Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 1 of 20
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`THEODORE J. BOUTROUS JR., SBN 132099
`tboutrous@gibsondunn.com
`RICHARD J. DOREN, SBN 124666
`rdoren@gibsondunn.com
`DANIEL G. SWANSON, SBN 116556
`dswanson@gibsondunn.com
`JAY P. SRINIVASAN, SBN 181471
`jsrinivasan@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`333 South Grand Avenue
`Los Angeles, CA 90071
`Telephone: 213.229.7000
`Facsimile: 213.229.7520
`
`VERONICA S. MOYÉ (Texas Bar No.
`24000092; pro hac vice)
` vmoye@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`2100 McKinney Avenue, Suite 1100
`Dallas, TX 75201
`Telephone: 214.698.3100
`Facsimile: 214.571.2900
`
` MARK A. PERRY, SBN 212532
`mperry@gibsondunn.com
`CYNTHIA E. RICHMAN (D.C. Bar No.
`492089; pro hac vice)
`crichman@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`1050 Connecticut Avenue, N.W.
`Washington, DC 20036
`Telephone: 202.955.8500
`Facsimile: 202.467.0539
`
`ETHAN DETTMER, SBN 196046
`edettmer@gibsondunn.com
`RACHEL S. BRASS, SBN 219301
` rbrass@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`555 Mission Street
`San Francisco, CA 94105
`Telephone: 415.393.8200
`Facsimile: 415.393.8306
`
`Attorneys for Defendant APPLE INC.
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`UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`OAKLAND DIVISION
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`
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`Case No. 4:20-cv-05640-YGR-TSH
`
`APPLE INC.’S REPLY IN SUPPORT OF
`MOTION FOR STAY OF INJUNCTION
`PENDING APPEAL
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`EPIC GAMES, INC.,
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`v.
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`APPLE INC.,
`
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`Plaintiff, Counter-
`defendant
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`Defendant,
`Counterclaimant.
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`Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 2 of 20
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`TABLE OF CONTENTS
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`Page
`TABLE OF AUTHORITIES ................................................................................................................ ii
`INTRODUCTION ................................................................................................................................ 1
`DISCUSSION ....................................................................................................................................... 2
`A.
`Apple Would Be Irreparably Harmed In The Absence Of A Stay ............................... 2
`B.
`Apple Has A Substantial Case For Relief On The Merits ............................................ 6
`1.
`There Is No Legal Or Factual Basis For UCL Liability.................................... 6
`2.
`Epic Lacks Standing .......................................................................................... 8
`3.
`The Equitable Relief Order Is Overbroad ....................................................... 11
`A Stay Will Not Injure Epic ........................................................................................ 13
`C.
`A Stay Is In The Public Interest .................................................................................. 14
`D.
`In The Alternative, The Court Should Temporarily Stay The Injunction ................... 15
`E.
