USA: Monopolization of mobile ecosystems - The decision in Epic v. Apple

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Apps for smartphones and tablet devices are increasingly important sites of innovation and the basis for monetization for digital platforms. Apple is the sole distributor of apps on iOS and prevents iOS users from downloading any apps from any source other than Apple’s own storefront, the App Store. Apple requires all in-app purchases to be made exclusively via Apple’s own proprietary in-app purchase (IAP) system and charges app developers a 30% commission. Apple also restricts developers from informing users of alternative (usually cheaper) purchasing possibilities outside of the app (“anti-steering provisions”). Epic, the creator of the popular online video game Fortnite, brought an antitrust case against Apple in the US district court (California) claiming that the exclusivity and anti-steering provisions amounted to maintenance of a monopoly, denial of an essential facility and unreasonable restraint of trade. This litigation raises broader antitrust questions regarding whether mobile ecosystems can be defined as separate markets and be subject to “monopolization” through the exercise of “intermediation power.” Like an aftermarket, this “lock in” on one side of the market can co-exist with a high degree of competition on the other side of the market.

I. Introduction 1. Apps for smartphones and tablet devices are increasingly important sites of innovation and a basis for monetization for digital platforms. These apps are becoming indispensable for consumers to access services, e-commerce, games and information. Apps are largely only accessible through a storefront on a particular operating system on a smartphone or tablet. Apple’s are available through its App Store, using iOS and iPadOS. Google’s are available through Google Play on Android. Apple is the sole distributor of apps on iOS and prevents iOS users from downloading any apps from any source other than the App Store. These apps are usually monetized through the “freemium model,” where the initial download is “free” but revenue comes from in-app purchases or payments for

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