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`Nos. 21-16506 & 21-16695
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`United States Court of Appeals for the Ninth Circuit
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`EPIC GAMES, INC.,
`Plaintiff, Counter-defendant – Appellant, Cross-Appellee,
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`v.
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`APPLE INC.,
`Defendant, Counterclaimant – Appellee, Cross-Appellant.
`_____________________________
`
`Appeal from the U.S. District Court
`for the Northern District of California
`The Honorable Yvonne Gonzalez Rogers (No. 4:20-CV-05640-YGR-TSH)
`_____________________________
`
`OPPOSITION TO APPLE INC.’S MOTION FOR
`ADMINISTRATIVE STAY AND TO STAY INJUNCTION
`PENDING APPEAL
`_____________________________
`Paul J. Riehle
`FAEGRE DRINKER BIDDLE & REATH
`LLP
`Four Embarcadero Center
`San Francisco, CA 94111
`(415) 591-7500
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`
`
`Christine A. Varney
`Peter T. Barbur
`Katherine B. Forrest
`Antony L. Ryan
`Gary A. Bornstein
`Yonatan Even
`Lauren A. Moskowitz
`Omid H. Nasab
`Justin C. Clarke
`M. Brent Byars
`CRAVATH, SWAINE & MOORE LLP
`825 Eighth Avenue
`New York, NY 10019-7475
`(212) 474-1000
`Counsel for Appellant, Cross-Appellee Epic Games, Inc.
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`CORPORATE DISCLOSURE STATEMENT
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`Pursuant to Federal Rule of Appellate Procedure 26.1, Epic
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`Games, Inc. (“Epic”) states that it has no parent corporation and that
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`Tencent Holdings Limited owns more than 10% of Epic stock.
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`TABLE OF CONTENTS
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`Page
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`CORPORATE DISCLOSURE STATEMENT ........................................... ii
`TABLE OF AUTHORITIES ..................................................................... iv
`INTRODUCTION ...................................................................................... 1
`STATEMENT OF THE CASE .................................................................. 4
`ARGUMENT ............................................................................................. 8
`I.
`APPLE WILL NOT SUFFER IRREPARABLE INJURY
`ABSENT A STAY. ................................................................... 8
`II. APPLE IS UNLIKELY TO SUCCEED ON THE
`MERITS. ................................................................................ 15
`A. Epic Proved a UCL Violation. ...................................... 15
`B. Epic Continues To Have Standing. .............................. 22
`C. Granting the UCL Injunction Was Within the
`District Court’s Equitable Authority. .......................... 25
`III. EPIC WOULD BE HARMED BY A STAY. .......................... 28
`IV. THE PUBLIC INTEREST FAVORS DENIAL OF A
`STAY. ..................................................................................... 29
`THE COURT SHOULD DENY APPLE’S
`ALTERNATIVE REQUEST FOR AN
`ADMINISTRATIVE STAY. ................................................... 30
`CONCLUSION ........................................................................................ 30
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`V.
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`iii
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`TABLE OF AUTHORITIES
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`Page(s)
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`
`Cases
`Al Otro Lado v. Wolf,
`952 F.3d 999 (9th Cir. 2020) ............................................................... 12
`Am. Passage Media Corp. v. Cass Commc’ns, Inc.,
`750 F.2d 1470 (9th Cir. 1985) ............................................................. 14
`Amylin Pharms., Inc. v. Eli Lilly & Co.,
`456 F. App’x 676 (9th Cir. 2011) ......................................................... 14
`Bresgal v. Brock,
`843 F.2d 1163 (9th Cir. 1987) ....................................................... 27, 28
`Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co.,
`20 Cal. 4th 163 (1999) ......................................................................... 16
`Chavez v. Whirlpool Corp.,
`93 Cal. App. 4th 363 (2001) ................................................................ 20
`City of San Jose v. Off. of the Comm’r of Baseball,
`776 F.3d 686 (9th Cir. 2015) ............................................................... 20
`Costco Wholesale Corp. v. Hoen,
`No. C04-360P, 2006 WL 2645183 (W.D. Wash.
