Case: 21-16695, 01/27/2022, ID: 12352822, DktEntry: 35, Page 1 of 33
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`Nos. 21-16506 & 21-16695
`__________________________________________________________________
`
`IN THE UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`
`
`
`
`
`
`
`
`EPIC GAMES, INC.,
`
`
`Plaintiff/Counter-Defendant,
`Appellant/Cross-Appellee
`
`
`v.
`
`APPLE INC.,
`
`
`Defendant/Counter-Claimant,
`Appellee/Cross-Appellant.
`
`
`On Appeal from the United States District Court
`for the Northern District of California
`No. 4:20-cv-05640-YGR
`The Honorable Yvonne Gonzalez Rogers
`
`
`BRIEF OF AMICI CURIAE 38 LAW, ECONOMICS, AND BUSINESS
`PROFESSORS IN SUPPORT OF APPELLANT/CROSS-APPELLEE
`
`
`
`Michael A. Carrier
`Distinguished Professor
`Rutgers Law School
`217 North Fifth Street
`Camden, NJ 08102
`856-225-6380
`mcarrier@law.rutgers.edu
`
`Attorney for Amici Curiae
`
`
`
`

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`TABLE OF CONTENTS
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`TABLE OF CONTENTS .......................................................................................... ii
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`TABLE OF AUTHORITIES ................................................................................... iii
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`STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIAE ................... 1
`
`INTRODUCTION ..................................................................................................... 1
`
`I.
`
`II.
`
`Unlike the Vast Majority of Rule-of-Reason Cases, Epic Showed
`Substantial Anticompetitive Effects ...................................................... 2
`
`The Court Below Erred in Treating Apple’s Security and Privacy
`Explanations as Antitrust Justifications ................................................ 6
`
`III. The Court Erred in Not Crediting the Less Restrictive Alternatives
`It Found in Its Findings of Fact ........................................................... 14
`
`IV. The Court Erred in Not Balancing the Harms Against the Claimed
`Benefits ................................................................................................ 19
`
`CONCLUSION ........................................................................................................ 22
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`
`
`ii
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`Broadcast Music, Inc. v. CBS, Inc.,
`441 U.S. 1 (1979) ........................................................................................... 11
`
`Capital Imaging Assocs., P.C. v. Mohawk Valley Medical Assocs., Inc.,
`996 F.2d 537 (2d Cir. 1993) .......................................................................... 20
`
`Cont’l T.V., Inc. v. GTE Sylvania, Inc.,
`433 U.S. 36 (1977) .................................................................................... 3, 11
`
`Chicago Prof’l Sports Ltd. P’ship v. NBA,
`961 F.2d 667 (1992) ........................................................................................ 6
`
`Epic Games, Inc. v. Apple Inc.,
`No. 4:20-CV-05640-YGR (N.D. Cal. Sept. 10, 2021) .......................... passim
`
`FTC v. Indiana Fed’n of Dentists,
`476 U.S. 447 (1986)............................................................................ 9, 11, 14
`
`FTC v. Superior Court Trial Lawyers Ass’n,
`493 U.S. 411 (1990)................................................................................ 10, 14
`
`In re Glumetza Antitrust Litig.,
`No. C 19-05822 WHA, 2021 WL 1817092 (N.D. Cal. May 6, 2021) ............ 4
`
`In re NCAA Athletic Grant-in-Aid Cap Antitrust Litig.,
`958 F.3d 1239 (9th Cir. 2020) ....................................................................... 17
`
`Leegin Creative Leather Products, Inc. v. PSKS, Inc.,
`551 U.S. 877 (2007)................................................................................ 12, 13
`
`NCAA v. Alston,
`141 S. Ct. 2141 (2021) ........................................................................... passim
`
`Nat’l Soc’y of Prof’l Eng’rs v. United States,
`435 U.S. 679 (1978)............................................................................... passim
`
`
`iii
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`O’Bannon v. NCAA,
`802 F.3d 1049 (9th Cir. 2015) ....................................................................... 14
`
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) .............................................................................. 2, 20
`
`Standard Oil Co. v. FTC,
`340 U.S. 231 (1951).....................................................................................8, 9
`
`
`United States v. Aluminum Co. of Am.,
`148 F.2d 416 (1945) ........................................................................................ 6
`
`
`United States v. Joint Traffic Ass’n,
`171 U.S. 505 (1898)......................................................................................... 6
`
`
`United States v. Microsoft Corp.,
`253 F.3d 34 (D.C. Cir. 2001) ......................................................................... 19
`
`
`United States v. Trenton Potteries Co.,
`273 U.S. 392 (1927)......................................................................................... 6
