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Y Combinator Brief in Epic vs. Apple

Y Combinator, LLC submitted an amicus curiae brief in support of Epic Games, Inc. against Apple Inc., arguing that Apple's new Link Entitlement Program violates a district court injunction by imposing anti-steering measures that inhibit competition and innovation. The brief emphasizes that Apple's 27% fee on out-of-app transactions acts as a tax on developers, deterring investment in startups and harming public interest. Y Combinator calls for the affirmation of the district court's Enforcement Order to ensure a competitive environment for technology startups.

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0% found this document useful (0 votes)
5K views24 pages

Y Combinator Brief in Epic vs. Apple

Y Combinator, LLC submitted an amicus curiae brief in support of Epic Games, Inc. against Apple Inc., arguing that Apple's new Link Entitlement Program violates a district court injunction by imposing anti-steering measures that inhibit competition and innovation. The brief emphasizes that Apple's 27% fee on out-of-app transactions acts as a tax on developers, deterring investment in startups and harming public interest. Y Combinator calls for the affirmation of the district court's Enforcement Order to ensure a competitive environment for technology startups.

Uploaded by

Mike Wuerthele
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 24

Case: 25-2935, 08/21/2025, DktEntry: 128.

1, Page 1 of 24

No. 25-2935

IN THE UNITED STATES COURT OF APPEALS


FOR THE NINTH CIRCUIT

EPIC GAMES, INC.,


Plaint Appellate,

v.

APPLE INC.,
Defendant-Appellant.

On Appeal from the United States District Court


for the Northern District of California
No. 4:20-cv-05640-YGR
Hon. Yvonne Gonzalez Rogers, District Judge

BRIEF OF Y COMBINATOR, LLC AS AMICUS CURIAE IN SUPPORT OF


PLAINTIFF-APPELLEE EPIC GAMES, INC.'S ARGUMENT FOR
AFFIRMANCE OF THE DISTRICT COURT'S ENFORCEMENT ORDER

Catherine S. Simonsen Shaoul Sussman


SIMONSEN SUSSMAN LLP Nicolas A. Stebinger
418 Bamboo Lane, Suite C-18 SIMONSEN SUSSMAN LLP
Los Angeles, CA 90012
(917) 747-5196
catherine@simonsensussman.com

Counsel for Amicus Curiae Of Counsel


Y Combinator, LLC

August 21, 2025


Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 2 of 24

CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1 and Circuit Rule 26. l-

1, Y Combinator, LLC states it has no parent corporation, and no publicly held

corporation owns 10% or more of its stock.

Date : August 21, 2025


By: /s/ Catherine S. Simonsen
Catherine S. Simonsen
SIMONSEN SUSSMAN LLP
Counsel for Amicus Curiae
Y Combinator LLC

i
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 3 of 24

TABLE OF CONTENTS

IDENTITY AND INTEREST OF AMICUS CURIAE...............................................1


INTRODUCTION AND SUMMARY OF ARGUMENT.........................................2
ARGUMENT .............................................................................................................4
I. Apple's New Link Entitlement Program Prohibited Steering in Violation of
the Injunction ...................................................................................................4
II. Apple's New 27% Link-Out Penalty Was a Tax on Innovation, Not a Fair
Recoupment of Value Provided by Apple......................................................10
III. Without the Enforcement Order, Startup Investment and Innovation Will
Be Chilled, to the Significant Detriment of the Public Interest ....................13
IV. Far from Threatening Small Businesses' Access to Apple's Platform, the
Enforcement Order Benefits Small Businesses .............................................16
CONCLUSION ........................................................................................................17

ii
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 4 of 24

TABLE OF AUTHORITIES

Cases

Am. Mfrs. Mud. Ins. Co. V. Am. Broad.-Paramount Theatres, Inc.,


388 F.2d 272 (Zd Cir. 1967)....................................................................................6

Epic Games, Inc. V Apple, Inc., 67 F.4th 946 (9th Cir. 2023) ...................................2

Epic Games, Inc. V Google LLC (In re Google Play Store Antitrust Litig),
Nos. 24-6256, 24-6274 25-303, 2025 U.s. App. LEXIS 19185
(9th Cir. July 31, 2025) .........................................................................................15

Int'l Boxing Club of New York, Inc. V United States,


358 U.S. 242 (1959) ...............................................................................................9
Int'l Salt Co. V. United States,
332 U.s. 392 (1947) .............................................................................................15

United States V Top co Assocs., Inc., 405 U.S. 596 (1972) ........................................4

