An irony looms for Microsoft as it backs Epic in antitrust fight vs. Apple

Earlier this month, Microsoft announced it would acquire Activision Blizzard.
Brad Bergan
Apple went hard after Epic for circumventing its system for in-app purchases. Epic sued and largely lost, but it's appealing, and Microsoft has its support.US District Court  / IE photo illustration

If you sue a major tech firm, the best ally might be another colossal tech company.

This may be what lawyers at the American video game company Epic are thinking after Microsoft filed an amicus brief last week that supports Epic's appeal of a U.S. federal court ruling that found it largely lost in an antitrust fight with Apple.

But as is often the case with Big Tech, an irony looms in the distance: Microsoft faces its own separate antitrust review by federal regulators, right as it stands against alleged antitrust behavior on the behalf of another company.

Earlier this month, Microsoft announced it would acquire Activision Blizzard, the video game studio behind the iconic Call of Duty, Overwatch, and Diablo franchises, for $68.7 billion, in an all-cash transaction. As a result, Microsoft will face its own antitrust review by the Federal Trade Commission over the merger. Federal regulators will look to see if combining the hardware power of Microsoft's Xbox with the maker of those mega-popular gaming franchises could effectively monopolize the market. The irony of it all shouldn't be lost on those who closely watch big tech mergers and the creation of walled-off payment ecosystems. 

In the Epic v. Apple case, the Fortnite-maker accused Apple of engaging in monopolistic behavior with its App Store, lawyers for Epic claimed in the suit that was decided in September 2021. The iPhone maker was found not guilty of antitrust behavior on nine of ten counts in the suit.

 

An irony looms for Microsoft as it backs Epic in antitrust fight vs. Apple
This document from the case shows that Apple had taken action to remove Fortnite, a video game by Epic, from its App Store, because Epic was directing players outside the App Store ecosystem to make payments, thusly excluding Apple from taking a cut of the transaction.

 

Apple's "enormous range of economic activity"

After the ruling in Apple's favor, Epic appealed, and since then both firms have continued to send filings to the court.

Microsoft's amicus begins with an assessment of its "unique — and balanced — perspective to the legal, economic, and technological issues this case implicates."

Both Microsoft and Apple sell software and hardware, which means the ruling of the Epic v. Apple case has a direct bearing on Microsoft, which said it "has an interest" in lending support to antitrust law. Microsoft, it should be noted, has also been accused of violating antitrust laws in the '90s, which leaves room for cynicism about the tech juggernaut's intentions. 

What Microsoft says — Apple has "extraordinary gatekeeper power" that demands more consideration from the judge, the amicus brief asserts.

"Online commerce and interpersonal connection funnels significantly, and sometimes predominantly, through iOS devices," claims the Microsoft brief. "Few companies, perhaps none since AT&T ... at the height of its telephone monopoly, have controlled the pipe through which such an enormous range of economic activity flows."

But these arguments aren't just an empty gesture: Microsoft claims that the ruling on Epic v. Apple represents "potential antitrust issues [that] stretch far beyond gaming," implying an "enormous range of economic activity."

Microsoft's gaming umbrella is spreading

"Beyond app distribution and in-app payment solutions — the adjacent markets directly at issue in this case," continues Microsoft in its filing. "Apple offers mobile payments, music, movies, and television, advertising, games, health tracking, web browsing, messaging, video chat, news cloud storage, e-books, smart-home devices, wearables, and more besides."

The sheer scope of Apple's device, product, media, and news infrastructure at times can feel like it makes a 360-degree run around nearly every aspect of modern life.

Arguing further in this vein, Microsoft warns that, should the initial ruling go uncontested, it could "insulate Apple from meritorious antitrust scrutiny and embolden further harmful conduct."

To Microsoft, this lack of scrutiny is bad for the tech industry broadly, making the claim that's been heard before in such cases. When there is less competition, "innovation will suffer."

While Microsoft makes convincing arguments of Apple's perhaps overextended reach, it's important to remember that Microsoft, too, has gone through previous antitrust issues, specifically with Internet Explorer. (Once, it was very, very difficult to uninstall the web browser.)

What else you should know — The administration of President Joe Biden, through its Justice Department, is also supporting the appeal of Epic in the antitrust appeal against Apple. Noting that federal government takes no position on the merits of either Epic or Apple, it states in its brief that, if uncorrected, the ruling "could significantly harm anitrust enforcement."

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