`
`
`
`
`
`Other Authorities
`
`VII Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of
`Antitrust Principles and Their Application (4th ed. 2017) ..................... 19, 20
`
`Michael A. Carrier, The Four-Step Rule of Reason, 33 Antitrust 50 (Spring 2019)
` ....................................................................................................................... 20
`
`Michael A. Carrier, The Real Rule of Reason: Bridging the Disconnect, 1999
`B.Y.U. L. Rev. 1265 ........................................................................................ 3
`
`Michael A. Carrier, The Rule of Reason: An Empirical Update for the 21st
`Century, 16 Geo. Mason L. Rev. 827 (2009) .................................................. 3
`
`
`Erika M. Douglas, Data Privacy Protection as a Procompetitive Justification, 36
`Antitrust 1 (Dec. 2021) .................................................................................. 11
`
`
`iv
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`Richard J. Gilbert & A. Douglas Melamed, Innovation Under Section 2 of the
`Sherman Act, 84 Antitrust L.J. 1 (2021) ........................................................ 12
`
`
`Michael Spence, Cost Reduction, Competition, and Industry Performance, 52
`Econometrica 101 (1984) ............................................................................. 12
`
`I J. von Kalinowski, Antitrust Laws and Trade Regulation (2d ed. 2017) ............. 20
`
`
`
`
`v
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`STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIAE1
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`Amici curiae are professors of law, economics, and business. (A list of
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`signatories is attached as Addendum A.) Their sole interest in this case is to ensure
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`that antitrust law develops in a way that serves the public interest by promoting
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`competition. While the amici differ in our legal and political views, we are united
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`in our agreement that the court below erred in its application of a central
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`framework of antitrust analysis today: the Rule of Reason.
`
`INTRODUCTION
`
`Antitrust law assesses most conduct under the Rule of Reason. Such
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`evaluation takes the form of a burden-shifting framework, with a determination of
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`net competitive effects serving as the core of the analysis. In the first step, the
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`plaintiff is required to show that the challenged conduct has anticompetitive
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`effects. The court below held that Epic satisfied the first step.
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`When the plaintiff makes this showing, the defendant must demonstrate that
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`the conduct has procompetitive benefits sufficient to justify the conduct. If the
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`court finds that the conduct provided such benefits and that they could not be
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`
`1 Pursuant to Fed. R. App. P. 29(a)(4)(E), amici declare that no party’s counsel
`authored this brief in whole or in part; no party or party’s counsel contributed
`money intended to fund preparing or submitting the brief; and no person—other
`than the amici, its members, or its counsel—contributed money that was intended
`to fund preparing or submitting this brief. All parties have consented to the filing
`of this brief.
`
`
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`

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`obtained from alternatives less harmful to competition, the court is to weigh the
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`benefits and the anticompetitive effects to determine whether the conduct on
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`balance harms competition.
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`In applying the Rule of Reason after the first step, the court below
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`committed three fundamental errors. First, it accepted business rationales that do
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`not promote competition or economic efficiency and are, as a matter of law, not
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`cognizable antitrust justifications. Second, it failed in its legal conclusions to credit
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`a less restrictive alternative to Apple’s restraints that it recognized in its factual
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`findings. And third, in dismissing the case based on its conclusion that the plaintiff
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`failed to show such an alternative, it never engaged in the required analysis of net
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`competitive effects.
`
`I.