Other Authorities
Andrew Liszewski, Amazon Now Has a 'Get 8ook'Button in Its iOS Kindle App,
The Verge (May 6, 2025), https://www.theverge.com/news/661719/amazon-app-
ios-app1e-iphone-ipad-kindle-buy-books ...............................................................8
Big Fixes for Big Tech: Hearing Before the Subeomm. on Antitrust,
Competition Pol 'y, and Consumer Rights of the S. Comm. on the Judiciary,
119th Cong. (2025) (testimony of Garry Tan, Pres. & CEO off Combinator) ....3
Blackie Law Dictionary (10th ed. 2014) .................................................................... 6
Sarah Perez, Substaek Writers Can Now Direct US Readers to (Often Cheaper)
Web-Based Subscriptions on iOS, TechCrunch (Aug. 18, 2025),
https://techcrunch.com/2025/08/18/substack-writers-can-now-direct-ws-readers-
to-often-cheaper-web-based-subscriptions-on-ios/ ..............................................12
U.K. Competition & Markets Authority, Mobile Ecosystems: Market Study Final
Report 161-62 § 5.70 (June 10, 2022),
https://assets.publishing.service.gov.uk/media/63f61bcOd3bf7f62e8c34a02/Mobi
je_Ecosystems_Final_Report_amended_2.pdf .................................................... 12

iii
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 5 of 24

IDENTITY AND INTEREST OF AMICUS CURIAE

Y Combinator's decades-long experience on the front lines of startup

development and expansion including in digital technology markets gives us a

valuable perspective on the anticompetitive restraints at issue in this case. We

submit this brief to share this perspective with the Court In our experience,

Apple's anti-steering restraints have profoundly inhibited the growth and

development of technology companies that deliver and monetize the value of their

goods and services through apps. The district court's Injunction, affirmed by this

Court, was meant to put an end to Apple's anticompetitive block on entry and

expansion. Instead, Apple implemented its new Link Entitlement Program (the

"Program") which, from Y Combinator's perspective, blatantly violated the

Injunction's requirement that Apple stop prohibiting steering. The district court's

Enforcement Order was welcome relief. For the first time in nearly two decades, Y

Combinator can seriously consider investing in innovative businesses that would

have been impossible in the past because of the "Apple Tax." An affirmance from

this Court would make that relief certain and permanent, with significant benefits

for competition, innovation, and the digital economy.

1 Apple and Epic consented to the filing of this brief. No party's counsel authored
this brief in whole or in part, no party or their counsel contributed money intended
to fund the preparation or submission of this brief, and no person other than Y
Combinator or its counsel contributed money that was intended to fund preparing
or submitting the brief.

1
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 6 of 24

Y Combinator is a startup accelerator and venture capital firm launched in

2005 and headquartered in San Francisco. Since Y Combinator's founding, we

have selected, funded, and fostered more than 5,000 startups and entrepreneurs and

created hundreds of thousands of jobs. From household names like Airbnb,

DoorDash, and Dropbox, to disruptive innovators like Coinbase and Stripe, Y

Combinator's alumni network represents the best of American entrepreneurship .

This experience and perspective inform the input and analysis we submit as

amicus.

INTRODUCTION AND SUMMARY OF ARGUMENT

The district court's Injunction against Apple's anti-steering policies served a

vital public interest in preserving competition among transaction platforms. See

Rule 52 Order, 5-ER-961-64, Epic Games, Inc. V Apple, Inc., 67 F.4th 946, 1000-

01 (9th Cir. 2023). This in turn created a groundbreaking opportunity for

technology startups to enter and thrive. But from the moment the Injunction issued,

Apple sought to evade it by creating new mechanisms to inhibit competition. The

district court properly entered the Enforcement Order in the face of Apple's

successful efforts to violate the Injunction and less successfully conceal that

violation. Y Combinator submits this brief to share our perspective, based on

decades of experience nurturing technology startups, that the Enforcement Order is

2
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 7 of 24

essential to serve the public interests in competition and innovation that undergird

the district court's original Injunction.

Apple's anti-steering restraints that the district court found unlawful are part

and parcel oflApple's broader and longstanding strategy to stifle innovation from

disruptive firlns.2 Consistent with that approach, when enjoined by the district

court from prohibiting competition directly, Apple pivoted: It charged new fees

specifically designed to make out-of-app transactions so prohibitively expensive

that they would not pose a true alternative to in-app payments, and imposed

onerous technical conditions to prevent consumers from following links to out-of-

app transactions. Enforcement Order, 1-ER-15-46. Apple's executives then lied

when confronted with these measures. 1-ER-3 .

