Monday, September 13, 2021

App developers must know that any alleged ambiguity in the Epic Games v. Apple injunction favors Apple, not them: there won't be IAP alternatives, not even in WebView

This is a follow-up to my previous post on this topic: "No, the Epic v. Apple injunction absolutely positively DOESN'T allow developers to incorporate 'buttons' for alternative IN-APP payment mechanisms".

The original version of that post said Daring Fireball's John Gruber was "right for the wrong reasons." He did state reasons on Twitter that didn't convince me because it sounded like Apple's app review practices were going to inform the interpretation of the Epic v. Apple injunction. But John also referred at some point to Apple telling him that the ruling is unambiguous, such as in this tweet, though I disagree with the pages referenced there as that's the Sherman Act--not California UCL--analysis.

It's regrettable (to put it mildly) that The Verge's Nilay Patel just keeps digging himself an ever bigger hole instead of acting responsibly and admitting his error. The man is actually a lawyer by training (and journalist by vocation), so it shouldn't be hard for him to figure out that his analysis was fundamentally flawed because he focused myopically on the wording of the injunction while ignoring the underlying Rule 52 order. And a few hours ago the intellectual bankruptcy of his argument became even more obvious in the following tweet:

So let me set the record straight on this:

Nilay Patel himself says his "whole argument" is that the wording is allegedly "ambiguous." I don't even agree because the ruling is clear enough if one reads the relevant parts of the 185-page Rule 52 order. But if we assume--only arguendo--that Nilay Patel is right and it is ambiguous, it means he loses the argument anyway.

Under controlling Ninth Circuit law, Apple will only be held in contempt of court if it "(1) [] violate[s] the court order, (2) beyond substantial compliance, (3) not based on a good faith and reasonable interpretation of the order, (4) by clear and convincing evidence." In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993)

By coincidence, that case was also an antitrust case as its caption shows. And the same appeals court--the one with which Epic filed its appeal yesterday--clarified that the standard involves "disobedience to a specific and definite court order." (id.)

The bottom line is that any alleged ambiguity would favor Apple, not developers.

I am a developer, and a complainant against Apple in another App Store context. I wish I had better news for the wider developer community. But someone has to counter all that disinformation out there. It hurts me to see people fantasizing and theorizing about out-of-this-world crap that's simply not going to help anyone.

The question is not whether a developer's interpretation of the injunction is somewhat reasonable. It's whether Apple's interpretation is so unreasonable as to constitute disobedience to a specific and definite court order.

That threshold is very high.

Apple may have political reasons (in light of legislative and regulatory proceedings in various jurisdictions) to make concessions to developers. But in legal terms, Apple is free to interpret the injunction in its favor, provided that its interpretation is reasonable.

For the reasons I explained in my previous post, it's not just one reasonable interpretation, but the only one, to understand that the court explicitly did not enable alternative IAP mechanisms. It's all just about informing users of alternative platforms, such as that the same in-game item or currency might be available at a lower cost on, say, a Samsung phone via the Galaxy Store.

WebView (i.e., opening web pages within an app) is not going to be the answer. Any purchases made in a WebView would reasonably be considered in-app purchases and, therefore, wouldn't have to be condoned by Apple under a reasonable (in my view, even the only reasonable) interpretation of the order.

As I cover competition and IP cases across various jurisdictions, I'd just like to point out in closing that the Ninth Circuit standard for civil contempt is consistent with what I see everywhere else: it's par for the course that an injunction is interpreted in defendant's favor and that the evidentiary standard for a violation is also exacting. It's that ancient concept of "in dubio pro reo."

Apple won't even have to approve linking out to websites that merely sell digital items consumed in an iOS app. The clear purpose of the injunction is to have some competitive constraint on Apple by making customers aware of lower prices on other platforms. That platform may be the World Wide Web, but then whatever you purchase there must also be consumable there. For example, a game must be playable as a browser game. If all you get in the browser is the in-game shop, but not the actual game, it won't qualify under a--in my view, the only or at least the most--reasonable interpretation of the order.

In other contexts than anti-steering, the order mentions Apple's argument that it allows "cross-wallet" and "cross-purchases." Cross-wallet means that Fortnite gamers could buy V-Bucks (the virtual in-game currency) on another platform, such as a Windows PC, and then use those virtual bucks on iOS. Sony and Nintendo don't allow that--they insist that whatever you consume on their platforms has been purchased on their platforms (earning them their commission). Apple does. Cross-purchases are the same for digital items such as a powerful weapon. Here, too, Apple is more flexible than some others.

What if Apple now disallowed cross-wallet and cross-purchases?

It would minimize the practical impact of the injunction because game makers could point users to other platforms on which they may find the same offerings at a lower cost, but those purchases couldn't be consumed on iOS.

It wouldn't be a violation of the order (considering the exacting standard I outlined above).

It would be politically problematic, and Apple couldn't do so with respect to "reader" apps under its recent Japanese settlement that has worldwide effect but doesn't cover games.

In legal terms, any modification of Apple's IAP-related terms that disadvantages developers over the status quo would potentially serve as an indication of Apple's market power and the absence of sufficient competitive constraints, meaning that future antitrust decisions could--but, to be clear, won't necessarily--have different outcomes under the Sherman Act, even in the same district.

Apple will now have to decide whether to appeal an injunction and seek a stay of its enforcement. That would be the most obvious thing to do. What sometimes happens is that parties don't try to get a jury verdict overturned because it largely favors them, and in order to do away with the remainder they'd have to argue that the jury made a decision that no reasonable jury could have made (while defending their victory against the other party's claims that the jury was unreasonable). Here, we're talking about a bench trial, so the standard is different, making it easier to "have your cake and eat it."

The injunction won't take effect for about three months, and I guess Apple will appeal it and seek a stay, which may very well be granted.

Assuming that--sooner or later--the current injunction does become enforceable, this post and the previous one hopefully helped many developers understand that most of them won't really benefit to any non-negligible extent. Should Apple play hardball and disallow cross-wallet/cross-purchase, developers may even be worse off than before.

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