Tag: Court

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App Store payment rules won’t change as Apple’s battle with Epic Games heads to Supreme Court

Apple’s current App Store rules will continue to stand as its case with Fortnite maker Epic Games heads to the Supreme Court — meaning developers won’t be able to redirect customers to their own payment systems anytime soon. The two tech giants have been battling over Apple’s requirement to use its in-app payments system, its commission structure, as well as its alleged monopolistic practices — something the lower courts found not to be the case.

Epic had asked that the federal appeals court’s most recent decision would stand while the case was argued at the nation’s highest court, but that request has now been denied.

If granted, Apple would have been forced to allow App Store apps the option to offer their own links or buttons to non-Apple payment systems, effectively permitting developers to circumvent Apple’s 15% to 30% commissions on purchases and subscriptions.

Though Apple largely won its antitrust case in the lower courts, the rules around in-app payments were the one area where it lost — and why it continues to fight. After the case reached the U.S. Ninth Circuit Court of Appeals, the justices upheld a lower court’s judgment in favor of Epic under California’s Unfair Competition Law. This decision would have impacted Apple’s ability to set “anti-steering” rules for its App Store that today restrict developers from even pointing to other options to pay besides Apple’s own payments system.

Epic, naturally, wanted that ruling to stand, despite its continued legal battle. Not surprisingly, the court said no. Prior to this, Apple had been granted a motion that put the appeals court ruling on a temporary 90-day hold as it filed its appeal to the Supreme Court.

Bloomberg first reported the news of the Supreme Court’s decision, noting that Justice Elena Kagan decided not to let the appeals court decision go into effect. However, if the top court’s justices refuse to hear the case, then the ruling will stand, the report said.

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Apple won’t have to allow third-party payments on App Store as case goes to Supreme Court

A new court ruling will put a pause on a legal requirement that directs Apple to open up its App Store to third-party payments. Despite Apple’s win in its lengthy antitrust court battle with Fortnite maker Epic Games, the iPhone maker moved to once again appeal the court’s decision earlier this month to argue its case in the U.S. Supreme Court. Though Apple largely won its court battles and was declared to be not a monopoly — a significant win and sizable setback for Epic Games and other app developers who want to reduce commissions paid to Apple — the Cupertino tech giant was unhappy with one of the lower court’s decisions: that it would have to give app developers the ability to link to their own payment systems instead of using Apple’s own.

Now, in a new filing, first reported by The Verge, Apple was granted a motion that would allow it to put the appeals court ruling on hold for 90 days as it files its appeal to the Supreme Court.

Had that motion not been granted, Apple would have to begin to allow apps that offer their own links or buttons to non-Apple payment systems in its App Store, which would permit app developers to circumvent Apple’s 15%-30% commissions on in-app purchases and subscriptions. As a result, Apple would see its App Store revenues decline.

Epic had originally sued Apple in 2020 over the fees Apple charges on in-app payments, seeking the court to put a stop to Apple’s practices so app developers could run payments through their own payment processors and avoid Apple’s commissions. The case eventually reached the U.S. Ninth Circut Court of Appeals, where the court ruled against most of Epic’s claims. However, it had upheld a lower court’s judgment in favor of Epic under California’s Unfair Competition Law.

“The district court did not clearly err in finding that Epic was injured, err as a matter of law when applying California’s flexible liability standards, or abuse its discretion when fashioning equitable relief,” the ruling stated.

In other words, the “anti-steering” changes the lower court previously decided on would once again be required. (Apple’s anti-steering rules prohibit app developers from pointing consumers to other places they can pay for their subscriptions and in-app purchases outside of Apple’s own App Store ecosystem.)

Although the court has now agreed to grant Apple’s motion to delay the changes to its App Store anti-steering rules, Ninth Circuit Judge Milan D. Smith Jr. shared his distaste over the decision, saying “I write separately to express my view that, while the arguments in Apple’s motion may not be technically frivolous, they ignore key aspects of the panel’s reasoning and key factual findings by the district court,” he wrote.

“When our reasoning and the district court’s findings are considered, Apple’s arguments cannot withstand even the slightest scrutiny. Apple’s standing and scope-of-the-injunction arguments simply masquerade its disagreement with the district court’s findings and objection to state-law liability as contentions of legal error,” the judge concluded.

After Apple notifies the court the petition has been filed with the Supreme Court, the stay will continue until the Supreme Court resolves the petition, the filing notes.

In response to the court’s decision to grant Apple’s motion, Epic Games CEO Tim Sweeney also tweeted his displeasure.

“Sadly, Apple’s anti-steering rules – which both the District Court and the 9th Circuit Court found to be illegal – will remain in place, as the 9th Court Court stayed the injunction that puts an end to the practice. Justice delayed, again,” he said.