`CONCLUSION ................................................................................................................................... 15
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`
`TABLE OF AUTHORITIES
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`Page(s)
`
`CASES
`
`Bresgal v. Brock,
`843 F.2d 1163 (9th Cir. 1987) .........................................................................................................13
`
`Cal. Dental v. FTC,
`224 F.3d 942 (9th Cir. 2000) .............................................................................................................7
`
`Campbell v. National Passenger Rail Road Corp.,
`No. 05-CV-5434, 2009 WL 4546673 (N.D. Cal. Nov. 30, 2009)...................................................15
`
`Conservation Cong. v. U.S. Forest Serv.,
`No. CIV. S-11-2605 LKK, 2012 WL 3150307 (E.D. Cal. Aug. 1, 2012) ......................................15
`
`Coto Settlement v. Eisenberg,
`593 F.3d 1031 (9th Cir. 2012) ...........................................................................................................9
`
`Deckers Outdoor Corp. v. Ozwear Connection Pty Ltd.,
`No. 14-CV-2307, 2014 WL 4679001 (C.D. Cal. Sept. 18, 2014) ..................................................13
`
`Dickson, Carlson & Campillo v. Pole,
`83 Cal. App. 4th 436 (2000) ...........................................................................................................12
`
`Dole Food Co. v. Patrickson,
`538 U.S. 468 (2003) ..........................................................................................................................9
`
`Elliot v. Williams,
`No. 2:08-CV-00829-GMN, 2011 WL 5080169 (D. Nev. Oct. 25, 2011) .......................................15
`
`Facebook, Inc. v. Brandtotal, Ltd.,
`No. 20-CV-7182, 2021 WL 2354751 (N.D. Cal. June 9, 2021) .......................................................6
`
`Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd.,
`493 U.S. 331 (1990) ..........................................................................................................................9
`
`Hangarter v. Provident Life & Accident Ins. Co.,
`373 F.3d 998 (9th Cir. 2004) ...........................................................................................................11
`
`Hawkins v. Risley,
`984 F.2d 321 (9th Cir. 1993) ...........................................................................................................10
`
`Hunt v. Check Recovery Sys., Inc.,
`No. 05-CV-4993, 2008 WL 2468473 (N.D. Cal. June 17, 2008) ...................................................14
`
`Lair v. Bullock,
`697 F.3d 1200 (9th Cir. 2012) .....................................................................................................6, 13
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`Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 4 of 20
`TABLE OF AUTHORITIES
`(continued)
`
`
`
`
`Lozano v. AT&T Wireless Servs., Inc.,
`504 F.3d 718 (9th Cir. 2007) .............................................................................................................8
`
`Page(s)
`
`Lujan v. Defs. of Wildlife,
`504 U.S. 555 (1992) ........................................................................................................................11
`
`Motorola Mobility LLC v. AU Optronics Corp.,
`775 F.3d 816 (7th Cir. 2015) .............................................................................................................9
`
`Nken v. Holder,
`556 U.S. 418 (2009) ........................................................................................................................13
`
`O’Donnell v. Harris County,
`260 F. Supp. 3d 810 (S.D. Tex. 2017) ........................................................................................4, 10
`
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) ..........................................................................................................2, 5, 6, 8
`
`ProMedica Health Sys., Inc. v. FTC,
`749 F.3d 559 (6th Cir. 2014) .............................................................................................................7
`
`Thurman Indus., Inc. v. Pay ‘N Pak Stores, Inc.,
`875 F.2d 1369 (9th Cir. 1989) ...........................................................................................................6
`
`Ticconi v. Blue Shield of Cal. Life & Health Ins. Co.,
`160 Cal. App. 4th 528 (2008) .........................................................................................................12
`
`Warth v. Seldin,
`422 U.S. 490 (1975) ..........................................................................................................................9
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`Wisc. Educ. Ass’n Council v. Walker,
`No. 11-CV-428-WMC, 2012 WL 13069917 (W.D. Wis. Apr. 27, 2012) ........................................4
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`Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 5 of 20
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`INTRODUCTION
`Apple has already complied with one-half of the Court’s injunction by striking the Guidelines
`restricting targeted out-of-app communications. Apple has moved to stay the other half of the
`injunction, which precludes Apple from enforcing the Guidelines’ prohibition on in-app “buttons,
`external links, or other calls to action,” because immediate implementation of that aspect of the
`injunction would upset the integrity of the iOS ecosystem. Epic has endorsed a broad interpretation of
`the injunction (so broad, indeed, that its own hotfix would be permitted under the injunction), yet it
`objects to Apple’s request for a stay during the resolution of both parties’ appeals. Epic’s arguments
`against staying the injunction, however, are unavailing.
`First, Apple would be irreparably harmed by immediate implementation of the injunction with
`respect to in-app messaging and, especially, mechanisms. Restrictions on linking out are inextricably
`tied to Apple’s requirement that developers use IAP for purchases of digital content—a requirement
`this Court considered in detail and upheld against Epic’s challenge. Eliminating these restrictions
`entirely would undermine the IAP requirement, force Apple to make its intellectual property available
`without compensation, and lessen the security and privacy afforded consumers. Epic’s half-hearted
`attempt to dispute that Apple would suffer these harms is contradicted by the evidentiary record.
