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(Bloomberg) – U.S. antitrust officials investigating Apple Inc. face new hurdles after a judge dismissed most of Epic Games Inc.’s lawsuit accusing the iPhone maker of thwarting laws on compete with its narrow grip on the App Store.
The Department of Justice’s antitrust division has investigated Apple’s in-store practices, an investigation that began under the Trump administration amid scrutiny of the country’s dominant technology platforms. The Biden administration is continuing the investigation.
Antitrust lawyers say Friday’s decision in the Epic trial, while not fatal to the Justice Department’s investigation, presents new challenges for the government as the judge said Epic did not failed to establish that Apple’s conduct violated the Sherman Act, the federal law used to target monopolies.
“This raises the bar for any Justice Department lawsuits,” said Joel Mitnick, an antitrust lawyer at Cadwalader, Wickersham & Taft LLP who is not involved in the case. “Apple has pretty much won a final victory over all the claims of the Sherman Act. “
The Biden administration is committed to tackling consolidation and anti-competitive behavior throughout the economy. President Joe Biden has placed prominent tech critics in key positions and, in a July executive order, said he would fight the rise of dominant internet platforms, which he accused of using ” their power to exclude market entrants, to extract monopoly profits and to gather intimate information. personal information that they can use to their advantage.
On Capitol Hill, Democratic and Republican lawmakers are backing legislation that would give more power to antitrust authorities and impose new rules on app stores run by Apple and Alphabet Inc.
Apple move stresses need for App Store bill, lawmakers say
U.S. District Judge Yvonne Gonzalez Rogers said in her ruling that Apple’s rules preventing app developers from alerting consumers to purchasing options outside the App Store are anti-competitive, and she said that Apple needs to let developers direct people to other payment methods.
Still, the judge ruled that Apple does not illegally monopolize the market for mobile game transactions. She also dismissed Epic’s case that Apple engages in illegal trade restriction, another element of federal antitrust law.
One of the challenges for the Justice Department, lawyers say, is that Gonzalez Rogers has said Apple’s restrictions on developers are justified in order to protect security. She also said the market is two-way, which presents courts with the difficulty of weighing harms on one side and benefits on the other, a framework established in a 2018 U.S. Supreme Court decision.
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“What scares me the most about this opinion is the complexity of the two-sided market,” said John Newman, who teaches antitrust law at the University of Miami Law School. “If it’s a two-sided market, you can’t prove that there is harm to developers only or harm to consumers only. You kind of have to prove the net damage to all the different groups that interact through the platform.
Still, the decision does not deal a fatal blow to a potential Justice Department case, lawyers say. Even though Gonzalez Rogers said Apple does not have monopoly power, she said the company “is close to the precipice of substantial market power, or monopoly power.” The judge also wrote that Apple did not justify the 30% commission it took on transactions.
“There’s a lot here to encourage an enforcement official depending on the aspect of their investigation,” said Sam Weinstein, who teaches antitrust law at Cardozo School of Law and is a former lawyer in the Antitrust Division. of the Ministry of Justice. “If I am the government, I am not looking at this and I think we are bankrupt.”
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