Toward the end of my first post today (on the Epic Games v. Apple bench trial having been scheduled to start on May 3, 2021) I linked to and quoted from a Congressional report, Investigation of Competition in Digital Markets. At about the same time, a Twitter user taking great interest in the App Store antitrust matters asked me whether I thought this report might affect the upcoming trial. I thought others might have the same question, so in addition to my Twitter reply I felt I should do a blog post as well.

As an antitrust commentator and app developer, I'm somewhere in the middle between the parties and understand both sides to some degree. At this point it's too early for me to take a firm position on the merits, though I will soon as the case is going to go to trial so very soon. The following thoughts are purely procedural or, where it applies, political in nature.

  • The separation of powers is one of the most fundamental principles of Western democracies. It's never a total separation: there are overlaps, some of which are important for checks-and-balances purposes.

    The report by the Democratic majority of the House of Representatives is, therefore, not legal precedent. While many Congresspeople have formal legal training, Congress is simply not a competent (in terms of "being in charge") forum of antitrust jurisdiction.

  • Epic will presumably quote from that report in future court filings, trying it to use it as persuasive authority--but persuasive authority is what it will be at best, and conservative judges (like two of the three judges who heard FTC v. Qualcomm this year) may even find it highly dissuasive.

  • Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California, who is presiding over the Epic Games v. Apple litigation and presumably close to finalizing her decision on Epic's motion for a preliminary injunction, is a Democrat (according to Wikipedia). But there's every indication she's a very independent thinker. She's going to form her own opinion on such questions as market definition.

  • The United States Senate--not the House of Representatives--confirms judicial nominations.

  • The Pepper and Cameron class actions against Apple over its App Store terms will be put before juries. There may be a dispute over the admissibility of that report.

  • A report like that doesn't amend the Sherman Act (which the House couldn't do without the Senate anyway).

  • I have no idea whether the Department of Justice (DoJ) is as much interested in the Apple App Store subject as it is in, for example, Google. If its Antitrust Division wanted to take action against Apple, it might like the idea of being supported by a House majority, but...this is a Republican administration.

  • The newly-formed Coalition for App Fairness is already trying to leverage the House Democrats' report:

  • The European Commission's Directorate-General for Competition (DG COMP) is investigating Spotify's EU antitrust complaint against Apple, and regulators in other jurisdictions are looking into the same topic. It definitely hurts Apple politically that a number of lawmakers in its own country attack its App Store practices--and as I mentioned earlier today, Apple "vehemently disagrees" with the report's findings. Then, just like that report doesn't amend U.S. competition law, it won't change the framework in other jurisdictions. Whatever DG COMP decides will be subject to review by the EU courts in Luxembourg, and decisions by other regulators are reviewable by courts in their countries.

  • The report is not just about Apple, but also about Google, Amazon, and Facebook, and says that while there are significant differences, the lawmakers behind the report feel that all four companies are simply too powerful. For a long time, those companies and other Silicon Valley tech companies, with only a few exceptions such as Oracle and maybe Tesla, have been ideologically aligned with the Democratic Party. They must be thoroughly disappointed, but it's not like they could solve their problems by supporting the Republican Party instead.

    The relationship between the Democratic Party and U.S. tech giants might improve after the election should Kamala Harris, a United States Senator from California who is known to be on friendly terms with Silicon Valley, be elected vice president.

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