`Second, the injunction is not likely to survive appellate review. Epic Games, Inc.—the sole
`plaintiff in this litigation—lacks standing to secure or enforce an injunction because its developer
`program account has been terminated and it has no apps on the App Store. Epic’s termination was a
`direct result of its own misconduct in triggering the hotfix; Epic’s CEO and corporate representative
`“acknowledge[d]” at trial “that Apple has the right to terminate Epic for any reason or no reason,” and
`this Court confirmed that right in its declaratory judgment. Epic also failed to prove that the anti-
`steering provisions harm competition in any relevant market or that they constitute either actual or
`incipient violations of the antitrust laws. Moreover, Epic failed to prove any harm to itself—or, for
`that matter, to any of its subsidiaries or their licensees—from the anti-steering provisions and thus
`would not be harmed by a stay pending appeal.
`Apple respectfully requests that the Court stay the injunction pending final resolution of the
`appellate proceedings.
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`DISCUSSION
`The injunction prohibits Apple from enforcing two provisions of the App Store Review
`Guidelines: A sentence in Guideline 3.1.1 regarding in-app mechanisms and messaging, and a sentence
`in Guideline 3.1.3 regarding targeted out-of-app communications. Apple has already complied with
`the second part of the injunction by deleting the provision and allowing developers to communicate
`with consumers outside the app. Reply Decl. of Mark A. Perry Ex. A. By this motion, Apple seeks a
`stay of the first part of the injunction pending appeal, to allow it to develop and implement a global
`solution to increased in-app communications without upsetting the integrity of the iOS ecosystem.
`Because all of the traditional factors are satisfied, the requested stay should be granted.
`
`A.
`
`Apple Would Be Irreparably Harmed In The Absence Of A Stay
`As Epic does not dispute, the portion of the injunction striking the Guidelines’ prohibition on
`“buttons, external links, or other calls to action” has created confusion among developers regarding
`what Apple can and cannot do to run its business and protect consumers. See Mot. at 1. The injunction
`prohibits Apple from enforcing this provision, but does not address what Apple may do in its stead.
`Epic contends the injunction only “removes an artificial barrier that Apple had placed on consumers’
`ability to become aware of and choose [an alternative to IAP],” yet under Epic’s construction, Apple
`would be required to permit developers to include links to external sites and even to install competing
`payment mechanisms—just as Epic did with the hotfix. Opp’n at 7–8. Apple would be harmed by
`precipitous implementation of the injunction, however construed, and Epic’s broad interpretation in
`particular would visit irreparable harm on Apple and its users.
`Epic does not dispute that Apple is entitled to collect a commission from developers for use of
`its platform, or that “IAP is the method” Apple has chosen to “collect[] its licensing fee from developers
`for the use of Apple’s intellectual property” and that allowing other payment mechanisms would make
`it “more difficult for Apple to collect that commission.” Op. at 150. Requiring Apple to allow other
`payment solutions in apps—or allowing links or other mechanisms directing consumers to alternatives
`outside the app—would undermine the “promise of a frictionless transaction,” which in turn “endangers
`the viability of the entire [platform’s] network.” Ohio v. Am. Express Co., 138 S. Ct. 2274, 2289
`(2018). In-app messaging regarding payment alternatives raise many of the same concerns, particularly
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`if Apple cannot constrain their placement, format, or content. Yet, if Apple imposes such constraints,
`it will face complaints from developers and possibly a contempt action from Epic. In light of this
`uncertainty, Apple faces harm regardless of how the injunction is construed and implemented.
`Kosmynka Decl. ¶ 10.
`The harm is not, as Epic contends, that “IAP will have to compete on price and/or quality.”