`Sept. 14, 2006) ...................................................................................... 9
`Doe v. CVS Pharmacy, Inc.,
`982 F.3d 1204 (9th Cir. 2020) ............................................................. 15
`Easyriders Freedom F.I.G.H.T. v. Hannigan,
`92 F.3d 1486 (9th Cir. 1996) ............................................................... 28
`Facebook, Inc. v. BrandTotal Ltd.,
`No. 20-cv-07182-JCS, 2021 WL 2354751 (N.D. Cal.
`June 9, 2021) ....................................................................................... 17
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`Facebook, Inc. v. BrandTotal Ltd.,
`No. 20-cv-07182-JCS, 2021 WL 662168 (N.D. Cal.
`Feb. 19, 2021) ...................................................................................... 17
`Franchise Tax Bd. of Cal. v. Alcan Aluminum Ltd.,
`493 U.S. 331 (1990) ....................................................................... 23, 25
`Freitag v. Ayers,
`468 F.3d 528 (9th Cir. 2006) ............................................................... 23
`Herr v. Nestlé U.S.A., Inc.,
`109 Cal. App. 4th 779 (2003) .............................................................. 27
`High Sierra Hikers Ass’n v. Blackwell,
`390 F.3d 630 (9th Cir. 2004) ............................................................... 25
`Kilgore v. KeyBank, Nat’l Ass’n,
`718 F.3d 1052 (9th Cir. 2013) ............................................................. 25
`Kirola v. City & Cty. of S.F.,
`860 F.3d 1164 (9th Cir. 2017) ............................................................. 26
`Latta v. Otter,
`771 F.3d 496 (9th Cir. 2014) ............................................................... 10
`LegalForce RAPC Worldwide P.C. v. UpCounsel, Inc.,
`No. 18-cv-02573-YGR, 2019 WL 160335 (N.D. Cal.
`Jan. 10, 2019) ...................................................................................... 16
`Lozano v. AT&T Wireless Servs., Inc.,
`504 F.3d 718 (9th Cir. 2007) ............................................................... 15
`Montano v. Bonnie Brae Convalescent Hosp., Inc.,
`79 F. Supp. 3d 1120 (C.D. Cal. 2015) ................................................. 27
`Nken v. Holder,
`556 U.S. 418 (2009) ............................................................................... 8
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) ......................................................................... 21
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`Sundance Image Tech., Inc. v. Inkjetmall.com, Ltd.,
`No. 02-cv-2258, 2005 WL 8173280 (S.D. Cal.
`Oct. 13, 2005) ...................................................................................... 16
`United States v. Mitchell,
`971 F.3d 993 (9th Cir. 2020) ................................................................. 8
`Statutes & Rules
`Cal. Bus. & Prof. Code § 17200 ................................................................. 4
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`Epic Games, Inc. (“Epic”) respectfully requests that this
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`Court deny Apple’s motion for an administrative stay and to stay the
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`injunction pending appeal (“Mot.”).
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`INTRODUCTION
`This case challenges Apple’s conduct relating to its App
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`Store, the only means through which app developers can distribute
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`their apps to iPhones and iPads. Unlike on personal computers, where
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`consumers can get software from a variety of sources, Apple makes it
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`impossible for consumers to get apps from anywhere other than Apple’s
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`own store. Apple further requires all developers selling digital content
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`inside an app to use Apple’s own in-app payment solution (“IAP”), for
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`which Apple charges a commission that is typically 30%. Through
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`so-called “anti-steering provisions” in Apple’s App Store Review
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`Guidelines ( “Guidelines”), Apple prohibits developers from even telling
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`iOS users that they can purchase the same digital content directly from
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`the developer elsewhere. Using these restrictions, Apple has
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`maintained a supracompetitive commission and reaped extraordinary
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`profit margins of 70%-80% on its App Store for years. (A-A at 118,
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`41-42.)1
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`After a 16-day trial, the district court entered an injunction
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`against the anti-steering provisions, in order to provide consumers with
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`information about, and readier access to, competitive alternatives to
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`Apple’s IAP. The district court found that these provisions
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`“contractually enforce[] silence” concerning purchasing alternatives
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`other than IAP and thereby “hide critical information from consumers
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`and illegally stifle consumer choice” (A-A at 2, 166). After the court’s
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`decision, Apple shrugged off the impact of the injunction, dismissing it
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`as “one or two sentences scratched out of an agreement” and declaring
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`the outcome “a resounding victory”. (E-H; E-I.) But a month later,
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`Apple suddenly claimed the injunction would “threaten[]” the iOS
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`ecosystem (Mot. 2) and asked the court to stay the injunction until all
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`appeals have been resolved—a period that could last years. The district
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`court denied Apple’s motion, which Apple now pursues in this Court.