From the perspective of Y Combinator, Apple's 27% fee on out-of-app

transactions and other anti-link-out measures were functionally identical to Apple's

original restraints and violated the express terms of the Injunction. The fee was not

justified to compensate Apple for value it provides but was instead a naked tax on

developers' revenues and a penalty for linking-out. The sheer magnitude of

2 For example, Garry Tan, President and CEO of Y Combinator, recently testified in
Congress about the direct harm Apple's anticompetitive practices have on startups,
using the Y Combinator-backed company Beeper as a prime example. See Big
Fixes for Big Tech: Hearing Before the Subeomm. on Antitrust, Competition Pol Y
and Consumer Rights of the S. Comm. on the Judiciary, ll9th Cong. (2025)
(testimony of Gary Tan, Pres. & CEO of Y Combinator).

3
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 8 of 24

revenues Apple sought to extract with its new Program would have made the

difference between viable and infeasible business models for countless developers.

If the district court had allowed Apple's fees and other tactics to stand, they would

have continued to chill investment in app-development startups and would have

resulted concretely in fewer American businesses being created.

Thankfully, the district court saw Apple's violation of the Injunction for

what it was and put an end to it. This Court should affirm the district court's

Enforcement Order, and end Apple's anticolnpetitive anti-steering restraints once

and for all. This relief will finally enable technology startups to freely exercise

their "vigor, imagination, devotion, and ingenuity," United States V. Top co Assocs.,

Inc., 405 U.S. 596, 610 (1972), substantially less constrained by one of the most

abusive gatekeepers in our economy.

ARGUMENT

I. Apple's New Link Entitlement Program Prohibited Steering in


Violation of the Injunction

A central issue in this appeal is whether Apple's Link Entitlement Program

violated the district court's original Injunction, thus warranting the district court's

Enforcement Order. Apple's Program combined new fees on out-of-app purchases

with other technical restrictions on links to out-of-app transaction platforms. See

Enforcement Order, l-ER-14-43. The Program clearly violated the literal terms of

the Injunction and constituted a de facto prohibition on steering.

4
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 9 of 24

Apple's most direct violation was its adoption of a new 27% fee on linked-

out transactions. Apple argues the Injunction did not prohibit this new fee because,

by its text, the Injunction only requires Apple to allow developers (i) to include

links and calls to action to external purchasing mechanisms and (ii) to

communicate with customers through voluntary points of contact. See Enforcement

Order, 1-ER-8. Since the Injunction does not expressly forbid Apple from charging

out-of-app commissions, Apple urges, such fees are permitted. See Apple Br. at

26-27.

As an initial matter, Apple ignores that its new 27% fee on linked-out

transactions was, in substance, simply a fee to link-out. In other words, Apple

began charging developers to do something the Injunction expressly requires Apple

to allow developers to do: include "links ... to external purchasing mechanisms"

in their apps. 1-ER-8. But the Injunction requires Apple not to prohibit linking-

out period, full stop. It does not permit Apple to condition the right to link-out

on the payment of a fee. Indeed, had Apple begun charging developers a fee to

include links to external purchasing mechanisms in their apps links the

Injunction expressly requires Apple to allow there would have been very little

dispute that Apple had violated the Injunction. Because Apple's 27% linked-out

transaction commission was in substance a punitive fee and deterrent to link-out, it

violated the terms of the Injunction Order.

5
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 10 of 24

Further, Y Combinator agrees with Epic that "the new out-of-app

commission so 'severely hindered' effective steering as to 'prohibit' it," and "the

combination of restrictions in the Link Entitlement Program as a whole created a

particularly effective prohibition on steering, in direct defiance of the Injunction's

literal terms." Epic Br. at 38 (quoting Prohibit, 8lack is' Law Dictionary 1405 (10th

ed. 2014)).

As noted in analogous antitrust contexts, a firm cannot evade prohibitions on

illegal restraints by setting prices so high that nobody would ever pay them in lieu

of imposing an outright restraint. See, et., Am. Mfrs. Mut. Ins. Co. V Am. Broad.-

Paramount Theatres, Inc., 388 F.2d 272, 284 (2d Cir. 1967) ("[T]o hold that a

seller can avoid [prohibitions on restraints] merely by setting a pre-established

price ... even if that price is rarely if ever charged ... would mean that the

antitrust laws could be flouted at will."). But here, Apple deliberately designed its

27% link-out fee to raise costs for linked-out transactions so high that they would

exceed the 30% in-aoo purchase fee. and thus it would never make economic sense

for app developers to use out-of-app transaction platforms. See Enforcement Order,

1-ER-22-24, 60 & n.64. This is because payment processing fees alone not to

mention fraud detection and customer service costs generally amount to at least

3%. 1-ER-60 & n.64. The 27% link-out fee thus constituted a de facto prohibition

on steering. Consistent with the intent and effect of Apple's Program, and as Epic

6
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 11 of 24

reported to this Court, "no developer ever steered pursuant to the Program." Epic

Br. at 39.

