Thursday, December 2, 2021

Apple will most likely get Epic's injunction stayed and reasonably disputes independence of Coalition for App Fairness, but should apply same standard to ACT | The App(le) Association's astroturfing

Briefing concerning Apple's appellate motion for a stay of the Epic Games v. Apple anti-anti-steering injunction is complete. Shortly before midnight local time on Tuesday, Apple filed with the United States Court of Appeals for the Ninth Circuit

  1. its reply to Epic's opposition brief and

  2. a response opposing the submission of an amicus curiae brief in support of Epic Games by the Epic-founded Coalition for App Fairness (CAF) and other CAF members.

Theoretically, the district court's injunction is scheduled to enter into force on December 9 (next week's Thursday), but I strongly doubt that it's going to happen then.

I still hope Epic will succeed with its appeal of the district court's flat rejection of Epic's federal antitrust claims against Apple, though the odds are against Epic now, primarily because of the high hurdles for private antitrust litigation in the United States (prior to the kind of reform that Capitol Hill lawmakers are working on) and secondarily because Epic missed out on certain opportunities (such as to convince the trial court that so-called Progressive Web Apps are not a viable alternative to native apps for a mix oftechnical, commercial, and legal considerations). But my personal hopes for loosening Apple's ironclad grip on the iOS app market are one thing, and the fundamental flaws of the California Unfair Competition law (UCL) injunction the district court awarded Epic as a consolation prize are another. Also, the end of opening up the iOS app market doesn't justify the means of trolling Apple with foreseeably aggressive contempt motions should the injunction get enforced (which in turn would place an unnecessary burden on the federal judiciary).

In procedural terms, the first question for the West Coast appeals court to decide on Apple's request for an administrative stay or whether to proceed directly to the adjudication of the motion, which would also be possible pretty quickly as Apple handily satisfies the criteria for a stay. I call an administrative stay a "micro-stay": it's a stay for the purpose of preserving the status quo while the court is weighing, for a few more days or weeks, the motion and deciding on whether to grant a stay for the entire duration of the appellate proceedings.

Apple has already requested an administrative stay for the event it petitions the Supreme Court. In its appellate motion, Apple wrote:

"In the event the full stay is denied, Apple requests that the administrative stay be extended for an additional 30 days to allow Apple to seek Supreme Court review while undertaking the substantial changes that would be required to comply with the injunction while attempting to mitigate—but not eliminate—the irreparable harms it will cause Apple, customers, and developers."

Apple would take this matter up with the top U.S. court if it had to, but again, I don't think it will be necessary. Now that briefing is complete, I find it not impossible but somewhat hard to imagine any outcome other than the stay Apple is seeking.

Here's Apple's reply brief, and it truly is a lot more compelling than Epic's opposition filing (this post continues below the document):

21-11-30 Apple Reply in Sup... by Florian Mueller

For the reasons I already discussed last month, it makes a whole lot of sense for the Ninth Circuit to grant Apple's motion for a stay.

In order for that to happen, Apple merely needs to convince the appeals court of there being pretty good grounds on which the UCL injunction may be overturned. As I explained before, it would be an unprecedented kind of anti-anti-steering injunction under U.S. law. Apple has other arguments that the district court wasn't receptive to but which are likely to bear weight with the appeals court, such as that Epic's defeat under the Sherman Act is also dispositive of its UCL claims. Even if one doesn't agree with Apple on this 100% (I, for one, am convinced that California UCL does give courts more wiggle room than federal antitrust law), the fact that Apple's business model was (regrettably, if you ask me) cleared under federal antitrust law at least makes it a pretty good possibility that the UCL injunction won't be affirmed.

There's also the notable absence of a market definition from the UCL part of the district court's judgment and question, and Apple continues to dispute Epic's standing, pointing to a decision by the Second Circuit that found merchants who don't accept Amex cards lack standing to challenge Amex's anti-steering provision. Epic is not on the App Store anymore; some of its subsidiaries are, but Epic elected not to make them parties to the case, as Apple accurately notes (and which may be one of those decisions that Epic regrets in retrospect--they made some brave and smart decisions, but also some that weren't great).

Apple argues that the amicus brief submitted by the Coalition for App Fairness (CAF) is just another filing by Epic itself. On this one, I agree with Apple, even though I very much agree with the CAF's #OpentheAppStore policy goals. However, courts are rather permissive when it comes to amicus briefs. And as I already did in the headline of this post, I can't help but notice Apple's dual standards in this regard.