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`Apple’s Motion should be denied.
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`1 Citations to “A-[letter]” refer to Apple’s Exhibits. Citations to
`“E-[letter]” refer to Epic’s Exhibits.
`2
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`First, Apple has not shown that it will suffer irreparable
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`harm absent a stay. Throughout the trial, Apple argued that its power
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`over consumers and developers was constrained by consumers’ ability to
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`make purchases outside an app, such as on a website. But Apple now
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`claims it would be irreparably harmed by an injunction that makes that
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`option visible to consumers. Apple cannot credibly claim that “a
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`cascading series of injuries will ensue” (Mot. 22) should Apple have to
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`face the very competition on which it relied to defend itself at trial.
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`Apple’s arguments regarding irreparable harm to users and iOS
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`security should also be rejected. Purchasing options outside of apps are
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`already available on iOS devices; the injunction simply removes
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`obstacles that Apple imposed to prevent users from learning about and
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`choosing those options.
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`Second, Apple has not demonstrated likelihood of success on
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`the merits. The district court made detailed factual findings regarding
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`the anticompetitive harms resulting from Apple’s anti-steering
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`provisions, and Apple’s challenges to the sufficiency of the evidence
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`supporting those findings fall flat. Apple’s legal challenges fare no
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`better. Its “relevant market” argument is based exclusively on federal
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`law and ignores the California Supreme Court’s authoritative
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`interpretation of California’s Unfair Competition Law (“UCL”). Nor is
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`Apple correct that its decision to kick Epic off iOS devices, which Epic
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`continues to challenge as unlawful, deprives Epic of standing and
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`compels the Court to grant a stay, regardless of the merits. Apple’s
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`gamesmanship aside, Epic still faces injury through its financial
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`interest in its subsidiaries’ iOS apps and in revenue Epic earns from
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`iOS apps of its Unreal Engine licensees.
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`Finally, the public interest weighs strongly against a stay.
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`The injunction would “uncloak[] the veil hiding pricing information on
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`mobile devices and bring[] transparency to the marketplace”, benefiting
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`millions of developers and U.S. consumers. (A-A at 166.)
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` STATEMENT OF THE CASE
`Epic develops entertainment applications, including video
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`games, for mobile devices, personal computers (“PCs”) and gaming
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`consoles. Epic also develops and licenses Unreal Engine, a
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`revolutionary software suite that allows developers to create
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`three-dimensional immersive digital content. In this case, Epic
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`challenges certain Apple Guidelines, including the anti-steering
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`provisions, under the Sherman Act, California’s Cartwright Act, and the
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`UCL. (A-E ¶¶ 130-32, 227, 263.)
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`The Guidelines, which Apple requires all developers to
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`follow, compel developers to use Apple’s IAP for all in-app sales of
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`digital content—be it a book, an online yoga class, or a new map for a
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`game. This restriction does not exist for in-app sales of physical goods
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`or real world services, such as a rideshare or pizza.
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`Apple typically collects a 30% commission on every in-app
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`purchase made through IAP. For digital goods purchased outside an
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`app—for example, on the website of a game developer or a newspaper
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`publisher—Apple does not collect a commission. However, Apple
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`restricts developers’ ability to inform consumers about the availability
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`of such out-of-app purchases. Under Guideline § 3.1.1, Apple prohibits
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`developers from including in their apps any “buttons, external links or
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`other calls to action that direct customers to purchasing mechanisms
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`other than in-app purchase” for digital content. (A-D § 3.1.1.) At the
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`time of trial, the Guidelines also prohibited developers from “either
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`within the app or through communications sent to points of contact
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`obtained from account registration within the app (like email or text),
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`encourag[ing] users to use a purchasing method other than [IAP]”. (A-D
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`§ 3.1.3.) These two Guidelines are the “anti-steering provisions”.