`Opp’n at 8. This is the same argument Epic repeatedly made at trial, Dkt. 777-3 (Proposed Conclusions
`of Law) ¶ 286—which the Court rejected, see Op. at 150. IAP is not a separate product, id. at 155,
`and, as Epic appears to acknowledge, Apple already competes with other platforms for purchases of
`digital content. Opp’n at 11; see also Op. at 71–72. Indeed, Apple itself has facilitated this competition
`by adopting its Multiplatform Rule and (unlike some consoles) allowing cross-wallet play. See Op.
`13, 84, 123 n.571. The actual issue, as the Court found, is that “[t]he requirement of usage of IAP
`accomplishes [Apple’s goal of collecting compensation for licensing its intellectual property] in the
`easiest and most direct manner.” Op. at 150. Thus, the injunction threatens the integrity of Apple’s
`monetization model itself, which the Court upheld. See id.
`Epic attempts to miscast Apple’s position as equating “consumers’ increased awareness” with
`“irreparable harm.” Opp’n at 11; see also id. at 1, 17 (suggesting the injunction will “simply provide[]
`consumers increased information” by enabling developers “to offer information and a choice”). But
`Apple does not seek to stay the injunction insofar as it allows developers to “communicat[e] with
`customers through points of contact obtained voluntarily from customers through account registration
`within the app.” Dkt. 813. To the contrary, Apple has already stricken the Guideline provision
`restricting targeted out-of-app communications. Perry Reply Decl. Ex. A. This is directly responsive
`to the Court’s concern with the information available to consumers. See Op. at 166. The other
`Guideline provision at issue, which speaks to in-app “buttons, [external links,] or other calls to action,”
`Mot. at 7, raises significantly more difficult problems as Apple attempts to ensure that “other parts of
`the Apple ecosystem . . . will not be significantly impacted.” Op. at 166. “Links” and “buttons,” in
`particular, go far beyond information to include payment mechanisms. Epic’s opposition conflates
`those two concepts, even though the Court’s opinion consistently speaks of information rather than
`mechanisms. See, e.g., Op. at 2–3, 50–51, 93, 117–19, 163–67, 179.
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`Epic also ignores the record in arguing that the injunction will not impair users’ security or
`privacy. See Opp’n at 9. The Court found that “if Apple could no longer require developers to use
`IAP for digital transactions, Apple’s competitive advantage on security issues, in the broad sense,
`would be undermined.” Op. at 150 (citation omitted); see also, e.g., id. at 65 (“Apple’s IAP, as used
`here, is a secured system which tracks and verifies digital purchases, then determines and collects the
`appropriate commission on those transactions.”). Epic unwittingly proves the point by touting the
`“innovat[ions]” other developers have already begun to announce, Opp’n at 24, while ignoring the
`serious risks that those alternatives entail. See Mot. at 7–8 & Perry Decl. Ex. H. Reportedly, multiple
`developers are creating systems with unknown protections, controls, and privacy measures (if any).
`Perry Reply Decl. Ex. F.
`Even though Epic offers only digital products and services (such as V-Bucks), it notes that
`Apple already permits alternative payment options for apps that deliver physical goods and services.
`Opp’n at 10. But the security and privacy risks associated with external links and alternative payment
`mechanisms exist in connection with apps that deliver physical goods and services. The difference is
`that for digital goods, Apple has the ability to facilitate a secure transaction, because unlike physical
`goods delivered to a user’s door, Apple can ensure the delivery of digital goods. Kosmynka Decl.