Here's Apple's opposition to the CAF's amicus brief filing (this post continues below the document):

21-11-30 Apple Response to ... by Florian Mueller

Apple makes some strong points in that opposition filing when it argues that the "CAF is not independent of Epic." Of course it's not. It came into being shortly after Epic provoked the removal of Fortnite from the App Store (and from Google Play). Apple's filing recalls the following:

"Epic was then in control of CAF, 'charg[ing] [it] with generating continuous media and campaign tactic pressure on Apple,' even hiring and paying for 'a consultant to help to establish a reason for [CAF] to exist (either organic or manufactured).'"

The "organic or manufactured" quote from the evidentiary record is pretty damning, and that kind of attitude did nothing to persuade the district judge to enter a judgment in Epic's favor on the key claims. (Again, I say so even though I'd like the CAF to succeed.)

Apple accurately disputes that the CAF is, as its proposed amicus brief claims, an "independent nonprofit organization" (emphasis in Apple's--but not the CAF's--filing). Epic has too much influence over the CAF for that claim to be true, and Apple accuses the CAF of failing "to disclose to this Court even that Epic is a member, much less that Epic created and controls CAF." Even if the appeals court accepted the amicus brief nonetheless, Apple has already destroyed its credibility.

The CAF's amicus brief's deficiencies extend beyond a lack of forthrightness in that one regard. In order to obfuscate Epic's control (together with Spotify and Match Group) over the organization, the CAF was formally joined by four of its members: Tile, Match Group, Basecamp, and Knitrino. But as Apple notes, all four of them offer subscription apps, which the district court noted "are not part of this case." Epic's case against Apple is all about in-app purchasing, and while subscriptions are closely related, it's true that "subscription apps are subject to a different anti-steering provision that is unaffected by the injunction." Therefore, it's easy to see that those four CAF members simply decided to lend their names to the motion in order to divert attention away from the fact that the CAF is simply trying to submit an amicus brief on Epic's behalf.

Of course, those companies might make IAP offers at some point, but that would be a change of business model for them.

Apple says that "CAF's motion is nothing more than an attempt by Epic to file two responses rather than one to Apple's stay motion." That characterization goes a bit far. Still, it is true that this attempt by the CAF to influence the Ninth Circuit's decision on Apple's motion is probably going to fail. Even if the brief was accepted, it would hardly benefit Epic.

But Apple is now the proverbial pot calling the kettle black. Two months ago I criticized Apple for utilizing ACT | The App Association, which is more accurately described as ACT | The Apple Association. ACT issues statements on App Store issues all the time, and I guess we'll see amicus briefs from them in this case, too. While CAF did a poor job on that amicus brief (failing to disclose even that Epic is a member is an unforgivable mistake and diminishes its credibility), there can be no doubt that not only all of its members but also all of its financial backers are genuine app developers (like Epic and Spotify). That is more tha ACT can say: ACT simply renamed itself "The App Association" at some point, but there is no indication that many of its curent members actually make apps, as I'm not aware of ACT only accepting sign-ups from actual app makers (apparently there's no vetting, and I know of a U.S. professor who held a position with the Clinton White House and at some point signed up for free just to verify the hypothesis of ACT not applying any criteria to who joins, or charging a cent) or that they kicked out members who don't make apps when ACT repositioned itself as an app developer organization.

Apple should refrain from astroturfing, and I absolutely don't understand why some other major tech companies condone ACT's disingenuous pro-Apple advocacy on App Store issues (especially members who don't like Apple's App Store model). ACT supports Apple not only in the App Store context but also on standard-essential patents, and interestingly that chameleon of a lobbying front then claims it has members who make IoT products. So it is an App Association or an IoT Association? This is called "géométrie variable" in French.

Astroturfing is so serious an issue that Politico recently reported on it. ACT doesn't get mentioned there, but that's the kind of organization policy makers can't trust to represent whom they say they represent.

We'll see a decision from the Ninth Circuit in a few days. Maybe even before the weekend. An administrative stay is a no-brainer, but they might even consider the motion to be strong enough to grant a full stay right away. The U.S. judiciary will do itself a favor if it doesn't have to rule on motions for contempt-of-court sanctions that would potentially try in more or less absurd ways to stretch the envelope of that unprecedented anti-anti-steering injunction.

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