I am curious if any lawyers can weigh in on whether or not the reasoning in Blizzard Entertainment Inc. v. Ceiling Fan Software LLC (https://casetext.com/case/blizzard-entmt-inc-v-ceiling-fan-s...) would apply to the antitrust claims made in Epic's lawsuits.
For those unfamiliar with the case, Blizzard filed suit against Ceiling Fan Software for selling a World of Warcraft bot against the WoW EULA. Ceiling Fan Software filed a countersuit claiming Blizzard's monopolistic actions in the market of "add-on hardware/software for WoW" violated antitrust laws.
Blizzard argued that Ceiling Fan Software could not establish an antitrust claim because WoW users voluntarily consented to their EULA and knew the ahead of time when they purchased WoW that they would not be allowed to use third-party bots. The court agreed:
> Blizzard raises this argument in its motion, contending that Defendants cannot establish antitrust claims based on its users' voluntary consent to the EULA and TOU. (Mot. Br. 22–23.) Although Blizzard does not argue this point in the market power analysis, the Court finds that this discussion is applicable to whether the market power requirement is established. Blizzard cites Newcal, Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 441 (3d Cir.1997), and Apple Inc. v. Psystar Corp., 586 F.Supp.2d 1190, 1201 (N.D.Cal.2008), to show that Defendants cannot base its claims on the aftermarket restrictions. ( See Opp'n Br. 17.) These cases explain that the law prohibits an antitrust claimant from asserting an antitrust claim “resting on market power that arises solely from contractual rights that customers knowingly and voluntarily gave to the defendant” when they purchased the initial tying product.
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> Based on the allegations in the FACC, users agreed to the terms of the EULA and TOU during the initial contract they sign with Blizzard regarding the use of WoW. Blizzard is entitled to condition the use of WoW on such restrictions, and any resulting market power in the aftermarket cannot be the basis for antitrust claims. The only reason why Blizzard or its licensees allegedly hold market power in the aftermarket is because Blizzard users agree not to use any unauthorized WoW add-ons. It can be inferred that users therefore agree to only use authorized WoW add-ons that advance play, and agreeing to this inherently gives Blizzard power over any market for such products. Based on the case law discussed, it is clear that such a contractually mandated monopoly over an aftermarket is not a legally cognizable market.
Because the market power allegations fail, Defendants have not adequately plead antitrust counterclaims under the Sherman and Clayton Acts. Moreover, since Defendants' UCL counterclaim is based those antitrust claims, that counterclaim also fails.
If the reasoning in that case applies here, I don't see how Epic doesn't lose both lawsuits? If Apple's App Store policies are known by the consumer in advance of purchasing an iPhone, and Apple's "market power" in the aftermarket of "iOS App Distribution" is based on the iPhone's EULA saying you can only install apps from the Apple App Store, wouldn't the same reasoning apply and Epic's antitrust claim would fail because "a contractually mandated monopoly over an aftermarket is not a legally cognizable market"?
Note: the Apple Inc. v. Psystar Corp (https://casetext.com/case/apple-2) case cited above is also highly relevant, possibly even moreso than the Blizzard case. It's about whether or not "Mac OS" and "computer hardware that runs Mac OS" are two separate markets and whether Apple's monopoly over the distribution of Mac OS results in antitrust liability in the aftermarket of "hardware that runs Mac OS". The court ruled in Apple's favor, concluding similarly that Apple's market power in the latter market was derived from its EULA and therefore was not an allowable basis for an antitrust claim, because customers "knowingly agree to the challenged restraint."
For those unfamiliar with the case, Blizzard filed suit against Ceiling Fan Software for selling a World of Warcraft bot against the WoW EULA. Ceiling Fan Software filed a countersuit claiming Blizzard's monopolistic actions in the market of "add-on hardware/software for WoW" violated antitrust laws.
Blizzard argued that Ceiling Fan Software could not establish an antitrust claim because WoW users voluntarily consented to their EULA and knew the ahead of time when they purchased WoW that they would not be allowed to use third-party bots. The court agreed:
> Blizzard raises this argument in its motion, contending that Defendants cannot establish antitrust claims based on its users' voluntary consent to the EULA and TOU. (Mot. Br. 22–23.) Although Blizzard does not argue this point in the market power analysis, the Court finds that this discussion is applicable to whether the market power requirement is established. Blizzard cites Newcal, Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 441 (3d Cir.1997), and Apple Inc. v. Psystar Corp., 586 F.Supp.2d 1190, 1201 (N.D.Cal.2008), to show that Defendants cannot base its claims on the aftermarket restrictions. ( See Opp'n Br. 17.) These cases explain that the law prohibits an antitrust claimant from asserting an antitrust claim “resting on market power that arises solely from contractual rights that customers knowingly and voluntarily gave to the defendant” when they purchased the initial tying product.
...
> Based on the allegations in the FACC, users agreed to the terms of the EULA and TOU during the initial contract they sign with Blizzard regarding the use of WoW. Blizzard is entitled to condition the use of WoW on such restrictions, and any resulting market power in the aftermarket cannot be the basis for antitrust claims. The only reason why Blizzard or its licensees allegedly hold market power in the aftermarket is because Blizzard users agree not to use any unauthorized WoW add-ons. It can be inferred that users therefore agree to only use authorized WoW add-ons that advance play, and agreeing to this inherently gives Blizzard power over any market for such products. Based on the case law discussed, it is clear that such a contractually mandated monopoly over an aftermarket is not a legally cognizable market. Because the market power allegations fail, Defendants have not adequately plead antitrust counterclaims under the Sherman and Clayton Acts. Moreover, since Defendants' UCL counterclaim is based those antitrust claims, that counterclaim also fails.
If the reasoning in that case applies here, I don't see how Epic doesn't lose both lawsuits? If Apple's App Store policies are known by the consumer in advance of purchasing an iPhone, and Apple's "market power" in the aftermarket of "iOS App Distribution" is based on the iPhone's EULA saying you can only install apps from the Apple App Store, wouldn't the same reasoning apply and Epic's antitrust claim would fail because "a contractually mandated monopoly over an aftermarket is not a legally cognizable market"?
Note: the Apple Inc. v. Psystar Corp (https://casetext.com/case/apple-2) case cited above is also highly relevant, possibly even moreso than the Blizzard case. It's about whether or not "Mac OS" and "computer hardware that runs Mac OS" are two separate markets and whether Apple's monopoly over the distribution of Mac OS results in antitrust liability in the aftermarket of "hardware that runs Mac OS". The court ruled in Apple's favor, concluding similarly that Apple's market power in the latter market was derived from its EULA and therefore was not an allowable basis for an antitrust claim, because customers "knowingly agree to the challenged restraint."