{"id":453,"date":"2024-08-08T14:54:00","date_gmt":"2024-08-08T19:54:00","guid":{"rendered":"https:\/\/zamzowfabian.com\/articles\/?p=453"},"modified":"2025-05-08T13:05:38","modified_gmt":"2025-05-08T18:05:38","slug":"anti-trust-epic-games-inc-v-apple-inc-part-i","status":"publish","type":"post","link":"https:\/\/zamzowfabian.com\/articles\/anti-trust-epic-games-inc-v-apple-inc-part-i\/","title":{"rendered":"Anti-trust: Epic Games, Inc. v Apple Inc. – Part I"},"content":{"rendered":"

Let\u2019s skim<\/em> back to July of 2020. It is alleged<\/em>\u2026<\/strong><\/p>\n

Apple maintains a fairly closed software environment, often referred to as a walled garden<\/em>. In exchange for an approximately 30% fee (to 15%) on money paid to developers, developers gain access to the App Store, security, software and other technology, and Apple’s payment system. Apple does not receive a fee from developers who offer their apps for free. Regardless, for example, of whether the developer is a large insurance company or a small game developer, both pay $99 annually for a developer account.<\/p>\n

On July 29, 2020, Apple Inc.\u2019s CEO, Tim Cook, was asked during a Congressional hearing whether Apple had \u201cever retaliated against or disadvantaged a developer who went public about their frustrations with the App Store.\u201d In response, Mr. Cook denied that Apple retaliates against or bullies its developers.<\/p>\n

Epic Games, Inc. developed and operates a popular game, Fortnite<\/em>. Within Fortnite<\/em>, Epic included an in-game currency called “V-Bucks,” which users can spend on in-game cosmetics and other perks.<\/p>\n

A few weeks after Mr. Cook\u2019s testimony, on August 13, 2020, Epic Games, Inc. filed a complaint<\/p>\n

    \n
  1. (4:20-cv-05640, ECF 1) against Apple alleging various violations of the Sherman Act<\/a>, the California Cartwright Act<\/a>, and the California Unfair Competition Law<\/a>.<\/li>\n
  2. Concurrently, Epic issued a “hotfix” to its then-popular game Fortnite, which offered 1,000 V-Bucks for either $9.99 paid through Apple\u2019s App Store or 20% less ($7.99) when paid through Epic\u2019s own payment system.<\/li>\n<\/ol>\n

    Epic\u2019s payment system bypassed Apple\u2019s 30% commission but otherwise continued to benefit from Apple\u2019s platform, technology, and services.<\/p>\n

    A few days later, on August 16, 2020, Apple terminated Epic\u2019s developer accounts and removed Fortnite<\/em> from the Apple App Store. On August 17, 2020\u2014the next day\u2014Epic filed its motion for an emergency injunction to restore Epic\u2019s developer accounts and Fortnite<\/em> (4:20-cv-05640, ECF 17).<\/p>\n

    Epic\u2019s TRO<\/strong>.
    \nTo support an emergency motion, Epic must demonstrate: (1) \u201cthat [it] is likely to suffer irreparable harm<\/strong> in the absence of preliminary relief\u201d; (2) \u201cthat [it] is likely to succeed on the merits<\/strong>\u201d; (3) \u201cthat the balance of equities<\/strong> tips in [its] favor\u201d; and (4) \u201cthat an injunction is in the public interest<\/strong>.\u201d     hiQ Labs, Inc. v. LinkedIn Corp<\/em><\/a>., 938 F.3d 985, 992 (9th Cir. 2019)\u00a0(quoting Winter v. Nat. Res. Def. Council, Inc.<\/em>, 555 U.S. 7, 20 (2008)).<\/p>\n

    As to irreparable harm<\/strong>, it should be noted that \u201c[M]onetary injury is not normally considered irreparable.\u201d Los Angeles Mem\u2019l Coliseum Comm\u2019n v. Nat\u2019l Football League, 634 F.2d 1197, 1202 (9th Cir. 1980). However, \u201c[t]he threat of being driven out of business is sufficient to establish irreparable harm.\u201d Am. Passage Media Corp. v. Cass Commc\u2019ns, Inc., 750 F.2d 1470, 1474 (9th Cir. 1985).<\/p>\n

    Epic argued essentially that it would partially lose customer goodwill and revenue concerning Fortnite, and further, without access to Apple\u2019s developer tools, Unreal Engine would wither on the macOS and iOS platforms.<\/p>\n