Other app developers have simply decided to route around Apple’s rules. Netflix had long ago ditched in-app subscriptions on iOS and more recently, Spotify did the same. In a clever workaround, the streaming music service announced this month that customers who had been paying for the service through Apple’s App Store could no longer pay through this method and would be moved to a free account at the end of their billing cycle. If they wanted to remain a premium subscriber, they’d have to purchase a plan through Spotify’s website.

Apple wins antitrust court battle with Epic Games, appeals court rules

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Appeals court rules in favor of Meta in antitrust case from State AGs

Meta has won an antitrust lawsuit that pitted the tech giant against dozens of state attorneys general, led by New York, who had alleged Meta had illegally maintained monopoly power in the social networking market through its acquisitions of photo-sharing app Instagram in 2012 and WhatsApp in 2014, and that it gained further power through data policies that harmed app developers.

“As the Court of Appeals rightly recognized, this case fundamentally mischaracterized the vibrant competitive ecosystem in which we operate,” a Meta spokesperson said, in a statement on the ruling. “In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight.’ Moving forward, Meta will defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services,” they added.

The plaintiffs, which included the attorneys general from 48 U.S. states and territories, had first sued Meta in December 2020, but a federal court dismissed their case in 2021, as well as a parallel case by the Federal Trade Commission, which could have ultimately resulted in Meta being required to divest of Instagram and WhatsApp. The states appealed the ruling in January 2022, arguing that the district court judge had wrongly terminated their case.

U.S. District Court Judge James Boasberg had ruled that states had waited too long to challenge Meta’s acquisitions and that the policies they had cited were not illegal under antitrust law. The states, however, believed that their unprecedented delay to file “does not apply against sovereign states suing to protect the public interest, like the states here.”

The states also believed the policies could violate antitrust law, so they appealed the case.

The lower court had additionally granted the FTC leave to amend its complaint, allowing its case to proceed, as was reported last year.

In terms of the states’ case, however, the U.S. Court of Appeals for the District of Columbia Circuit has now upheld the district court’s ruling, calling the states’ lawsuit “not only odd, but old.”

The court’s opinion further explains that the suit “concerns an industry that, even on the States’ allegations, has had rapid growth and innovation with no end in sight.”

It then explains that as “sovereigns,” the states aren’t able to argue for an injunction under antitrust laws, because to be entitled to do so, they must be a “person, firm, corporation or association,” which they are not.

The court also agreed with Judge Boasberg’s, decision that the States “unduly delayed” to file their suit. Facebook, (now Meta), had first acquired Instagram and WhatsApp in 2012 and 2014, respectively, but the lawsuit wasn’t filed until Dec. 2020.

The district court had ruled that the long delays were “unreasonable and unjustified as a matter of law,” citing a four-year statute of limitations from other antitrust cases on other circuits as a guideline. The court also pointed out the acquisitions were well-publicized and went through lengthy, publicly reported FTC investigations to determine if they violated antitrust laws at the time.

The appeals court also agreed with Judge Boasberg’s opinion regarding Facebook’s Platform and its practices and policies. The States had cited snippets of Facebook policies from 2011 and 2013, which the court said were “accurate, but the messages they seek to convey are not” — meaning, they didn’t make a case for antitrust law violations.

“…we agree again with Judge Boasberg’s comprehensive and well-reasoned opinion determining that the States’ Platform-based allegations failed to state a cause of action,” the new opinion issued today states.

It also agreed that the district court was correct that the States’ “exclusive dealing” theory fails as a matter of law, as it only limited apps on Facebook but left app developers free to develop applications for Facebook competitors.

On other matters, the lateness of the lawsuit impacted the States’ ability to make its case, as it wanted injunctive relief for a policy that ended in 2018, giving Facebook platform access to companies that have long since shut down or pivoted their business.

“Injunctive relief would be unwarranted even if the States could prove their allegations,” the court noted.

Appeals court rules in favor of Meta in antitrust case from State AGs by Sarah Perez originally published on TechCrunch

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Google asks court to dismiss multiple claims in Epic Games antitrust trial

Google is hoping to speed along the resolution of its antitrust legal battle with Fortnite maker Epic Games, Match Group, and state Attorneys General. In a new filing, Google’s legal team is now asking the court to dismiss several of the plaintiffs’ arguments regarding the nature of its app store business, revenue-sharing agreements, and other app store-related projects in a partial motion for summary judgment.

According to Google, it believes the court should now have enough information on hand to make determinations on a handful of the plaintiffs’ claims before the case goes to trial, saying that these items are not in violation of antitrust law. If the court agrees with Google’s position, the trial would still move forward as other claims would still need to be argued in court.

Google specifically wants the court’s judgment on five key claims which would seemingly be pivotal to the plaintiffs’ ability to prove anticompetitive behavior.