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`During trial, in an attempt to rebut any findings of market
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`power or anticompetitive harm, Apple argued that developers’ ability to
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`sell content on the web constrained Apple’s ability to charge
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`supracompetitive prices for sales within iOS apps using IAP. One of
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`Apple’s economists testified that despite Apple’s restrictions, users can
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`“can still download and have free apps on iOS, use all the services of the
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`Apple ecosystem, and transact elsewhere”. (E-A at 2139:18-2140:15; see
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`also E-E ¶ 512 (“If Apple sought to raise its commission . . . developers
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`could monetize . . . through a web browser.”); id. ¶ 244 (“Developers
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`have many options for monetizing apps that avoid Apple’s commission
`entirely, including selling . . . through other platforms (including on a
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`web browser).”).)
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`Against this backdrop, the district court heard extensive
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`evidence showing that Apple’s anti-steering provisions stunted the
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`competitive impact of web purchases. For example, the district court
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`credited testimony from “both Down Dog [a yoga app developer] and
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`Match Group [a dating app developer] . . . that they have been unable to
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`entice users to other platforms with lower prices” and that “Apple’s
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`anti-steering provision[s] ha[ve] prevented [Down Dog] from directing
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`users to the cheaper price” on the web. (A-A at 93.) The district court
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`concluded that the anti-steering provisions “hide critical information
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`from consumers and illegally stifle consumer choice”, “prevent[]
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`informed choice among users of the iOS platform” and “contractually
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`enforce[] silence”, in violation of the UCL. (A-A at 2, 164, 166.)
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`Pursuant to these findings, the court entered an injunction
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`directing Apple to cease “prohibiting developers from (i) including in
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`their apps and their metadata buttons, external links or other calls to
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`action that direct customers to purchasing mechanisms, in addition to
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`[IAP] and (ii) communicating with customers through points of contact
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`obtained voluntarily from customers through account registration
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`within the app”. (A-G ¶ 1.) The injunction is to take effect on
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`December 9, 2021.
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`The court found for Apple on Epic’s other counts and on
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`Apple’s breach of contract and declaratory relief counterclaims, ordering
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`Epic to pay Apple damages, which Epic promptly did. (A-A at 173, 179;
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`E-J.)
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`ARGUMENT
`To obtain a stay pending appeal, Apple bears the burden of
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`showing that: (1) it will be irreparably injured absent a stay; (2) it is
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`likely to succeed on the merits; (3) the issuance of the stay will not
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`substantially injure the other parties interested in the proceeding; and
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`(4) the public interest favors a stay. Nken v. Holder, 556 U.S. 418, 426
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`(2009).
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`I. APPLE WILL NOT SUFFER IRREPARABLE INJURY
`ABSENT A STAY.
`A party seeking to stay an injunction “must demonstrate
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`that irreparable harm is probable—as opposed to merely possible—if
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`the stay is not granted”. United States v. Mitchell, 971 F.3d 993, 996
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`(9th Cir. 2020). Apple does not meet this standard.
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`First, Apple argues that the injunction will “interfere with
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`Apple’s ability to efficiently collect its commission”. (Mot. 17.) But the
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`injunction allows Apple to continue requiring developers to use Apple’s
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`IAP, with its associated commissions, for all in-app sales. The only
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`transactions on which Apple will not receive a commission are
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`transactions that happen outside the app, such as on the web, on which
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`Apple has never charged a commission. (See e.g., E-A at 66:2-5 (“I can
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`even buy V-Bucks through the web browser on my iPhone and spend
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`them on purchases in the app . . . [and] no commission goes to Apple.”).)
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`The injunction simply makes it easier for consumers to learn about and
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`take advantage of the existing ability to make purchases outside an
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`app. Apple is concerned that greater information flow to consumers will
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`lead to more competition, but that is not irreparable harm.
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`Importantly, at trial Apple maintained that consumers have
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`always had paths outside iOS apps to purchase digital content for use
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`in those apps, without Apple collecting a commission, and that those
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`options constrained Apple’s pricing. (See, e.g., E-A at 3236:16-3238:3
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`(Apple witness demonstrating payments on a web browser as an
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`alternative channel for purchasing digital content for games); E-D ¶ 152
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`(Apple is “constrained by the fact that consumers can make purchases
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`from developers through an iOS web browser”); E-A at 2139:18-2140:15;
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`E-E ¶ 512; id. ¶ 244.) Apple cannot claim that its “business model”
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`(Mot. 18) will be irreparably harmed if these existing out-of-app
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`transacting alternatives become more salient. See Costco Wholesale
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`Corp. v. Hoen, No. C04-360P, 2006 WL 2645183, at *5 (W.D. Wash.