`¶¶ 13–15; see also Perry Reply Decl. Ex. C at 958:6–960:9 (Fisher). The injunction thus could
`transform one of the most secure kinds of transactions on iOS into one of the least secure. Epic does
`not contest this, nor does it rebut Mr. Kosmynka’s declaration; instead, Epic asks the Court to disregard
`that evidence. But Apple, as the stay applicant, is entitled to prove the harm that it would suffer from
`the injunction—particularly because Epic’s proposed injunction did not even address Apple’s so-called
`anti-steering provisions. See Dkt. 276-1. Apple therefore had no reason to submit the substance of
`Mr. Kosmynka’s declaration at trial, and Epic’s suggestion to the contrary is unfounded.1
`Epic also calls Apple’s security justification “pretextual.” Opp’n at 6. But while the Court said
`
`
` 1 In the sole case Epic cites, the defendants pursued a stay based on a waived argument that the
`plaintiff had failed to exhaust state-law remedies. O’Donnell v. Harris County, 260 F. Supp. 3d
`810, 815 (S.D. Tex. 2017). That says nothing about a party’s ability to identify irreparable harm
`through a declaration in seeking a motion to stay, particularly where, as here, the relevant record
`“was less fulsome.” Op. at 163; see also, e.g., Wisc. Educ. Ass’n Council v. Walker, No. 11-CV-
`428-WMC, 2012 WL 13069917, at *4 (W.D. Wis. Apr. 27, 2012) (crediting declarations submitted
`with motion to stay injunction pending appeal).
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`an increase of information in general might not impair Apple’s security, it made no findings about the
`specific security and privacy threats imposed by unrestricted linking out, in-app buttons, or other
`mechanisms. Nor did it have occasion to do so. Epic’s evidence was “less fulsome” on anti-steering
`generally, Op. at 163, and non-existent on mechanisms as distinguished from information. Nor can
`Epic dismiss the security and privacy threats as harm to developers and users, not Apple. See Opp’n
`at 8. Just as Epic sought to do throughout trial, this argument ignores the nature of a two-sided
`transaction platform. The approach advocated by Epic and others will disrupt “the optimal balance”
`between the two sides of the App Store platform. Amex, 138 S. Ct. at 2281. This “risk[s] a feedback
`loop of declining demand.” Id. Thus, making the platform less attractive to users or developers is an
`injury to Apple.
`Nothing in Apple’s “post-decision statements” suggest otherwise. Opp’n at 7. That Apple was
`“pleased with the Court’s ruling,” id., is hardly surprising given that Epic’s assault on the App Store’s
`business model failed and the Court ruled against Epic on nine of the ten claims it asserted. Op. at 1.
`Indeed, Apple’s statements were the natural corollary of Mr. Sweeney’s admission that the Court’s
`“ruling isn’t a win.” Perry Reply Decl. Ex. B. Whereas Apple has relied on Mr. Sweeney's very public
`statements on Twitter and elsewhere, Epic quotes an unauthorized report of one confidential statement
`by Mr. Cook, Byars Decl. Ex. B; but even assuming the statement was accurately reported, it correctly
`summarized the Court’s injunction, which requires Apple to strike two sentences from Guidelines 3.1.1
`and 3.1.3. See Dkt. 813. Nor do Apple’s comments provide any basis to “heavily discount” Apple’s
`arguments, Opp’n at 7, as none of them had anything to do with the challenges Apple faces in replacing
`the sentence in Guideline 3.1.1 with a framework that comports with the Court’s opinion, provides
`clarity for developers, maintains Apple’s business model, and protects iOS users. See Kosmynka Decl.
`¶¶ 15-18. Apple would suffer irreparable harm from precipitous implementation of that aspect of the
`injunction.
`At bottom, the Court’s injunction was not intended to have “any impact on the integrity of the
`ecosystem.” Op. at 164. But Epic does not, because it cannot, dispute that immediate implementation
`of the injunction’s first clause would do just that, especially if it is interpreted as broadly as Epic has
`proposed. Apple has therefore made a more-than-sufficient showing that it will be irreparably injured
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`absent a stay. Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 2012).
`
`
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`B.
`
`Apple Has A Substantial Case For Relief On The Merits
`This Court need not conclude that Apple will win its cross-appeal to enter the requested stay.