Apple's new link-out fee also guaranteed that no competing transaction

processing platform would ever pose a competitive threat to Apple's 30% in-app

purchase fee. Developers would have continued to absorb or pass through a charge

equal to nearly one-third of the value of the actual products and services being

purchased, even though other transaction platforms may provide similar or better

functionality at a lower price. See Rule 52 Order, 5-ER-916-17. As explained in

Section III, infra, this would have had profound negative implications for

investment in innovative startups.

Further, Apple layered additional anti-steering technical and design

restrictions similarly violative of the express provisions of the Injunction on top

of its 27% fee. See Enforcement Order, 1-ER-27-43. These additional restrictions

amplified the effect of Apple's already prohibitive 27% fee.

For example, imagine a person who typically reads books in e-book format

on an e-reader (e.g., Kindle or Nook). The person is on their public transit

commute to work. They see an ad promoting a new book they would like to read.

They wish to purchase the e-book in that moment, before they forget the title, with

the intent to download and read it later on their e-reader. They open an online

shopping app on their iPhone, search for and find the book, and pull up the product

7
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 12 of 24

detail page in the app. Today, with the Enforcement Order in effect, they can click

on a prominent button to "Get book," which dynamically links them to and signs

them into the online shopping provider's website and takes them directly to the

book's product detail page where they can click "Buy now" (with nearly 100% of

the revenues going to the online shopping provider).3

By contrast, under Apple's Link Entitlement Program, there would have

been no "Get book" button in the app, because Apple's Program prevented

purchase links from appearing as buttons or near the product being sold. See

Enforcement Order, 1-ER-29-33. So, after painstakingly searching for, identifying,

and clicking on a link (which would not have looked like a button) to where they

could purchase the e-book outside of the app, and after clicking through the "scare

screen" that Apple superimposed specifically to intimidate them from completing

the out-of-app purchase (Enforcement Order, 1-ER-35-39), the user would have

been taken to the online shopping provider's website in their iPhone's browser.

Because the Program did not allow dynamic links (Enforcement Order, l-ER-40-

42), the user would have been required to manually log into their account with the

online shopping provider in the browser and conduct a new search for the e-book

3 See Andrew Liszewski, Amazon Now Has a 'Get Book '8utton in Its iOS Kindle
App, The Verge (May 6, 2025), https://www.theverge.com/news/661719/amazon-
app-ios-apple-iphone-ipad-kindle-buy-books.

8
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 13 of 24

before they could have made the purchase. (And 27% of the purchase price would

have gone to Apple.)

As this example illustrates, Apple's new Program was an elaborate, Rube

Goldberg-esque set of mechanisms intended to impose enough friction that

consumers would simply give up before leaving Apple's ecosystem. Accord

Enforcement Order, 1-ER-35, 62-64. The convoluted nature of this arrangement

stands in stark contrast to the alternative, which is consumer-friendly and

intuitive the prominent, orange "Get book" button dynamically linking the

consumer straight to a product detail webpage where they can easily purchase the

book.

It is therefore not surprising that not a single developer took Apple up on

this new "entitlement." Epic Br. at 38. Apple's new Program, involving prohibitive

fees and requiring intentionally deprecated links, was a full ban on steering by

another name. It violated the Injunction, and the district court, consistent with

long-established principles of equity, properly entered the Enforcement Order to

stop it. See, et., Int'l Boxing Club of New York, Inc. V. United States, 358 U.S.

242, 258-60 (1959) (holding district court was fully entitled to adopt a more

assertive approach to its ordered remedy when "two and a half years after our

opinion in the former appeal ... it appears that appellants had continued exercising

their unlawful control long after they well knew that this activity was within the

9
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 14 of 24

coverage of the [competition laws] ... [and] from all appearances it is continuing

to this day").