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`Sept. 14, 2006) (“The mere existence of competition is not irreparable
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`harm, in the absence of substantiation of severe economic impact.”).2
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`Second, Apple argues that the injunction will “adversely
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`affect iOS users” because (i) “[a] number of important features
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`implemented through IAP are unavailable through external links” and
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`(ii) external links may “exploit[] users or violat[e] Apple’s privacy
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`guidelines”. (Mot. 18-19.) Even if these supposed harms to users
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`constituted harms to Apple, as required for a stay (see Latta v. Otter,
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`771 F.3d 496, 498 (9th Cir. 2014)), Apple’s arguments wrongly suggest
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`that the injunction prevents consumers from using IAP. It does not.
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`Consumers who value IAP or Apple’s promises of privacy can continue
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`to make in-app purchases using IAP. The injunction simply gives
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`consumers a choice by removing an artificial barrier that Apple had
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`placed on developers’ ability to advise consumers of other options.
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`2 Apple’s claim that the injunction would put Apple at a competitive
`disadvantage by “rais[ing] Apple’s cost of commission collection
`compared to other platforms” (Mot. 18) is without merit. Apple will still
`be able to collect commissions on all in-app purchases, as it does now.
`Out-of-app purchases of the type facilitated by the injunction have
`never been subject to a commission.
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`Apple’s other arguments about the supposed dangers of
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`external links are contradicted by the fact that thousands and
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`thousands of iOS apps already have external payment mechanisms.
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`Apple allows external links and payment solutions other than IAP for
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`the purchase of physical goods and services, like food or transportation.
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`(See e.g., E-A at 2769:7-18 (developers sold over $400 billion worth of
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`physical goods through iOS apps in 2019), 1987:5-9 (sales of physical
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`goods do not use IAP).) During trial, Apple did not show that these
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`payment solutions impede its ability to “protect the iOS ecosystem”.
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`(See, e.g., E-A at 3109:20-3110:3 (Apple executive was unaware of “any
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`analysis within Apple that has examined whether or not . . . alternative
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`payment processing methods utilized by sellers of physical goods have
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`introduced security vulnerabilities into the iPhone”).)
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`Moreover, Apple does not deny the district court’s
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`observation that external links can be tested and reviewed as part of
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`Apple’s App Review process. (A-B at 3.) Instead, Apple suggests that
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`using App Review to test external links would impose a “‘substantial’
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`time and resource burden” on Apple. (Mot. 19.) But the time or
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`monetary cost of complying with an injunction is not irreparable harm.
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`See Al Otro Lado v. Wolf, 952 F.3d 999, 1008 (9th Cir. 2020) (“The key
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`word in this consideration is irreparable. Mere injuries, however
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`substantial, in terms of money, time and energy necessarily
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`expended . . . are not enough.”). Apple’s claims that it would be “costly”
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`to “develop new App Review processes, write and enforce new
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`Guidelines, and implement alternative solutions for collecting its
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`commission” (Mot. 21) are unavailing for the same reason.
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`Regarding Apple’s concern that external links may be
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`changed by the developer after the app has been reviewed (Mot. 19),
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`Apple has a mechanism for removing rogue apps from the App Store
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`that change their behavior post-App Review. (See E-A at 3509:10-13;
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`E-B ¶ 115.) In addition, there is no genuine risk to the iOS ecosystem
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`from external links, given that Apple currently allows countless
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`external links for buying physical goods and services. Apple’s
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`scaremongering is pure pretext, contradicted by its existing behavior.
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`Ultimately, as the district court found, Apple’s motion does
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`not raise any substantial security argument that was not already
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`considered and rejected by the court in its post-trial decisions. (See A-A
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`at 166 (“Apple’s business justifications . . . will not be significantly
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`impacted by the increase of information to and choice for consumers.”);
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`A-B at 3 (“The reader rule, cross-play, and cross-wallet all reflect trial
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`examples that alternatives outside the app can be accommodated.
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`Mr. Kosmynka’s declaration does not change the result. In most ways,
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`he merely repeats arguments that the Court considered as part of its
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`Order.”).)