    Apple\u2019s Response.
    \n<\/strong>Apple countered this point by distinguishing between two types of preliminary injunctions: prohibitory<\/strong> injunctions, which preserve the status quo, and mandatory<\/strong> injunctions, which require affirmative action. Apple argued Epic sought a mandatory injunction rather than a prohibitory one. However, from a judicial perspective, the Court focused on reminding the parties to focus on the big picture, a temporary restraining order is \u201cnot a preliminary adjudication on the merits but rather a device for preserving the status quo and preventing the irreparable loss of rights before judgment.\u201d Sierra On-Line, Inc. v. Phoenix Software, Inc<\/em>., 739 F.2d 1415, 1422 (9th Cir. 1984).<\/p>\n

    This argument left Apple with its strongest point against a preliminary injunction: \u201cself-inflicted wounds are not irreparable injury.\u201d Al Otro Lado v. Wolf, 952 F.3d 999, 1008 (9th Cir. 2020) (quoting Second City Music, Inc. v. City of Chicago, 333 F.3d 846, 850 (7th Cir. 2003)); see also K.D. v. Oakley Union Elementary Sch. Dist., No. C 07-00920 MHP, 2008 WL 360460, at *11 (N.D. Cal. Feb. 8, 2008) (\u201charm is not irreparable if self-inflicted\u201d); California Pawnbrokers Ass\u2019n, Inc. v. Carter, No. 216CV02141, 2016 WL 6599819, at *10 (E.D. Cal. Nov. 8, 2016) (harm caused by plaintiffs\u2019 voluntary choices did not support irreparable injury); see also Clapper v. Amnesty Int\u2019l USA, 568 U.S. 398, 416 (2013) (plaintiffs \u201ccannot manufacture standing merely by inflicting harm on themselves\u201d).<\/p>\n

    Court\u2019s Response.<\/strong>
    \nThe Court agreed, adding that courts generally decline to find irreparable harm resulting from the express terms of a contract. See Salt Lake Tribune Publ\u2019g Co., LLC v. AT&T Corp., 320 F.3d 1081, 1106 (10th Cir. 2003) (finding no irreparable harm when the alleged harm \u201cresults from the express terms of [the] contract\u201d). The Court stated that \u201c[t]he sensible way to proceed is for [Epic to comply with the agreements and guidelines] and continue to operate while it builds a record.\u201d See Second City Music, 333 F.3d at 850 (\u201cOnly the injury inflicted by one\u2019s adversary counts for this purpose.\u201d). \u201cAny injury that [Epic Games] incurs by following a different course is of its own choosing.\u201d Id. Epic Games admitted that the technology existed to \u201cfix\u201d the problem easily by deactivating the \u201chotfix.\u201d<\/p>\n

    Thus, balancing the equities<\/strong>, the Court observed:<\/p>\n

    In focusing on the status quo, the Court notes that Epic Games strategically chose to breach its agreements with Apple, altering the status quo. No equities have been identified to suggest that the Court should impose a new status quo in favor of Epic Games. By contrast, with respect to Unreal Engine and the developer tools, the Court reached the opposite conclusion.<\/p>\n

    In summary, while disagreeing that Epic\u2019s Fortnite-related claims merited an injunction, the Court did find problematic that suspending Unreal Engine would cause injury to third-party developers, coupled with the likelihood (or fact) that the Xcode and Apple SDK Agreement constituted a fully integrated<\/em> agreement, necessitating further briefing to examine historical practices.<\/p>\n

    Consequently, the temporary injunction was denied regarding Fortnite<\/em> but granted concerning Epic’s affiliates. A further preliminary injunction hearing was scheduled for September 28, 2020.<\/p>\n

    As far as Michigan and the Federal W.D. of Michigan goes, applying these same facts, it is unlikely the outcome would be any different.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Let\u2019s skim back to July of 2020. It is alleged\u2026 Apple maintains a fairly closed software environment, often referred to as a walled garden. In exchange for an approximately 30% fee (to 15%) on money paid to developers, developers gain access to the App Store, security, software and other technology, and Apple’s payment system. Apple […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-453","post","type-post","status-publish","format-standard","hentry","category-larticles"],"_links":{"self":[{"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/posts\/453","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/comments?post=453"}],"version-history":[{"count":1,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/posts\/453\/revisions"}],"predecessor-version":[{"id":454,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/posts\/453\/revisions\/454"}],"wp:attachment":[{"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/media?parent=453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/categories?post=453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zamzowfabian.com\/articles\/wp-json\/wp\/v2\/tags?post=453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}