Contents

Identity and Interest 1

Argument 2

The Injunction’s Prohibition on Commissions for Linked Transactions Is Not Consistent With Applicable Equitable and Legal Principles 2

Proscribing Commissions On Linked Transactions Is Not Permissible Equitable Relief 2

A Ban on Linked Transaction Charges Is Not Properly Tailored. 3

De Facto Price Regulation Is Inappropriate and Will Harm Innovation and Consumers 4

Antitrust Does Not Condone Judicial Central Planning. 4

Innovation and Consumer Welfare Will Be Reduced. 5

Conclusion. 5

Endnotes 6

Identity and Interest

The Information Technology and Innovation Foundation (“ITIF”) is an independent, non-profit, and non-partisan think tank. ITIF’s mission is to formulate, evaluate, and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. To that end, ITIF strives to provide policymakers around the world with high-quality information, analysis, and recommendations they can trust. ITIF adheres to the highest standards of research integrity and is guided by an internal code of ethics grounded in analytical rigor, policy pragmatism, and independence from external direction or bias. The University of Pennsylvania has recognized ITIF as setting the global standard for excellence in science and technology policy, and as one of the 40 overall “Top Think Tanks in [the] United States.”[1]

ITIF’s core focus lies at the intersection of technological innovation and public policy—including economic issues related to innovation, productivity, antitrust and competition policy, as well as technology policy issues in the areas of information technology, broadband telecommunications, mobile platforms, and more. ITIF engages in policy and legal debates, both directly and indirectly, by presenting policymakers, courts, and policy influencers with compelling data, analysis, and proposals to advance effective innovation policies and oppose counterproductive ones.

ITIF’s Schumpeter Project on Competition Policy promotes an understanding of antitrust law and economics that is designed to maximize dynamic competition and innovation, with a particular focus on promoting sound antitrust enforcement in the digital economy and other high-tech industries. ITIF draws heavily from the work of the Austrian-American economist Joseph A. Schumpeter, who famously described how competition takes the form of “creative destruction” by large firms who have the incentive and ability to engage in both the risk taking as well as research and development that are necessary to drive innovation.

As relevant here, ITIF has studied the mobile ecosystem at the heart of this appeal and concluded that the district court’s new injunction—and, in particular, preventing Apple from charging any commission on linked transactions—punitively proscribes conduct that was not found to be anticompetitive and extends well beyond the scope of proper relief under California’s Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code §§ 17200 et seq.). A ban on commissions for linked transactions is tantamount to judicial central planning that will both chill innovation as well as put the privacy and security of millions of iOS users at risk.

Argument

The Injunction’s Prohibition on Commissions for Linked Transactions Is Not Consistent With Applicable Equitable and Legal Principles

In a landmark opinion, this Court upheld a decision that two of Apple’s anti-steering provisions, pursuant to which “developers cannot communicate out-of-app payment methods through certain mechanisms such as in-app links,” violated California’s UCL. Epic Games, Inc. v. Apple Inc., 67 F. 4th 946, 968 (9th Cir. 2023). But instead of crafting “injunctive relief [that is] ‘no more burdensome to the defendant to provide complete relief to the plaintiff,’” the new injunction issued by the court below adopts an entirely different and highly problematic approach to fashioning relief. Id. at 1002 (quoting L.A. Haven Hospice, Inc. v. Sebelius, 638 F. 3d 644, 644 (9th Cir. 2011)). Specifically, the district court decided to prohibit Apple from “imposing any commission or any fee on purchases that consumers make outside an app.” Order Granting Epic Games, Inc.’s Motion To Enforce Injunction (the “Order”), at p. 75, Epic Games, Inc. v. Apple Inc., No. 20-cv-05640-YGR, (N.D. Cal. Apr. 30, 2025), Dkt. No. 1508. At bottom, such a remedy is not just wholly unnecessary to enjoin the anti-steering policies that were found to be unfair under the UCL, but it constitutes at worst a punitive remedy that extends far beyond the lower court’s civil contempt power, or at best an attempt at disgorgement that courts have made clear is simply not appropriate for this type of UCL violation.

Proscribing Commissions On Linked Transactions Is Not Permissible Equitable Relief

Preventing Apple from charging a commission on linked transactions goes beyond what is permissible under the UCL and the civil contempt power. “While the scope of conduct covered by the UCL is broad, its remedies are limited . . . . [P]revailing plaintiffs are generally limited to injunctive relief and restitution.” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144 (2003) (citations omitted). And, the Supreme Court of the United States has explained that “civil contempt proceedings are primarily coercive; criminal contempt proceedings are punitive.” Hicks v. Feiock, 485 U.S. 624, 646 (1988) (O’Connor, J., dissenting).