`
`Unlike the Vast Majority of Rule-of-Reason Cases, Epic Showed
`Substantial Anticompetitive Effects
`The first step of the Rule-of-Reason analysis requires a plaintiff to show a
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`substantial anticompetitive effect. E.g., Ohio v. Am. Express Co., 138 S. Ct. 2274,
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`2284 (2018) (“Amex”). The court below found that Epic satisfied this burden by
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`showing that Apple’s restrictions on competition from other means of app
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`distribution had substantial anticompetitive effects. That is no small
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`accomplishment.
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`Of the 915 Rule of Reason cases decided in the modern era, courts have
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`disposed of nearly all at the initial stage on the grounds that the plaintiff failed to
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`2
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`demonstrate a significant anticompetitive effect.2 When plaintiffs do make this
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`showing, courts take note. For example, the Court in NCAA v. Alston, relying on
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`this empirical analysis, found that this case was “different” from the vast majority
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`of Rule-of-Reason cases, which meant that, “[u]nlike so many cases,” the district
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`court “proceeded to the second step.” 141 S. Ct. 2141, 2161 (2021).
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`Like the Alston case, the court below found that Epic met its burden of
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`demonstrating substantial anticompetitive effects. It found that “Apple’s
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`restrictions on iOS game distribution have increased prices for developers.” Epic
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`Games, Inc. v. Apple Inc., No. 4:20-CV-05640-YGR, at 99 (N.D. Cal. Sept. 10,
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`2021) (“Op.”). In particular, “in light of Apple’s high profit margins on the App
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`Store, a third-party store could likely provide game distribution at a lower
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`commission and thereby either drive down prices or increase developer profits.”
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`Id.; see also id. at 144 (prices are “artificially high given Apple’s growing market
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`power and growing demand”).
`
`
`2 Since 1977, courts have decided 90% (824 of 915) on this ground, with the figure
`rising to 97% (406 of 420) after 1999. Michael A. Carrier, The Rule of Reason: An
`Empirical Update for the 21st Century, 16 Geo. Mason L. Rev. 827 (2009)
`(reviewing cases between 1999 and 2009); Michael A. Carrier, The Real Rule of
`Reason: Bridging the Disconnect, 1999 B.Y.U. L. Rev. 1265 (reviewing cases
`from Continental T.V., Inc. v. GTE Sylvania, 433 U.S. 36 (1977) to 1999). The
`principal drafter reviewed every Rule of Reason case between 2009 and January
`2022 for this brief.
`
`3
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`

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`Such a finding of increased price would, alone, have been sufficient for Epic
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`to meet its burden under the Rule of Reason.3 But the court additionally found
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`“[d]ecreased innovation” in “core” game distribution services. Id. at 100, 102. The
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`court relied on developer surveys Apple conducted to observe that the company “is
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`not moving quickly to address developer concerns or dedicating sufficient
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`resources to their issues.” Id. at 101. The court pointedly reminded Apple that
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`“[i]nnovators do not rest on laurels.” Id.
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`The court also noted “a top reason for dissatisfaction with the App Store,”
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`namely a “lack of functions which other platforms have, such as personalized
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`recommendations.” Id. Developers lamented characteristics of the App Store such
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`as a need “to spell names exactly correct,” which it found “ridiculous for a multi-
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`billion dollar company.” Id. Similarly, the search algorithm was “terrible,”
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`discoverability “is still a significant challenge,” and the App Store “desperately
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`needs . . . testing.” Id. Nor was Apple’s lack of innovation discerned by third
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`parties alone. The company’s own former Head of App Review “described the App
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`Store as ‘antiquated,’ with ‘no radical innovation, only evolution’ for the last ten
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`years.” Id. at 102.
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`3 E.g., Alston, 141 S. Ct. at 2155; In re Glumetza Antitrust Litig., No. C 19-05822
`WHA, 2021 WL 1817092, at *8 (N.D. Cal. May 6, 2021).
