Landmark proceedings brought by software developer Epic Games against Apple and Google have come to an end, with the Federal Court finding that prohibitive bans on their respective app stores were targeted “against competitors, rather than competition”.
In a move that could have changed the game for Australian app developers and users, Epic Games brought proceedings against Apple and Google for banning other app stores from using their devices and forcing them to use, and pay for, their payment systems.
Epic Games argued that by holding an allegedly illegal monopoly over respective markets, Apple and Google “substantially” lessened competition and were in breach of the Competition and Consumer Act.
The dispute arose after Apple and Google removed Epic Games’ most popular game, Fortnite, from their app stores in August 2020.
In a judgment delivered via a YouTube live stream on Tuesday (12 August) afternoon, Justice Jonathan Beach found the app stores provided a “competitive restraint to some extent” and both Apple and Google enjoyed a “substantial degree of market power”.
While Justice Beach found Apple engaged in conduct in either or both of its markets – being the iOS distribution market and iOS in-app payment solutions market – that substantially lessened competition, he said the app store did not contravene the act.
Similarly, Google was found to have engaged in conduct that had the purpose of “essentially lessening competition”, but this was only in terms of a “likely effect” rather than an “actual effect”. In other respects, Justice Beach was not persuaded of Epic Games’ case.
Both Apple and Google argued security provisions were the cause of the restrictions, and while Justice Beach said that it was disproportionate, he was not prepared to accept that they imposed this with the intention of substantially lessening competition in their app store markets.
It was still a partial win for Epic Games, which posted on social media shortly afterwards that Fortnite would “come to IOS in Australia”.
“An Australian court just found that Apple and Google abuse their control over app distribution and in-app payments to limit competition. There are 2000-plus pages of findings that we’ll need to dig into to fully understand the details,” the company said.
“This is a win for developers and consumers in Australia.”
There was also good news for the class actions filed against Apple and Google by law firm Phi Finney McDonald, also on behalf of the consumers who joined forces with Maurice Blackburn Lawyers.
The class actions alleged Apple and Google engaged in anti-competitive conduct that harmed consumers and app developers by restricting fair access to digital marketplaces and inflating the prices for apps and in-app purchase “through monopolistic practices”.
By coming out on top, the class actions can move into a second stage hearing to determine compensation for consumers and developers, as well as for directives to increase transparency and competition.
Joel Phibbs, principal at Maurice Blackburn Lawyers, said the victory could result “in one of the largest class action payouts in Australian history”, with the potential for several hundred million dollars to come from “two global corporate Goliaths”.
Kimi Nishimura, fellow principal at the firm, said Justice Beach’s judgment was a “turning point” for the class action applicants.
“It sends a clear message that even the most powerful corporations must play by the rules and respect the rights of consumers and developers alike,” Nishimura said.
The judgment will be published at a later date.
More to come.
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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