`Rather, the question at this stage is whether Apple has a substantial case for relief from the Ninth
`Circuit, and that question can only be answered in the affirmative. If anything, Epic’s response to the
`stay motion confirms this point.
`
`1.
`There Is No Legal Or Factual Basis For UCL Liability
`Epic does not dispute that the Court did not “identify a product market” before assessing the
`competitive effects of Apple’s anti-steering provisions under the UCL; nor does Epic dispute that the
`identification of a product market is a threshold requirement in any assessment of competitive effects
`(including one under the UCL). Facebook, Inc. v. Brandtotal, Ltd., No. 20-CV-7182, 2021 WL
`2354751, at *15 (N.D. Cal. June 9, 2021) (dismissing UCL claim for failure to allege a cognizable
`market). While the UCL ruling is premised on the Court’s conclusion that the anti-steering provisions
`are “anticompetitive,” Op. at 163, “[w]ithout a definition of the market there is no way to measure the
`defendant’s ability to lessen or destroy competition,” Amex, 138 S. Ct. at 2285 (alterations and
`quotation marks omitted). Given that there is no evidence of competitive harm in the sole market the
`Court did identify (for mobile gaming apps), Apple will argue that the UCL ruling cannot stand.
`Epic contends that it is sufficient that the Court observed no “principled reason” to limit the
`injunctive relief to mobile gaming apps. Opp’n at 16 (citing Op. at 167). Elsewhere in the opinion,
`however, the Court explained in detail the differing competitive conditions that justified separating
`mobile gaming app transactions from all other app transactions. See Op. at 61–64, 122–24. And the
`Court expressly excluded subscription apps from the relevant market. See id. at 123 n.571; see also id.
`at 61 n.310. Yet the only evidence of competitive effects on app developers came from representatives
`of companies offering subscription apps (Down Dog and Match Group). See Perry Reply Decl. Ex. C
`at 360:7–13 (Simon); Dkt. 667-1 at 24:17–26:5, 28:9–22 (Ong). If Apple’s anti-steering provisions
`implicated a different product market than the one the Court adopted for all other purposes, it was
`incumbent on Epic to prove such a market. See Thurman Indus., Inc. v. Pay ‘N Pak Stores, Inc., 875
`F.2d 1369, 1373 (9th Cir. 1989). Indeed, the Court rejected Epic’s alleged “iOS In-App Payment
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`APPLE INC.’S REPLY ISO MOTION FOR STAY OF INJUNCTION PENDING APPEAL, 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 11 of 20
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`Processing Market,” which was the only market that Epic suggested was relevant to its anti-steering
`contentions. See Dkt. 1 ¶¶ 10, 130–32, 227–28, 263–64; see also Dkt. 777-3 (Proposed Findings of
`Fact) ¶¶ 368, 419–22.
`Epic’s attempt to disavow its own allegation that game developers would be affirmatively
`harmed if users “were directed to” purchase mechanisms outside of the app is disingenuous. See Opp’n
`at 17 (citing Dkt. 1 ¶ 116). The point is not whether some game developers might prefer to include
`links to external payment solutions, but rather that the competitive considerations for requiring Apple
`to permit such links are different from those that apply to non-gaming apps. See ProMedica Health
`Sys., Inc. v. FTC, 749 F.3d 559, 565-66 (6th Cir. 2014). By Epic’s own reckoning, whether Apple’s
`anti-steering provisions are “unfair” vis-à-vis game transactions raises issues that the Court did not
`analyze. See, e.g., Cal. Dental v. FTC, 224 F.3d 942, 951–52 (9th Cir. 2000) (“[O]ur rule-of-reason
`case law usually requires the antitrust plaintiff to show some relevant data [of anticompetitive effects]
`from the precise market at issue in the litigation.”).
