Neil Cybart 4/27/23 Neil Cybart 4/27/23

U.S. Appeals Court Sides With App Store, App Store Curation Is Key, Apple's Anti-Steering Loss Isn’t Major (Daily Update)

Hello everyone. Today's update will be dedicating to discussing the latest chapter of the Epic Games vs. Apple legal battle in the U.S. The U.S. Court of Appeals for the Ninth Circuit upheld all of the district court’s rulings that Epic had appealed. We go over Neil’s thoughts on the ruling, why App Store curation is playing such a big role with the App Store’s defense, and why Apple’s anti-steering provision loss isn’t a major blow to the company. Let's jump right in.

U.S. Appeals Court Sides With App Store

Back in September 2021, the U.S. District Court for the Northern District of California (the district court) issued its 185-page ruling in Epic Games vs. Apple. The district court's ruling was an unequivocal beating for Epic Games. We won’t go over all of the details of the case in this update. You can do so by reading the September 13th, 2021 daily update. Instead, there were four primary takeaways from that ruling:

iOS App Distribution. The district court ruled Apple can’t have a monopoly over iOS app distribution because that’s no different than saying a company has a monopoly over a service that only it can provide.
In-App Purchases. The district court found that IAP is not a separate product. Instead, it’s part of the iOS experience. That was a crucial determination as it played a role in the court declaring Apple’s requirement to have iOS developers use IAP (and Apple payment) as legal.
Switching Costs. The district court did not buy Epic’s arguments about the App Store increasing switching costs and customer lock-in. The court said Epic did not provide anything to show consumers actually faced switching costs moving from iOS to other gaming platforms.
App Store Curation. The district court upheld Apple’s App Store curation model involving human review.

On Monday, the U.S. Court of Appeals for the Ninth Circuit

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Neil Cybart 12/13/22 Neil Cybart 12/13/22

FTC Sues Microsoft Over Activision Deal, Console Gaming Competition, Games vs. Video Competition (Daily Update)

The update is dedicated to discussing the FTC suing Microsoft over its proposed Activision Blizzard acquisition. We focus on Neil’s thoughts regarding competition in gaming and the areas where the FTC faces its steepest challenges in going after Microsoft. The discussion concludes with a look at differences between games and video when thinking of competition and U.S. antitrust.

Hello everyone. Happy Tuesday. Let's jump right into today's update.

FTC Sues Microsoft Over Activision Deal

Here’s the WSJ:

“The Federal Trade Commission Thursday sued Microsoft Corp. to block its planned $75 billion acquisition of Activision Blizzard Inc., taking one of its biggest shots under the Biden administration at halting a merger of technology giants.

The lawsuit sets the stage for a court challenge over the deal as Microsoft agreed as part of negotiations with the ‘Call of Duty’ publisher to defend the acquisition against a government lawsuit.

The law enforcement agency said the deal is illegal because it would give Microsoft the ability to control how consumers beyond users of its own Xbox consoles and subscription services access Activision’s games. The company could raise prices for people who don’t use Microsoft’s hardware to access the games, or even cut off access entirely, the FTC said.

‘Microsoft has already shown that it can and will withhold content from its gaming rivals,’ said Holly Vedova, director of the FTC’s bureau of competition, in a statement. ‘Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.’

Microsoft said it continues to believe the deal, which it values at $68.7 billion after adjusting for Activision’s net cash, would expand competition and signaled it plans to litigate with the federal agency.

‘We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC,’ Brad Smith, Microsoft vice chair and president, said. “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”

The FTC’s complaint is available here.

The complaint's primary thrust has to do with Microsoft removing one of the few “independent companies capable of developing standout video games [for high-performance video game consoles]” and the impact such a deal would have on Sony PlayStation.

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