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`4
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`The court explained that “Apple’s slow innovation stems in part from its low
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`investment in the App Store.” Id. And it noted how, absent Apple’s restrictions,
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`innovation could increase given that “a third-party app store could put pressure on
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`Apple to innovate by providing features that Apple has neglected.” Id. Finally, the
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`court found harm to “large game developers who have well-known games” who
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`“would likely, and have the resources to, open their own stores to forego Apple’s
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`‘fees, rules, and review’” absent Apple’s “restrictions [that] foreclose
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`competition.” Id. at 96; see also id. at 144.
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`Considering the company’s restrictions as a whole, the court recognized
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`“common threads run[ning] through Apple’s practices which unreasonably
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`restrain[] competition and harm consumers, namely the lack of information and
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`transparency about policies which affect consumers’ ability to find cheaper prices,
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`increased customer service, and options regarding their purchases.” Id. at 118.
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`Apple “employs these policies so that it can extract supracompetitive commissions
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`from this highly lucrative gaming industry.” Id.
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`In short, unlike the overwhelming majority of Rule-of-Reason cases, the
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`court found that Epic demonstrated substantial anticompetitive effects. Even rarer,
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`the effects took place along two separate axes: price and innovation.
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`5
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`II. The Court Below Erred in Treating Apple’s Security and Privacy
`Explanations as Antitrust Justifications
`After a plaintiff demonstrates a substantial anticompetitive effect, the burden
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`shifts to the defendant to demonstrate a procompetitive justification. In this case,
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`Apple argued that its restrictions on competition were necessary to ensure that
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`products developed and sold by competing app developers met security and
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`privacy standards selected by Apple. The court below erred in crediting these
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`explanations because they are not cognizable antitrust justifications.4
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`The court erred as a matter of law in treating what it called the “security,
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`privacy, and reliability” benefits claimed by Apple as cognizable justifications for
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`restricting competition (1) among third party app developers and between those
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`developers and apps developed and sold by Apple and (2) between Apple and
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`
`4 The court reasonably did not rely on Apple’s purported justification based on
`“distribution restrictions [being] part of its [IP] licensing arrangement for which it
`is entitled to be paid.” Op. 104. For starters, Apple did not need the restrictions to
`be compensated because it could simply charge a fee when it licensed its
`application programming interfaces (“APIs”) to app developers. E.g., Chicago
`Prof’l Sports Ltd. P’ship v. NBA, 961 F.2d 667, 675 (1992) (“When payment is
`possible, free-riding is not a problem because the ‘ride’ is not free.”).
`In addition, Apple could not reasonably claim that it was entitled to the
`inflated compensation the restrictions enabled it to charge (Op. 92–94, 144)
`because (1) the court found that its claim to a 30% commission rate was
`“pretextual,” id. at 114, 146, and (2) for more than a century, courts have held that
`charging even a “reasonable price” is not a defense to otherwise anticompetitive
`conduct. E.g., United States v. Trenton Potteries Co., 273 U.S. 392, 396 (1927);
`United States v. Joint Traffic Ass’n, 171 U.S. 505, 570–71 (1898); United States v.
`Aluminum Co. of Am., 148 F.2d 416, 427 (1945). Apple is entitled only to the
`compensation it can obtain without imposing anticompetitive restrictions.
`
`6
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`

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`competing app distributors. Id. at 105. The court explained that those alleged
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`benefits were intended to protect users from misrepresentations from app suppliers,
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`“constant crashing” from unreliable apps, objectionable content like pornography,
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`and apps that ask for home addresses or access to a user’s camera or microphone.
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`Id. The claimed benefits, in other words, were purported improvements in the
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`quality of apps developed and sold by third parties in competition with one another
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`and with apps developed by Apple. Apple implemented these claimed benefits by
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`restricting competition in app distribution and, in particular, requiring that all apps
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`for Apple devices be distributed exclusively through Apple’s app store and that all
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`fees paid by consumers to app developers be processed through Apple’s app store.
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`Such restrictions directly impose anticompetitive harm by denying customers the
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`option of obtaining apps and buying app services through other distribution
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`channels that might offer them lower prices or more innovative and attractive
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`distribution services.