California courts have described how obtaining restitution for the UCL entails the “restoration of any interest in ‘money or property, real or personal, which may have been acquired by means of such unfair competition.’” Zhang v. Superior Court, 57 Cal. 4th 364, 371 (2013) (citation omitted, emphasis in original). However, there is no viable claim that any losses Epic suffered were a result of a post facto decision by Apple to charge for linked commissions, let alone any explanation as to how a ban on this behavior would make it whole. Rather, restricting Apple from charging a commission for linked transactions is not just an attempt to enforce the original injunction, but an imposition of costs on Apple in the “hundreds of millions to billions” of dollars a year. Def.’s Br., pp. 35-36, Dkt. 59.1. This result is manifestly punitive and beyond the scope of the lower court’s civil contempt power.

To be sure, the court below also intimates that Apple’s commission on linked transactions is designed to “maintain its anticompetitive revenue stream,” which suggests that restricting this behavior may be viewed as a type of non-punitive disgorgement. Order p. 2. And yet, as this Court explained, while the UCL permits “awards of restitution,” it does not countenance awards of non-restitutionary disgorgement.” Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F. 3d 991, 1008 (9th Cir. 2008) (citation omitted). Indeed, even the district court concedes that “whether Apple should be deprived of the fruits of its violation” should “be for the executive branch to decide” in any criminal contempt proceeding. Order, p. 78.

A Ban on Linked Transaction Charges Is Not Properly Tailored

Even if it could constitute legitimate equitable relief, the district court’s ban would still be impermissibly overbroad and an abuse of its remedial discretion. The primary purpose of antitrust relief should be to “unfetter a market from anti-competitive conduct.” Ford Motor Co. v. United States, 405 U.S. 562, 577 (1972). While remedial measures may take a variety of forms, this Court has made clear that injunctive relief “must be tailored to remedy the specific harm alleged” and that “[a]n overbroad injunction is an abuse of discretion.” Lamb-Weston, Inc. v. McCain Foods, Ltd., 941 F. 2d 970, 974 (9th Cir. 1991) (citations omitted); see also United States v. Microsoft Corp., 253 F. 3d 34, 107 (D.C. Cir. 2001) (relief “should be tailored to fit the wrong creating the occasion for the remedy”).

There is no such tailoring here. The conduct found to violate the UCL were two of Apple’s anti-steering practices. Epic Games, 67 F. 4th at 972. The “judgment of liability contains no determination” that the charging of a commission on linked transactions was in any sense illegal. Clark v. Coye, 60 F. 3d 600, 605 (9th Cir. 1995) (citation omitted). The district court only found Apple’s 30 percent in-app commission rate to be supracompetitive. Epic Games, Inc. v. Apple Inc., 559 F. Supp. 3d 898, 992 (N.D. Cal. 2021). It did not make either any finding that Apple’s 27% commission on linked transactions was supracompetitive, and certainly no finding that any commission for linked transactions is supracompetitive—let alone anticompetitive—even though this is precisely what the new injunction prohibits.

Courts have made clear that antitrust remedies may also include “forward-looking provisions” to restore competitive conditions, Mass. v. Microsoft, 373 F. 3d 1199, 1215-25 (D.C. Cir. 2004), and “eliminat[e] the consequences of the illegal conduct.” Nat’l Soc’y of Prof’l Eng’rs, 435 U.S. 679, 698 (1978). This type of relief should be designed to “ensure that there remain no practices likely to result in monopolization in the future.” U.S. v. Microsoft Corp., 253 F. 3d at 103 (citations omitted). However, charging a commission—either in-app or out-of-app—is not cognizable exclusionary conduct, but instead exploitative or above-cost pricing, which is merely “profit-seeking behavior [that] alone is insufficient to establish antitrust liability.” Fed. Trade Comm’n v. Qualcomm Inc., 969 F. 3d 974, 1003 (9th Cir. 2020).

De Facto Price Regulation Is Inappropriate and Will Harm Innovation and Consumers

Rather than reflect properly tailored “injunctive relief [] or restitution” under the UCL, Cohen v. DirecTV, Inc., Inc., 178 Cal. App. 4th 966, 980 (2009), the decision to prevent Apple from “[i]mposing any commission or fee on purchases that consumers make outside an app” is a thinly veiled attempt to engage in price regulation. Order, p. 75. As such, the new injunction explicitly contemplates the sort of judicial central planning that the Supreme Court has forcefully condemned. See Verizon Commc’ns, Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 408 (2004). Such behavior also extends well beyond the purview of the UCL, as courts have similarly made clear that they are not “well suited to regulating … pricing via injunction on an ongoing basis.” Beasley v. Wells Fargo Bank, N.A., 235 Cal. App. 3d 1383, 1391 (1991). In fact, by giving developers license to circumvent Apple’s in-app purchase mechanism (“IAP”), the lower court envisions the very worst kind of regulatory scheme: one which limits Apple’s ability to recoup the investments in its platform and monetize the features and user access it provides even in the context of linked transactions. Epic Games, 67 F. 4th at 970. This will chill not only Apple’s innovation incentives but also those of third parties who will be able to free ride off Apple’s investments in the iOS platform. Moreover, by incentivizing developers to steer consumers off iOS to avoid paying Apple’s commission, user safety, privacy, and security are at a greater risk of being compromised.

