Saturday, October 22, 2022

Google opposes Epic Games, Match Group's motion to amend antitrust complaint with per se claim; in another app store case, credit card issuers announce intent to amend Apple Pay complaint

Mobile app store antitrust cases tend to be complex and multi-faceted, making it anything but a huge coincidence that two such complaints are presently in the process of being amended. One of them involves Google Play, the other one Apple's App Store and specifically also the Apple Pay monopoly. If you're interested in only the Apple Pay case, just click here.

Google says Epic Games and Match Group shouldn't be allowed to amend their complaint with a per se claim relating to Google's "Project Hug"

Two weeks ago, Epic Games and Match Group moved to amend their Google Play Store antitrust complaints in the Northern District of California with a per se claim under Sherman Act Section 1 over Google's infamous Project Hug, under which Google paid hundreds of millions of dollars to more than two dozen game makers to ensure their continuing loyalty to the Google Play Store). Notably, one of those publishers is Activision Blizzard, which is particularly interesting now that Google is opposing Microsoft's acquisition of Activision Blizzard, which Microsoft says will enable it to run a mobile app store that will compete with Google Play.

Also, all plaintiffs in those related Google Play antitrust cases are seeking sanctions against Google for not preserving any relevant chats using Google's own chat apps. The 36 U.S. states suing Google, Epic, and the consumer plaintiffs brought that motion, and Match Group (Tinder) has since joined.

Google is now opposing Epic's and Match Group's motions to amend their complaints:

Public redacted version of Google's opposition to Epic's Match's motion to amend complaints

There are two kinds of arguments here. One is that Google says the amendment is "futile" because per se violations of Sherman Act Section 1 are a rare exception that can't apply here because the relevant relationships (such as between Google and Activision Blizzard King) are vertical, not horizontal. The other argument is that this amendment comes too late, which would prejudice Google as it would otherwise have done some things differently, such a spending more time (than just under an hour) deposing Activision Blizzard executives.

I don't buy the "vertical" argument here for a simple reason: what we must focus on is the anticompetitive object of the agreements in question. That one was to prevent other game makers from following Epic's example at the time (which was in 2018, long before the summer 2020 Fortnite hotfix) of trying to circumvent the Google Play Store. In my opinion, sideloading is a horizontal competitor to the Google Play Store, as are alternative app stores. It doesn't matter that those companies also provide a vertical input to Google Play.

I cannot take seriously Google's argument that there was anything procompetitive about secretly offering more than two dozen game makers such deals and that this was going to benefit consumers in the end. A general reduction of the app tax for large game makers would benefit consumers through reduced prices, but that's not what happened.

I'm considerably more sympathetic to the "prejudice" part of Google's motion, but the solution would be to allow them some additional discovery, not to deny the motions to amend the complaints. So if Google wants to sit down with Activision Blizzard and others and ask some more questions about Project Hug, I can understand that desire, even though it would cause delay and the court would have to amend the case schedule.

Affinity Credit Union v. Apple over Apple Pay and access to the iPhone's NFC chip

Two weeks ago, Apple moved to dismiss the Affinity Credit Union v. Apple class action over restrictions on access to the iPhone's NFC chip that prevent other companies from effectively competing with Apple Pay. A week later, the class action lawyers opposed Apple's motion to stay discovery and argued that Apple's motion to dismiss wouldn't succeed. Now they've announced their intent to amend their complaint within the statutory deadline (October 28), which is the scenario I mentioned at the end of my post on Apple's motion ("... or--potentially--a motion to amend their complaint with a concomitant motion to declare the motion to dismiss moot") as well as in my post on the opposition to the motion to stay discovery:

"While I want the credit card issuers to prevail (because Apple is indeed abusing its monopoly power), they have to do their homework and properly address Apple's motion to dismiss, potentially with an amended complaint."

The original complaint did a great job explaining market and technical realities involving the App Store, Apple Pay, and the NFC chip. But after reading Apple's motion, I felt that the plaintiffs could be clearer about their proposed market definition. Presumably that is where we're going to see the most significant improvements now. If they want to plead a single-brand market, they should use a key term like "aftermarket" more than just once and not just in parentheses. If they argue (in the alternative) that Apple has market power in the U.S. smartphone market (unlike some other Apple cases, this one is not about the global market), they should say so, too.

This is a good move. We may very well see a renewed motion to dismiss, of course.