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Australia’s Apple Monopoly Ruling Blatantly ‘Wrong’

Letting Apple use a contract clause to shift a monopoly case offshore could have a chilling effect on Australian laws.

CANBERRA, Australia — Allowing Apple to move allegations of Australian law breaches to the United States is against the public interest. It 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 informed the court on June 9.

The judgment would signal to potential contraveners of Australian competition law that “you can avoid the operation of such laws by a forum selection clause you impose on other parties” when entering a contract, he said.

Epic, which runs popular online game Fortnite, alleges Apple’s control of the iPhone and iPad app market breaches Australian competition law. (Bianca De Marchi/AAP Image)

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

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

Epic, which runs the 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.

Apple is due to articulate its case to the Full Court of the Federal Court on Wednesday afternoon. (Joel Carrett/AAP Image)

Young said Justice Nye Perram had mischaracterized Epic’s case against Apple as a dispute between parties.

“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,” Young said.

“These are fundamental errors.”

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

But 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.

Justice Perram’s decision went against a long line of Federal Court and superior court rulings concerning the choice of forum clauses, he said.

Apple is due to articulate its case to the Full Court of the Federal Court on the afternoon of June 9.

The appeal has also drawn attention from the national competition regulator and Google Payment Australia, which operates in-app payments in the Android marketplace.

Both have been permitted to make written submissions to the court.

The Australian Competition and Consumer Commission believes the case deals with significant competition law. Therefore, in the public interest, for such matters to be determined in Australian courts, chair Rod Sims said in May.

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

Judgment has been reserved in the US case.

Apple and Google say the 30 percent cut they take on in-app payments supports security measures.

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

(Edited by Vaibhav Vishwanath Pawar and Ojaswin Kathuria)