'Overly Broad' Apple Injunction 'at Odds With Established Jurisprudence': Amicus Brief

The U.S. Supreme Court “admonished” in its 1979 decision in Califano v. Yamasaki that "injunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs,” said the International Center for Law & Economics (ICLE) in an amicus brief Friday (docket 23-344) in support of Apple’s Sept. 28 cert petition against Epic Games (see 2310030002). The nationwide injunction issued against Apple in the case, which applies to millions of nonparty app developers, can’t be “reconciled with that principle,” said ICLE, a research and policy nonprofit.

Apple is seeking to set aside the 9th U.S. Circuit Appeals Court’s affirmation of the U.S. District Court for Northern California’s injunction barring Apple from enforcing its anti-steering rules against U.S. iOS app developers arising from the antitrust litigation against Epic. Apple’s cert petition argued that a federal court may provide injunctive relief only to a named plaintiff, “unless a class has been certified or broader relief is necessary to redress that plaintiff ’s injury.”

ICLE “has an interest in ensuring that antitrust law promotes the public interest by remaining grounded in sensible rules informed by sound economic analysis,” said its amicus brief. That includes “fostering consistency” between antitrust law and other laws “that proscribe unfair methods of competition,” such as California’s Unfair Competition Law, it said. ICLE often advocates “against far-reaching injunctions that could deteriorate the quality of mobile ecosystems, thereby harming the interests of consumers and app developers,” it said.

The lower court’s use of a nationwide injunction to address narrow alleged injuries “has severe consequences that are best understood through the lens of law and economics principles,” said the amicus brief. The district court recognized that Apple’s “walled-garden ecosystem” yields “procompetitive consumer benefits,” including greater privacy and data security, and that such benefits “are cognizable under federal antitrust law,” it said.

Yet the district court’s nationwide injunction “undercuts precisely those benefits,” said the amicus brief. Apple’s practice of vetting unsafe payment systems and malware on its App Store “depends on its ability to prevent third parties from ‘steering’ consumers towards purchase mechanisms” other than Apple’s secure in-app purchasing (IAP) system, it said. The anti-steering policy also “prevents free-riding,” and protects Apple’s incentive to invest in its platform “to improve the curation” of apps, privacy, safety and security, it said.

Those harms to Apple’s platform aren’t offset “by benefits to consumers, or even to developers taken as a whole,” said the amicus brief. “All the injunction does is alter the allocation of app store fees between developers,” it said. Even if Apple’s ability to collect a commission through its IAP is limited, Apple “would still have the right to collect a commission in other ways for the use of its proprietary software and technology,” it said. It could do so “by readjusting whom it charges for access to the App Store, and how much it charges,” it said.

Rather than charge a commission to developers on paid downloads of apps and on in-app purchases of digital goods and services, as it does now, for example, Apple “could instead charge all developers a fee for accessing the App Store,” said the amicus brief. That might “ostensibly benefit big developers who rely heavily on in-app purchases and paid downloads to monetize their apps,” it said.

But it’s “not at all clear that the net effects would be positive,” said the amicus brief. “One thing does seem clear,” it said: “The current model, in which small, free apps pay few fees, would likely cease to be tenable under a nationwide federal injunction.”

Put differently, despite not violating federal antitrust law, the district court’s “sweeping remedy” risks harming “the vast majority of app developers,” said the amicus brief. Those developers haven’t “requested the injunction and are now operating on the iOS for free,” it said. The injunction also “may ultimately harm tens of millions of consumers using Apple’s App Store and iOS,” it said.

The district court’s injunction affects Apple’s anti-steering rules “across the board,” said the amicus brief. It thus “redefines Apple’s relationship with many developers -- not just Epic,” it said. As it stands, the injunction “is overly broad and at odds with established jurisprudence,” it said. It also “reduces consumer welfare by precluding more beneficial conduct than the harmful behavior it deters,” it said.

It’s unclear why the district court “found it necessary to issue an injunction covering all developers who are licensed to make iOS apps for the App Store’s U.S. storefront, not just Epic’s subsidiary and the approximately 100 developers who use the Epic Store,” said the amicus brief. Califano precludes the 9th Circuit’s “erroneous assertion” that an injunction need only be tied to Epic’s injuries, it said.

There’s also relevant precedent in the Supreme Court’s Oct. 20 grant in Murthy v. Missouri (docket 23-411) of the government’s cert petition to vacate the district court’s injunction that bars officials from the White House and four federal agencies from coercing or significantly encouraging social media platforms to moderate their content (see 2310230003), said the amicus brief. The government’s argument in support of the cert petition “raises similar issues” as the court found in Califano, it said: “An overbroad injunction cannot be justified on the theory that the non-parties are simply incidental beneficiaries of the injunction for the prevailing parties.”