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`Third, Apple argues that it will suffer harm because the
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`injunction “will expose users with much greater frequency to the risks of
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`external payment links”, will “lower user confidence in the safety,
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`security, and reliability of digital content purchases”, and developers
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`“will suffer from this lowered confidence as well, as users will be less
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`inclined to make purchases”. (Mot. 20 (emphasis in original).) Apple
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`has not put forward, at trial or now, a single developer that shares this
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`concern. Instead, Apple relies solely on the assertions of its employee
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`Mr. Kosmynka. (Mot. 20.) But Mr. Kosmynka does not explain why the
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`supposed decline in user confidence has not afflicted the sales of
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`physical goods and services, as to which external links have always
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`been allowed.
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`Moreover, Mr. Kosmynka does not grapple with the fact that
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`the injunction does not require developers to offer external links and
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`does not require consumers to use them; the injunction simply removes
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`prohibitions imposed by Apple. Under the injunction, Apple may
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`continue to require developers to use IAP for in-app purchases, and
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`consumers who do not have “confidence” in external links need not use
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`them. Speculative and unsubstantiated statements like
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`Mr. Kosmynka’s cannot support irreparable harm. See e.g., Am.
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`Passage Media Corp. v. Cass Commc’ns, Inc., 750 F.2d 1470, 1473
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`(9th Cir. 1985) (rejecting affidavits claiming irreparable harm as
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`“conclusory and without sufficient support in facts”); Amylin Pharms.,
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`Inc. v. Eli Lilly & Co., 456 F. App’x 676, 679 (9th Cir. 2011) (no
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`irreparable harm absent “concrete evidence”).
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`Fourth, Apple’s argument that the “implementation of the
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`injunction would require costly technical and engineering changes”
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`lacks any factual basis in the record. (Mot. 21.) Mr. Kosmynka’s
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`declaration provides no detail regarding the required changes, and the
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`argument is belied by the existing “buttons, external links, or other
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`calls to action that direct customers to purchasing mechanisms other
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`than [IAP]” (A-D § 3.1.1) permitted in apps selling physical goods or
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`services.
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`II. APPLE IS UNLIKELY TO SUCCEED ON THE MERITS.
`A. Epic Proved a UCL Violation.
`Apple has not identified any errors by the district court that
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`would warrant reversal.
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`First, the district court properly applied the balancing test to
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`assess Apple’s UCL liability. Apple’s cursory statement that the
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`balancing test “is inapplicable here as a matter of law” (Mot. 9) lacks
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`merit. In Lozano v. AT&T Wireless Services, Inc., 504 F.3d 718, 735
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`(9th Cir. 2007), the sole case that Apple cites for this proposition, this
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`Court found that in consumer actions—as opposed to competitor
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`actions—courts may apply the tethering test or the balancing test to
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`determine unfairness, and that these options “are not mutually
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`exclusive”. Id. at 736; see also Doe v. CVS Pharmacy, Inc., 982 F.3d
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`1204, 1214-15 (9th Cir. 2020). As the district court found that “Epic
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`Games has standing to bring a UCL claim as a quasi-consumer, not
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`merely as a competitor” (A-A at 161), its use of the balancing test was
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`appropriate. In any event, the district court concluded that Apple
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`violates the UCL under both tests. (A-A at 162-66; A-B at 2 (“Contrary
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`to Apple’s assertions, the Court evaluated the UCL claims using two
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`tests, not one.”).)
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`Second, UCL jurisprudence does not require the district
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`court to “analyze the steering provisions using the same market it had
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`used for Epic’s other claims”, as Apple claims (Mot. 9), or to conduct a
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`full-blown market definition exercise of the kind courts undertake in
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`Sherman Act cases. Indeed, in Cel-Tech Communications, Inc. v. L.A.
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`Cellular Telephone Co., 20 Cal. 4th 163 (1999), the California Supreme
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`Court allowed an unfair competition claim to proceed without such a
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`market definition exercise. Id. at 180, 187. Other UCL cases have
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`recognized cognizable threats to competition without a full market
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`definition analysis. See, e.g., LegalForce RAPC Worldwide P.C. v.
