Apple denies “shopping centre” comparison in Australian Epic trial 

Apple has rejected comments from an Australian judge comparing the technology company to a shopping centre owner, arguing the analogy is incorrect because mall operators do not help retailers produce their goods.

Justice Jonathan Beach of the Federal Court of Australia asked today why he should not look at Apple as a “digital shopping centre owner” when determining a relevant market to assess whether the technology giant has misused its market power.

Apple provides a multi-sided platform where developers are essentially retailers who want to lease space to sell their goods to consumers, but Justice Beach said Apple is not processing the transactions that occur.

The iPhone maker began its closing arguments today in Epic Games’ misuse of market power trial against it and Google, which began on 18 March.

Matthew Darke SC, who acts for Apple, argued that his client does far more than a shopping centre owner, as the latter does not assist retailers in producing and selling their goods to consumers. 

Apple facilitates transactions by providing access to its intellectual property, developer tools and technologies, he said. The company also reviews apps and ascertains the quality of what developers sell, Darke added.

But Justice Beach argued that Apple’s provision of services for developers to operate is similar to granting access to the physical infrastructure of a shopping centre. The owner also sets rules for retailers to an extent – such as by telling tobacco stores that they cannot also sell rifles, the judge said.

The analogy came as Apple sought to counter Epic’s proposed relevant market definitions for the distribution of apps on iOS devices and related payment services. Apple instead argues a market for the facilitation of app transactions, which Justice Beach questioned during opening arguments.

Apple’s lawyer also accused Epic today of trying to secure a compulsory access regime to its intellectual property rights, citing an argument that helped the iPhone maker win a similar US litigation.

Apple has spent billions of dollars building its ecosystem and Epic is now wanting to use that to compete with Apple, Darke said. Competition law does not go that far, he added.

Since access to Apple’s intellectual property is a necessary component of developers operating on iOS devices and the company would never license those rights for an alternative app marketplace, Epic’s entire relevant market hinges on “theoretical competition”, Darke said.

Epic’s markets are based on unavailable hypotheses that assume away Apple’s proprietary rights, he argued. Australia’s Competition and Consumer Act directs that markets be defined on actual or potential competition, which Epic has failed to do, he added.

Justice Beach questioned whether Apple’s proprietary rights trump the law’s misuse of market power provisions and why he should assume that Apple would never license those rights in a future scenario – which would open the door for potential competition. 

The ramifications for accepting a stance where Apple, as a monopoly owner of its intellectual property, would never license them in a but-for-future world could be applied to many other markets and “run a truck” through the statute and allow parties to avoid the issue of defining a market, he said.

Apple’s closing submissions continue on Monday before Google makes its final arguments. The trial is scheduled to conclude next Friday, and Justice Beach has hinted he could reach a decision by the end of this year.

The Federal Court has also joined two class action lawsuits to the hearing, alleging that Apple and Google have misused their market power to charge supracompetitive commission rates.

Counsel to Epic Games

Allens

Partners Fiona Crosbie and Christopher Prestwich in Sydney and Robert Walker, Rosannah Healy and Kate Austin in Melbourne

New Chambers

Neil Young KC in Melbourne

Banco Chambers

Ruth Higgins SC in Sydney

Fifth Floor St James’ Hall Chambers

Garry Rich SC in Sydney

Counsel to Google

Corrs Chambers Westgarth

Partners Mark McCowan and Simon Johnson in Sydney

Banco Chambers

Cameron Moore SC and Robert Yezerski SC in Sydney

Counsel to Apple

Clayton Utz

Partner Adrian Kuti in Sydney

Tenth Floor Chambers

Matthew Darke SC in Sydney

12 Wentworth Selborne Chambers

Conor Bannan in Sydney

Eleven Wentworth

Stephen Free SC in Sydney

Counsel to the classes

Phi Finney McDonald

Tenth Floor Chambers

Tony Bannon SC in Sydney

Banco Chambers

John Sheahan SC in Sydney