It wants the court to dismiss the argument that Google’s Developer Distribution Agreement is illegal because it prohibits the distribution of other app stores. Google counters this by saying it doesn’t have a legal obligation to distribute to other app stores, and notes that most Android devices come preloaded with more than one app store. In addition, it points out that consumers can install additional app stores from the web browser.

“Android is the only major mobile platform that allows multiple app stores,” a Google spokesperson said in a statement. “In fact, most Android devices ship with two or more app stores preinstalled, and consumers can install others. Epic, Match Group and the state Attorneys General ignore the openness and choice Android and Google Play offer, and we look forward to making our case in court,” they added.

Another argument it wants dismissed is focused on “Project Hug,” a Google-run program that was designed to incentivize Android game developers to keep their games on the Google Play Store. The plaintiffs argued that Google quietly paid game developers millions of dollars in incentives as part of this initiative, which was later known as the “Apps and Games Velocity Program.” Epic Games alleged the program came about because Google was scared other developers would follow its lead after it exclusively released Fortnite for Android outside the Play Store through its own installer. Supposedly, Google was also worried Epic might strike up other exclusive pre-install deals with OEMs like Samsung to lower its revenue splits.

The program itself was fairly successful as Google was able to forge deals with a number of developers, including Activision Blizzard, to keep their games on the Play Store, earlier filings had stated.

Epic Games and Match look to expand their antitrust claims against Google

Google, however, argues that Project Hug was not an anticompetitive move, but has been mischaracterized by the plaintiffs. It says the program offered developers benefits and early access to Google Play users when developers released new or updated content, but did not prevent developers from creating competing app stores.

The company is also pushing back against claims over revenue-sharing agreements with wireless carriers, saying they are outside the statute of limitations. The agreements have been expired for more than four years, Google says, so should be dismissed.

In addition, Google claims the AGs and consumer class were unable to show that Google harmed competition by selling app subscriptions and in-app purchases to consumers. For that reason, consumers should not be able to recover any of these alleged overcharges, Google says.

The final claim focuses on tying — or the allegation that in order to buy one product, the buyer also had to purchase a different (or tied) product. The plaintiffs argued that Google Play and Google Play’s billing services are illegally tied together, but Google says this isn’t true. Instead, it argues Play’s billing services are not a separate product. It also notes that over 90% of the apps on Google Play are free and developers pay nothing when they are downloaded.

The new push for a partial summary judgment follows shortly after last month’s ruling that Google’s failure to preserve some of its messages for discovery requires sanctions. The plaintiffs successfully demonstrated that Google employees tended to switch off chat history on internal discussions, in an effort to destroy sensitive communications related to the case. The DoJ recently cited the same issue in its own antitrust investigation. The judge gave the plaintiffs’ lawyers until April 21 to provide an amount in legal fees they are seeking as part of the sanctions, as a start.

Google earlier asked for the trial to be delayed and was denied.

Epic Games has been asked for comment and we’ll update if one is provided.

Google asks court to dismiss multiple claims in Epic Games antitrust trial by Sarah Perez originally published on TechCrunch

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Judge rules that Twitter can expedite its trial against Elon Musk

For the first time today, representatives for Elon Musk and Twitter faced off in court. So far, Twitter has a leg up.

As Twitter sues Musk to force him to close his $44 billion acquisition, the company wanted to fast-track the trial to take place in September over four days. But the SpaceX and Tesla CEO wanted to wait until February for a ten-day trial, saying that it would be unfair to go to court so soon. Today, Judge Kathaleen McCormick ruled that the Twitter v. Musk showdown will be expedited and take place in October, rather than in February. However, the court thinks that the case should be tried over five days, which is slightly longer than Twitter’s proposal.

This isn’t quite as early as Twitter wanted to go to court, but the ruling still favors the company over its presumptive buyer.

In a filing yesterday, Twitter argued that the company is harmed each day that its dispute with Musk continues, so the case needs to be tried as soon as possible. The company also stated that Musk’s proposed schedule, slating the trial for February, was “calculated to complicate and obfuscate.”

“Millions of Twitter shares trade daily under a cloud of Musk-created doubt,” Twitter wrote. “No public company of this size has ever had to bear these uncertainties.”

At the hearing, Musk’s lawyers argued that they need more time to investigate the “firehose” of data that Twitter provided in an attempt to confirm its estimates that less than 5% of monetizable daily active users (mDAUs) are bots. Apparently, Musk’s team is running millions of searches on this data to better understand the platform’s calculations, which have appeared in SEC filings consistently since the company went public in 2013.

Though Musk’s team stays true to its assertion that Twitter is lying about how many bots are on the platform, Twitter believes that the real issue at play is the macroeconomic downturn.