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`Apple tries to justify this harm by arguing that it is necessary to enable it to
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`provide the claimed security and privacy benefits. In effect, Apple is arguing that it
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`should be permitted to reduce competition in app distribution in order to force
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`consumers not only to pay higher prices for inferior distribution services, but also
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`to buy security and privacy benefits that they might not want. Imagine if
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`automobile manufacturers claimed that they should be permitted to restrict
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`7
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`competition to ensure that they could provide higher-quality cars—perhaps cars
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`with bigger engines, better sound systems, or more reliable and safer brakes. Such
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`contentions—similar to those offered by Apple—would be dismissed. And this
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`would not be a close call. For more than four decades, one of the most
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`uncontroversial principles in antitrust law is that restrictions on competition cannot
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`be justified by arguments that they will improve product quality or even safety.
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`The leading case articulating this principle is National Society of
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`Professional Engineers v. United States, 435 U.S. 679 (1978) (“Engineers”). In
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`that case, the Supreme Court held that a professional association violated antitrust
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`law by prohibiting its members’ competitive bidding to “minimiz[e] the risk that
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`competition would produce inferior engineering work endangering the public
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`safety.” Id. at 681. The Court acknowledged that the restriction could effectuate the
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`claimed benefit, in part because of the complexity of engineering matters and
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`difficulty of observing in a competitive market “all the variables which will be
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`involved in the [product’s] actual performance.” Id. at 694.
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`But the Court rejected the justification as a matter of law and explained that
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`“[t]he Sherman Act reflects a legislative judgment that ultimately competition will
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`produce not only lower prices, but also better goods and services.” Id. at 695
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`(emphasis added); see also id. (quoting Standard Oil Co. v. FTC, 340 U.S. 231,
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`248 (1951) (“The heart of our national economic policy long has been faith in the
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`8
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`value of competition.”)). Foreshadowing Apple’s arguments here, the Court
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`explained that “[t]he assumption that competition is the best method of allocating
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`resources in a free market recognizes that all elements of a bargain—quality,
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`service, safety, and durability—and not just the immediate cost, are favorably
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`affected by the free opportunity to select among alternative offers.” Id. And in one
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`of the most cited clauses in antitrust’s modern era, the Court concluded that the
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`attempt to fabricate a safety-based antitrust justification was “nothing less than a
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`frontal assault on the basic policy of the Sherman Act.” Id.
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`In the years since Engineers, the Supreme Court has never wavered from the
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`core principle of the case—that conduct that harms competition cannot be justified
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`under antitrust law on the ground that it furthers other, non-competition objectives.
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`In FTC v. Indiana Federation of Dentists (“Indiana Dentists”), for example, the
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`Court rejected an attempt by dentists collectively to “refuse to submit x rays to
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`dental insurers for use in benefits determinations.” 476 U.S. 447, 448 (1986). The
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`dentists were responding to insurers’ cost-containment measures, which they
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`viewed “as a threat to their professional independence and economic well-being”
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`and which they argued would lead to lower-quality medical care. Id. at 449. But
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`the Court held that the defendants were not “justified in deciding on behalf of
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`[their] customers that they did not need the information” because “if that were the
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`case, the discipline of the market would itself soon result in the insurers’
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`9
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`abandoning their requests for x rays.” Id. at 462. Applying Engineers, the Court
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`held that the defendants could not claim that the provision of x rays would result in
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`“inadequate treatment” because such an attempt to block consumers from “an
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`unrestrained market” that could lead to “unwise and even dangerous choices” is “a
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`frontal assault on the basic policy of the Sherman Act.” Id. at 463 (quotation marks
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`omitted).
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`In FTC v. Superior Court Trial Lawyers Association (“SCTLA”), “a group of
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`lawyers agreed not to represent indigent criminal defendants in the District of
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`Columbia Superior Court until the District of Columbia government increased the
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`lawyers’ compensation.” 493 U.S. 411, 414 (1990). While recognizing that “the
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`city purchases respondents’ services because it has a constitutional duty to provide
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`representation to indigent defendants” and that “the quality of representation may
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`improve when rates are increased,” the Court held that “neither of these facts is an
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`acceptable justification for an otherwise unlawful restraint of trade.” Id. at 423.
