Apple monopoly ruling blatantly 'wrong'

·3-min read

A decision allowing Apple to move allegations of Australian law breaches to the United States is against the public interest and contains "fundamental errors of law", an appeal court has heard.

Apple in April succeeded in stopping a game developer's market power misuse case being heard in Australia after the tech giant pointed to a contract dictating disputes must first be filed in California.

But that decision could have a "chilling effect", Neil Young QC told the Full Court of the Federal Court on Wednesday.

The judgment would signal to potential contraveners of Australian competition law that "you can avoid the operation of such laws" by imposing a forum selection clause on other parties in contracts, he said.

"That is the most undesirable public interest consequence that would undermine the deterrent effect of the legislation," Mr Young said.

A forum selection clause is in the Apple Developer Program License Agreement between the tech giant and Mr Young's client, multi-billion-dollar software developer Epic Games.

Epic, which runs popular online game Fortnite, alleges Apple's control of the iPhone and iPad app market breaches Australian competition law.

Fortnite was booted off Apple's App Store and Google's Play Store in August 2020 after allowing users to bypass the tech giants' in-app payment systems and their hefty commissions.

Justice Nye Perram's decision went against a long line of Federal Court and superior court rulings concerning choice of forum clauses, Mr Young said.

"He's inappropriately disregarded the public interest aspects of this case and the third-party benefits that would flow from the matter staying in this court," Mr Young said.

"These are fundamental errors."

But Apple's lawyer said Epic broke its contractual promise on the forum clause and the courts' attitude to such a breach was "perfectly well settled".

"It's critical to recognise the law doesn't consider clauses of this kind to be contrary to public policy," Stephen Free SC said.

A choice of forum served both the private and public interest, allowing global companies to have certainty about where they will litigate if they fall into dispute, he said.

Epic denies breaching its contractual promise.

Justice John Middleton suggested the competition regulator could still bring issues of market power against Apple in Australian courts if it saw fit.

But Mr Young said that went against federal parliament's intention to allow anyone to seek an injunction under competition law and those rulings to have broad effect.

The appeal has also drawn attention from the Australian Competition and Consumer Commission and Google Payment Australia, which operates in-app payments in the Android marketplace.

Both were permitted to make written submissions to the court.

Judgment was reserved.

Epic has filed similar cases against Apple and Google in the US and Europe, alleging contraventions of market power laws in those jurisdictions.

Judgment has been reserved in the US case.

Apple and Google say the 30-per-cent cut they take on in-app payments support security measures.

Since Epic launched its market power cases, the tech giants have both announced reductions in commission charges for smaller developers.

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