UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT EPIC GAMES, INC., No. 21-16506 Plaintiff-counter- defendant-Appellant, D.C. No. 4:20-cv-05640- v. YGR APPLE, INC., Defendant-counter- OPINION claimant- Appellee.

EPIC GAMES, INC., No. 21-16695 Plaintiff-counter- defendant-Appellee, D.C. No. 4:20-cv-05640- v. YGR APPLE, INC., Defendant-counter- claimant-Appellant.

Appeal from the United States District Court for the Northern District of California Yvonne Gonzalez Rogers, District Judge, Presiding

Argued and Submitted November 14, 2022 San Francisco, California 2 EPIC GAMES, INC. V. APPLE, INC.

Filed April 24, 2023

Before: SIDNEY R. THOMAS and MILAN D. SMITH, JR., Circuit Judges, and MICHAEL J. MCSHANE, * District Judge.

Opinion by Judge Milan D. Smith, Jr.; Partial Concurrence and Partial Dissent by Judge S.R. Thomas

SUMMARY **

Antitrust

The panel affirmed in part and reversed in part the district court’s judgment, after a bench trial, against Epic Games, Inc., on its Sherman Act claims for restraint of trade, tying, and monopoly maintenance against Apple, Inc.; in favor of Epic on its claim under California’s Unfair Competition Law; against Epic on Apple’s claim for breach of contract; and against Apple on its claim for attorney fees. The panel affirmed except for the district court’s ruling respecting attorney fees, where it reversed and remanded for further proceedings.

* The Honorable Michael J. McShane, United States District Judge for the District of Oregon, sitting by designation. ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. EPIC GAMES, INC. V. APPLE, INC. 3

The panel explained that, when Apple opened the iPhone to third-party app developers, it created a “walled garden,” rather than an open ecosystem in which developers and users could transact freely without mediation from Apple. Epic alleged that Apple acted unlawfully by restricting app distribution on iOS devices to Apple’s App Store, requiring in-app purchases on iOS devices to use Apple’s in-app payment processor, and limiting the ability of app developers to communicate the availability of alternative payment options to iOS device users. These restrictions were imposed under the Developer Program Licensing Agreement (“DPLA”), which developers were required to sign in order to distribute apps to iOS users. The district court rejected Epic’s Sherman Act §§ 1 and 2 claims challenging the first and second restrictions, principally on the factual grounds that Epic failed to propose viable less restrictive alternatives to Apple’s restrictions. The district court concluded that the third restriction was unfair pursuant to the California UCL and enjoined Apple from enforcing it against any developer. The district court held that Epic breached its contract with Apple but was not obligated to pay Apple’s attorney fees. On Epic’s appeal, the panel affirmed the district court’s denial of antitrust liability and its corresponding rejection of Epic’s illegality defense to Apple’s breach of contract counter-claim. The panel held that the district court erred as a matter of law in defining the relevant antitrust market and in holding that a non-negotiated contract of adhesion, such as the DPLA, falls outside the scope of Sherman Act § 1, but those errors were harmless. The panel held t