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`Relying on Engineers, the Court concluded that “[t]he social justifications
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`proffered for [the defendants’] restraint of trade . . . do not make it any less
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`unlawful.” Id. at 424.
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`And just last year in NCAA v. Alston, the Court addressed restraints that
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`limited the education-related benefits available to collegiate student-athletes. The
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`Court emphatically rejected the NCAA’s efforts to seek “a sort of judicially
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`10
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`ordained immunity from the terms of the Sherman Act for its restraints of trade . . .
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`because they happen to fall at the intersection of higher education, sports, and
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`money.” 141 S. Ct. at 2159. Relying in large part on Engineers, the Court made
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`clear that it “has regularly refused materially identical requests from litigants
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`seeking special dispensation from the Sherman Act on the ground that their
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`restraints of trade serve uniquely important social objectives beyond enhancing
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`competition.” Id. (emphasis added).5
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`Like the unsuccessful defendants in these cases, Apple is arguing that
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`interbrand competition—in this case, in robust app distribution—will lead to
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`inferior product quality and that it should be therefore permitted to prohibit such
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`competition. But if Engineers and its four decades of Supreme Court progeny
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`mean anything, it is that this argument is foreclosed as a matter of law.6 Indeed, the
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`5 Courts have accepted defendants’ antitrust justifications only when they enhance
`competition. See, e.g., Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 21–22
`(1979) (joint selling arrangement created a new product that increased output and
`competition); Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 54 (1977)
`(restrictions on intrabrand competition ameliorated free-rider problems and other
`market failures and thereby “promote[d] interbrand competition”).
`6 See Erika M. Douglas, Data Privacy Protection as a Procompetitive Justification,
`36 Antitrust 1, 12 (Dec. 2021) (decision of the district court in Epic v Apple is
`contrary to Engineers and Indiana Dentists because the “asserted social welfare
`improvement” of “greater app security and privacy,” even if “normatively ‘good’
`for consumers, . . . requires the absence or reduction of competition”); see also id.
`(“It is true that a reliable, secure source for app downloads benefits consumers in
`the broader sense of social welfare achieved through privacy and security
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`11
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`requirement that antitrust justifications must be based on “enhancing competition”
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`has special force when the purported non-competition justification has to do with
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`increasing product quality. There is no basis in economics for concluding that
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`higher-quality products are better for consumers when, as the court below found in
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`this case, they are also higher-priced.7 (Some consumers, for example, prefer
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`Chevrolets to BMWs, and vice versa.) And under the antitrust laws, it is consumers
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`and competition, not powerful firms like Apple, that are supposed to decide what
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`combination of price and quality they prefer.
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`The court below asserted that Apple’s restraints on competition among app
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`developers enhanced interbrand competition between Apple and Android devices.
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`Op. 145–46. This statement, asserted with no factual findings in support, rests on a
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`fundamental misunderstanding of the applicable law and the underlying
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`economics.
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`The court relied on Leegin Creative Leather Products, Inc. v. PSKS, Inc. for
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`the proposition that “restricting price competition among retailers who sell a
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`particular product can help the manufacturer of that product compete against other
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`manufacturers.” Op. 145–46 (citing 551 U.S. 877, 890–91 (2007)) (emphasis
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`protection,” but “this type of normative privacy claim is not cognizable as a
`justification under current antitrust case law.”).
`7 See, e.g., Richard J. Gilbert & A. Douglas Melamed, Innovation Under Section 2
`of the Sherman Act, 84 Antitrust L.J. 1, 15 (2021); Michael Spence, Cost
`Reduction, Competition, and Industry Performance, 52 Econometrica 101 (1984).