`As to the purported evidence regarding the anti-steering provisions more generally, Epic insists
`that the “Court’s factual findings were supported by substantial evidence in the record, including
`quantitative evidence.” Opp’n at 18. But the representative from Down Dog testified only as to his
`anecdotal recollection of statistics from an indeterminate timeframe, and no witness offered any data
`regarding the effects of Apple’s anti-steering provisions—notwithstanding that the Court “warned the
`parties in advance that actual data was an important consideration.” Op. at 50. Epic further
`acknowledges that its lead economist, Dr. Evans, did not separately analyze the competitive effects of
`the anti-steering provisions, see Perry Reply Decl. Ex. C at 1552:3–14, 1574:1–4, 1716:15–20 (Evans),
`but attempts to excuse that evidentiary gap on the ground that “no rule of law requires a party to
`independently analyze from an economic perspective each of the defendant’s anticompetitive acts,”
`Opp’n at 18 (alteration and quotation marks omitted). As the Court recognized in the context of this
`case, however, “[e]valuating competitive effects . . . would require isolating the effects of a particular
`restriction.” Op. at 144. Epic does not explain how two specific provisions in Apple's Guidelines can
`be deemed “unfair” without any independent economic analysis of those provisions—as distinguished
`from all other provisions challenged by Epic and actually analyzed by the parties and their experts.
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`APPLE INC.’S REPLY ISO MOTION FOR STAY OF INJUNCTION PENDING APPEAL, 4:20-CV-05640-YGR
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`Case 4:20-cv-05640-YGR Document 826 Filed 10/29/21 Page 12 of 20
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`Epic blithely asserts that the Supreme Court did not “hold that Amex’s anti-steering provisions
`were procompetitive.” Opp’n at 19. It does not even acknowledge the Court’s statement that “there is
`nothing inherently anticompetitive about Amex’s antisteering provisions,” because those provisions
`“actually stem negative externalities in the credit-card market and promote interbrand competition.”
`Amex, 138 S. Ct. at 2289. Indeed, anti-steering and anti-circumvention policies are commonplace
`among digital marketplaces, see DX-3120.016–.018, .025–.030—“prior information,” in the words of
`Epic’s economic expert, “that these practices are efficient,” Perry Reply Decl. Ex. C at 2414:20–23
`(Evans). As for the purported “enforced silence” regarding payment alternatives, Opp’n at 20
`(quotation marks omitted), Epic does not respond at all to the undisputed evidence showing that
`although earlier versions of the Guidelines were less clear, Apple has long permitted developers to
`contact users, including regarding alternative payment options, see, e.g., Perry Reply Decl. Ex. C at
`2824:15–2828:18 (Schiller). Apple’s recent amendment to the Guidelines makes explicit the ability of
`developers to engage in targeted out-of-app communications. At the same time, however, Epic cannot
`explain how compelling Apple to allow in-app messaging, which would transform the App Store into
`an advertising platform for its competitors, is consistent with Amex. Epic cites no case in which a firm
`was required to permit use of its facilities to advertise competitors’ offerings.
`Finally, Epic argues that the balancing test under the UCL can apply here, essentially making
`all inquiries into the competitive effects of the anti-steering provisions irrelevant. Opp’n at 15. The
`Ninth Circuit has been clear that it “agree[s] with the Fourth District [Court of Appeals in California]
`that Cel-Tech effectively rejects the balancing approach.” Lozano v. AT&T Wireless Servs., Inc., 504
`F.3d 718, 736 (9th Cir. 2007). The Ninth Circuit did go on to opine that for class certification purposes,
`the district court did not err in considering the predominance of common questions under the balancing
`test, but did not hold that the balancing test is, standing on its own, a viable test for unfairness under
`the UCL. See id. Even applying a free-floating balancing test, however, would not alter the outcome
`here because the Court expressly found that IAP, which is the very feature the anti-steering provisions
`are intended to protect, has procompetitive benefits for consumers. See Op. at 150.
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`2.
`Epic Lacks Standing
`Epic argues that notwithstanding the fact that it no longer has an active developer account and
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