“In his press release announcing the deal on April 25, 2022, Musk raised a clarion call to ‘defeat the spam bots.’ But when the market declined and the fixed-price deal became less attractive, Musk shifted his narrative, suddenly demanding ‘verification’ that spam was not a serious problem on Twitter’s platform, and claiming a burning need to conduct ‘diligence’ he had expressly forsworn,” Twitter wrote in its lawsuit against Musk.

Yet Musk’s team argued that it doesn’t make sense for the mogul to drive down Twitter’s stock price, since he is presently the company’s second-largest shareholder. However, he has publicly used his Twitter account to urge the SEC to investigate the company.

With so much drama and dispute, it might seem nonsensical for Twitter to force Musk into buying a company that he is acting quite hostile toward. Yet the fact remains that Musk’s signed offer remains far too appealing to turn down. While Twitter shares are trading around $40 at the time of publication, Musk’s offer values the company at $54.20 a share.

This story is developing…

Twitter sues Elon Musk to force him to seal the deal

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Felix Capital closes $300M fund to double down on DTC, break into fintech and make late-stage deals

To kick off 2020, one of Europe’s newer — and more successful — investment firms has closed a fresh, oversubscribed fund, one sign that VC in the region will continue to run strong in the year ahead after startups across Europe raised some $35 billion in 2019. Felix Capital, the London firm founded by Frederic Court that was one of the earlier firms to identify and invest in the trend of direct-to-consumer businesses, has raised $300 million, money that it plans to use to continue investing in creative and consumer startups and platform plays as well as begin to tap into a newer area, fintech — specifically startups that are focused on consumer finance. 

Felix up to now has focused mostly on earlier-stage investments — it now has $600 million under management and 32 companies in its portfolio in eight countries — based across both Europe and the US. Court said in an interview that a portion of this fund will now also go into later, growth rounds, both for companies that Felix has been backing for some time as well as newer faces.

As with the focus of the investments, the make-up of the fund itself has a strong European current: the majority of the LPs are European, Court noted. Although Asia is something it would like to tackle more in the future both as a market for its current portfolio and as an investment opportunity, he added, the firm has yet to invest into the region or substantially raise money from it.

Felix made its debut in 2015, founded by Court after a strong run at Advent Capital where he was involved in a number of big exits. While Court had been a strong player in enterprise software, Felix was a step-change for him into more of a primary focus on consumer startups focused on fashion, lifestyle and creative pursuits.

That has over the years included investing in companies like the breakout high-fashion marketplace Farfetch (which he started to back when still at Advent and is now public), Gwyneth Paltrow’s GOOP, the jewellery startup Mejuri, trend-watching HighSnobiety, and fitness startup Peloton (which has also IPO’d).

It’s not an altogether easygoing, vanilla list of cool stuff. Peloton and GOOP have had been mightily doused in snarky and sharky sentiments; and sometimes it even seems as if the brands themselves own and cultivate that image. As the saying goes, there’s no such thing as bad press, I guess.

Although it wasn’t something especially articulated in startup land at the time of Felix’s launch, what the firm was honing in on was a rising category of direct-to-consumer startups, essentially all in the area of e-commerce and building brands and businesses that were bypassing traditional retailers and retail channels to develop primary relationships with consumers through newer digital channels such as social media, messaging and email (alongside their own DTC websites). 

This is not all that the company has focused on, with investments into a range of platform businesses like corporate travel site TravelPerk, Amazon -backed food delivery juggernaut Deliveroo and Moonbug (a platform for children’s entertainment content), as well as increasingly later stage rounds (for example it was part of a $104 million round at TravelPerk; a $70 million round for marketplace-building service Mirakl; and $23 million for Mejuri.

Court’s track record prior to Felix, and the success of the current firm to date, are two likely reasons why this latest fund was oversubscribed, and why Court says it wants to further spread its wings into a wider range of areas and investment stages.

The interest in consumer finance is not such a large step away from these areas, when you consider that they are just the other side of the coin from e-commerce: saving money versus spending money.

“We see this as our prism of opportunity,” said Court. “Just as we had the intuition that there was a space for investors looking at [DTC]… we now think there is enough evidence that there is demand from consumers for new ways of dealing with money and personal finance.”

The firm has from the start operated with a board of advisors who also invest money through Felix while also holding down day jobs. They include the likes of executives from eBay, Facebook, and more. David Marcus –who Court backed when he built payments company Zong and eventually sold it to eBay before he went on to become a major mover and shaker at Facebook and is now has the possibly Sisyphean task of building Calibra — is on the list, but that has not translated into Felix dabbling in cryptocurrency.

“We are watching cryptocurrency, but if you take a Felix stance on the area, it’s only had one amazing brand so far, bitcoin,” said Court. “The rest, for a consumer, is very difficult to understand and access. It’s still really early, but I’ve got no doubt that there will be some things emerging, particularly around the idea of ‘invisible money.'”