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`added). The idea is that a manufacturer can decide how to distribute its product—
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`for example, through a particular combination of quality and price—because it is
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`motivated to maximize the product’s commercial value. The court did find that
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`Apple believed that users generally value privacy and security and thus chose to
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`feature those attributes in its products. See Op. 110 (security and privacy are “a
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`competitive differentiator for Apple”). The quoted language from Leegin and the
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`court’s findings would be relevant if the restraints at issue involved distribution of
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`the iPhone and other Apple products and were thus restrictions on intrabrand
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`competition. But they are beside the point for the restraints here, which limit
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`interbrand competition by restricting the distribution of apps developed and
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`produced by third parties that compete with each other and with apps provided by
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`Apple. The antitrust laws do not allow such a restriction of interbrand competition
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`to be justified on the ground that it improves the quality of other app developers’
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`products.
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`Apple’s interest in security and privacy might have been relevant if Apple
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`had shown that restricting the product quality and distribution choices of
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`competing app developers is necessary to enable Apple to compete effectively with
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`Android or other rivals. Apple might have shown, for example, that security
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`problems with third-party apps undermine the security of Apple’s devices or its
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`apps. Or Apple might have shown that users that purchased apps in other
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`distribution channels might have blamed Apple for security and privacy problems
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`with those apps, notwithstanding the reasonable and predictable warnings that
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`Apple would have communicated to users about acquiring apps from somewhere
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`other than the App store. But Apple made no such showings, and the court made
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`no such findings. In short, with respect to security and privacy, the court’s findings
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`show that the only possible effect of Apple’s restrictions was to affect the security
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`and privacy attributes of competitors’ products and their ability to compete with
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`one another and with Apple.
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`In failing to recognize the uncontroversial principle—articulated in
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`Engineers, Indiana Dentists, SCTLA, and Alston—that it is the market, not a
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`powerful competitor, that determines preferable price/quality combinations of
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`competing products, the court below erred.
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`III. The Court Erred in Not Crediting the Less Restrictive Alternatives It
`Found in Its Findings of Fact
`If the defendant has proven a cognizable benefit to justify its conduct, the
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`court is required to determine whether that benefit could be achieved by some
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`other means, usually called a “less restrictive alternative,” that would be materially
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`less harmful to competition. E.g., Alston, 141 S. Ct. at 2162–63; O’Bannon v.
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`NCAA, 802 F.3d 1049, 1060 (9th Cir. 2015). The court below erred in its
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`assessment of less restrictive alternatives as it overlooked its own factual findings
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`when it reached its conclusions about this issue.
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`In its factual determinations (Op. 2 (“Part I: Findings of Fact”)), the court
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`found a less restrictive alternative to Apple’s constrictive app review. The court
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`observed that under the “notarization” model “currently used on macOS,” Apple
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`“could continue to review apps without limiting distribution.” Id. at 112. Pursuant
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`to this model, “Apple scans apps using automatic tools and ‘notarizes’ them as safe
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`before they can be distributed without a warning.” Id. Apps “can still be distributed
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`through the Mac store (with complete app review) or with a warning if not
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`notarized, but notarization provides a ‘third path’ between full app review and
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`unrestricted distribution.” Id.
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`The court found this model “particularly compelling” because “Apple
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`contemplated a similar model when developing iOS,” which “is based on macOS
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`and share[s] the same kernel.” Id. According to documents in the case, “Apple
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`initially considered using app signing for security while allowing developers to
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`distribute freely on iOS.” Id. In fact, “Apple could continue performing app review
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`even if distribution restrictions were loosened.” Id.8
`
`
`8 Although Apple’s Senior Vice President of Software Engineering claimed that
`macOS had a “malware problem” relative to iOS, the court observed that these
`opinions “appear to have emerged for the first time at trial,” which “suggests he is
`stretching the truth for the sake of the argument.” Id. at 113; see also id. (“Prior to
`this lawsuit, Apple has consistently represented Mac as secure and safe from
`malware.”).
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`The court observed that, if Apple implemented a review “similar to the type
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`done on the App Store, there is no reason why the results would be different.” Id.
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`And the court rejected “Apple’s only response,” which is that “app review may not
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`scale given developers’ expectation over timing.” Id. The court found that “[g]iven
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`that app review is already required for all apps in the App Stor