Antitrust Does Not Condone Judicial Central Planning

The Supreme Court of the United States has expressly warned against remedies that “require[] antitrust courts to act as central planners,” which constitutes “a role for which they are ill-suited.” Trinko, 540 U.S. at 408. Indeed, this Court has acknowledged the need for “caution about using the antitrust laws to remedy what are essentially contractual disputes between private parties engaged in the pursuit of technological innovation.” FTC v. Qualcomm, Inc., 969 F. 3d 974, 997 (9th Cir. 2020). These concerns are no less relevant to the enforcement of the UCL, with courts holding that doing price regulation under the pretext of antitrust enforcement would constitute “an inappropriate exercise of judicial authority.” Cal. Grocers Ass’n v. Bank of Am., 22 Cal. App. 4th 205, 217 (1994).

The district court’s ban on commissions for linked transactions fails to heed these warnings. It concludes that Apple’s 27 percent commission is “tied to nothing,” Order p. 2, in a way that “no reasonable mind interpreting this Court’s and Ninth Circuit’s orders would find [] permissible because it forecloses competitive alternatives.” Order, p. 60 (emphasis in the original). However, here again, not only is this not anticompetitive behavior given that even the “charging of monopoly prices, is [] not unlawful,” Trinko, 540 U.S. at 407, but “the control of charges…is better accomplished by statute [and not] ad hoc decisions of courts.” Lazzareschi Inv. Co. v. S.F. Fed. Sav. & Loan Ass’n, 22 Cal. App. 3d 303, 311 (1971).

It is true both that courts can engage with the terms and conditions between parties when remedying anticompetitive behavior like unilateral refusals to deal, as well as that by virtue of the new injunction’s decision to ban any commission on linked transactions—that is, to effectively impose a zero price—the new injunction may not entail courts “identifying the proper price, quantity, and other terms of dealing.” Trinko, 540 U.S. at 408. However, not only was Apple not found to have anticompetitively refused to deal, but the court does expressly deploy a regulatory calculus in rejecting Apple’s 27 percent commission on linked transactions on the grounds that it does not reflect a proper “valuing [of] its intellectual property” but instead “reverse engineering a number right under 30% that would allow it to maintain its anticompetitive revenue stream.” Order, p. 60 (citation omitted).

Innovation and Consumer Welfare Will Be Reduced

The district court’s foray into judicial regulation will chill iOS innovation. As it recognized prior, Apple charges commissions to obtain “compensation for its intellectual property,” Epic Games, 559 F. Supp. 3d at 1012. But if developers steer users to payments outside the iOS ecosystem, Apple’s ability to recoup its investments in iOS is put at risk, as “this relief would create a pathway for developers to bypass Apple’s 30% commission altogether.” Epic Games, 67 F. 4th at 970. As a result, Apple risks being unable to “guard its intellectual property from uncompensated use by others.” Epic Games, 559 F. Supp. 3d at 1039.

Developer innovation may also be stifled. Prohibiting Apple from charging a commission on linked transactions amounts to “enforced sharing” for the features and access to users its iOS platform provides. Trinko, 540 U.S. at 408. This, in turn, enables free riding by developers and lessens incentives for them to invest in methods of their own to drive transactions to their preferred payment options. What’s more, to keep fueling investments in iOS, Apple may be forced to generate more revenue through fixed payments, such as by starting to charge small developers a core technology fee, which could strain their ability to dynamically compete.

 This Court recognized that “improving security and privacy features” was a procompetitive benefit of Apple’s practices and a means for “tapping into consumer demand and differentiating its products from those of its competitors.” Epic Games, 67 F. 4th at 987 (citation omitted); accord. Beverage v. Apple, Inc., 320 Cal. Rptr. 3d 427 (Ct. App 2024), review denied (July 10, 2024). However, due to the new injunction, “rather than Apple steering users toward the safety of its platform, the elimination of Apple’s ability to charge commissions on linked transactions will create a perverse incentive structure where developers are motivated to steer users to less secure payment methods outside of Apple’s ecosystem so that the developers can avoid paying a commission.” Brief for the Info., Tech., Innovation Found. as Amicus Curiae supporting Defendant Apple, Inc., No. 25-2935 (9th Cir. May 7, 2025) Dkt. No. 19.1, pp. 11-12. That is not a desirable outcome for consumers.

Conclusion

By foreclosing Apple from charging a commission for linked transactions, the district court inexplicably decided to prohibit Apple from engaging in unilateral pricing conduct that was not—and cannot be—found to violate the antitrust laws. Rather than attempting to prevent truly anticompetitive behavior, the district court’s remedy is a transparent effort to try and impose punitive relief that is inconsistent with a civil contempt sanction, or at the very least, disgorgement that goes beyond the scope of permissible UCL relief. Indeed, as an attempt to dictate how and what a company may charge for its services, the district court would use an antitrust remedy to condone judicial central planning that both greatly risks chilling the incentives of both Apple and developers to invest in innovation, but gives developers free reign to steer users toward engaging in transactions with a lower degree of privacy, safety and security than what is provided on Apple’s iOS platform.

Endnotes