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`UpCounsel, Inc., No. 18-cv-02573-YGR, 2019 WL 160335, at *18
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`(N.D. Cal. Jan. 10, 2019) (denying dispositive motion under the UCL
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`unfairness prong without a full-scale market definition); Sundance
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`Image Tech., Inc. v. Inkjetmall.com, Ltd., No. 02-cv-2258, 2005 WL
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`8173280, at *9 (S.D. Cal. Oct. 13, 2005) (same).
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`In the sole UCL case Apple relies on, the court recognized in
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`a preceding order that “a plaintiff need not always allege a Sherman
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`Act violation to state a UCL claim based on ‘unfair’ conduct”. Facebook,
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`Inc. v. BrandTotal Ltd., No. 20-cv-07182-JCS, 2021 WL 662168, at *10
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`(N.D. Cal. Feb. 19, 2021). But the plaintiff there failed to allege
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`“circumstances that would allow something other than an antitrust
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`violation to support an ‘unfair’ prong claim”, so the court proceeded to
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`rely on Sherman Act cases requiring market definition. Facebook, Inc.
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`v. BrandTotal Ltd., No. 20-cv-07182-JCS, 2021 WL 2354751, at *15
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`(N.D. Cal. June 9, 2021). Here, by contrast, the district court found that
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`Epic’s UCL claim “warrants separate consideration apart from antitrust
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`laws”. (A-A at 162.)
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`Further, the district court’s analysis was not done “in the
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`abstract”, as Apple suggests. (Mot. 9.) The court considered whether to
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`use the mobile gaming transactions market it had defined under the
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`Sherman Act but concluded it could not “discern any principled reason
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`for eliminating the anti-steering provisions to mobile gaming only”
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`because “[t]he lack of information and transparency extends to all apps,
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`not just gaming apps”. (A-A at 167.)
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`Apple’s challenges to the sufficiency of the evidence are also
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`unavailing. It contends that anticompetitive effects of the anti-steering
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`provisions on developers of non-gaming apps are “insufficient evidence
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`to support the UCL judgment in the market for mobile gaming
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`transactions”. (Mot. 10.) But as noted above, the district court
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`specifically found that Apple’s concealment “extends to all apps”. (A-A
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`at 167.) That conclusion stands unrebutted. Apple does not present
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`any evidence, or even argument, showing disparate effects on gaming
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`and non-gaming apps.3
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`Apple also contends that “Epic’s economic experts did not
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`testify about the anti-steering provisions independent of any other
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`challenged provisions”. (Mot. 10.) But Epic’s expert did address the
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`harms caused by the provisions. (See, e.g., E-A at 1715:11-16 (anti-
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`steering provisions “make[] it much more difficult for Epic to
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`communicate to the iOS app user that they have another alternative to
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`3 Apple claims that Epic itself alleged that mobile game developers
`would be harmed “if customers were sent outside the app to make a
`purchase”. (Mot. 10 (citing A-E ¶ 116).) But Epic was referring to the
`harm that would result if out-of-app purchases were the only option—
`not a world in which in-app purchases remain available and consumers
`have a choice.
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`go to”); see also id. at 1726:16-18, 2408:15-2409:5, 2436:3-6.) Moreover,
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`no rule of law requires separate economic expert opinion about each of a
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`defendant’s interlocking anticompetitive acts. The district court also
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`heard ample testimony on the effects of the anti-steering provisions
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`from those directly harmed by them—app developers. (See, e.g., A-A
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`at 93; E-A at 363:4-364:17 (Down Dog CEO testifying that average
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`subscription price for iOS users is roughly 15% higher than on Android
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`due to Apple’s prohibition on telling users about discounted purchase
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`options on the web); id. at 366:6-367:10 (inability to steer users to
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`cheaper subscription on the web resulted in a 28% reduction in the
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`number of [Down Dog] subscribers).) Apple similarly misses the mark
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`in arguing that “novel business practices—especially in technology
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`markets—should not be conclusively presumed to be unreasonable and
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`therefore illegal”. (Mot. 10 (emphasis omitted).) Apple’s restrictions
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`were not “presumed” to be unreasonable; they were found to be harmful
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`based on concrete evidence at trial.4
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`4 Nor are they “novel”. They were adopted over a decade ago (Mot. 7-8),
`leading to extensive evidence of years of supracompetitive prices and
`extraordinary profit margins.
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`Case: 21-16506, 11/26/2021