II. Apple's New 27°/0 Link-Out Penalty Was a Tax on Innovation, Not a
Fair Recoupment of Value Provided by Apple

Apple claims its new 27% link-out fee was not an anti-steering restraint, but

rather a lawful mechanism for Apple to recoup a fair rate of compensation for the

value Apple provides in "enabling" consumers' in-app enjoyment of digital goods

and services. Apple Br. at 30-31 (discussing hypothetical example of user

purchasing costume for virtual character). In other words, Apple states, without

Apple, the digital goods and services delivered through apps would be of little to

no value to consumers and therefore, Apple was "justified" in charging a link-out

fee, to "[]compensate]" Apple for "use of its intellectual property." Id. at 30.

Y Combinator does not dispute that Apple has introduced innovations in its

long and lucrative history. But Apple's claims of entitlement to more than one-

quarter of the revenues from every linked-out transaction within seven days of a

link-out are overstated. An example beyond Apple's virtual character costume

hypothetical (Apple Br. at 30-31) serves to illustrate the point.

Dropbox (a 2007 graduate of the Y Combinator program) offers a cloud

storage and file synchronization service. Dropbox works in the background of a

consumer's computer, backing up files saved to the computer's hard drive to

Dropbox's cloud. If their device is lost or broken, their files are still safe and secure

10
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 15 of 24

in the Dropbox cloud. Some consumers use Dropbox almost exclusively on their

computers and never access Dropbox via an app on an Apple device. However,

Dropbox does offer an app, available in the Apple App Store, which allows

customers to interact with their files saved to the Dropbox cloud from their Apple

device. Imagine a Dropbox customer finds themself without their computer,

needing to access a file. They download the Dropbox app on their iPhone, log in,

and encounter a pop-up message from Dropbox alerting them that they are running

low on space and offering them a promotional price for a basic paid subscription.

Not wanting to miss out on the deal, they decide to upgrade there and then. Apple

designates the upgrade a "digital good" and charges Dropbox a double-digit

percentage-point commission on the entire subscription. The user remains a

satisfied paying customer of Dropbox for years, but never accesses Dropbox from

their iPhone again.

As this example makes clear, Apple's new link-out fee bore no proportional

relationship to the value Apple did (or did not) provide to the users to whom it was

inevitably passed on. There are many additional examples of high-value digital

goods and services that developers not Apple have poured millions of dollars

and untold hours into innovating and bringing to market. These are products that

anyone can access with an internet connection and a web browser. That these

developers were forced to build an app that runs on iOS through which consumers

11
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 16 of 24

could access their creations forced because Apple doggedly directs users away

from browsers and towards apps so it can monetize them does not somehow

transform Apple's forcing into value creation for which it is entitled to an over one-

quarter share of developers' revenues. Apple does not enable these consumers '

en oyment of the fruits of developers' investments and innovation in any way that

is even remotely proportional to the value Apple sought to extract with its out-of-

app fee.5 Apple's fee was not "justified" fair compensation, but rather a steering

penalty, a punitive tax on innovation, and a mechanism for insulating Apple's IAP

fee from competition.

4 See U.K. Competition & Markets Authority, Mobile Ecosystems: Market Study
Final Report 161-62 § 5.70 (June 10, 2022),
https://assets.publishing.service.gov.uk/media/63f61bcOd3bf7f62e8c34a02/Mobile
_Ecosystems_Final_Report_amended_2.pdf ("Apple is able to exert control over
the maximum functionality of all browsers on iOS and, as a consequence, hold up
the development and use of web apps. This limits the competitive constraint that
web apps pose on native apps, which in turn protects and benefits Apple's App
Store Revenues.") .
5 As another example, Apple cannot with a straight face argue it is entitled to 27%
of an online writer's or journalist's income merely because one of the many ways
their readers can access their work is through an app. But only now, with the
Enforcement Order in place, can those writers and journalists enable subscription
payments through an iPhone without paying over one-quarter of those revenues
over to Apple. See Sarah Perez, Substack Writers Can Now Direct US Readers to
(Often Cheaper) Web-Basea' Subscriptions on iOS, TechCrunch (Aug. 18, 2025),
https://techcrunch.com/2025/08/ l 8/substack-writers-can-now-direct-u-s-readers-to-
often-cheaper-web-based-subscriptions-on-ios/.

12
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 17 of 24

III. Without the Enforcement Order, Startup Investment and Innovation


Will Be Chilled, to the Significant Detriment of the Public Interest

If this Court does not affirm the Enforcement Order, the promise of the

original Injunction affirmed by this Court to unfetter the market from Apple's

longstanding anti-steering restraints will be lost. An understanding of how startups

evolve into significant engines of growth and change in our economy helps to

explain why the Enforcement Order is SO crucial to promoting competition and

innovation. Other rici, such as Spotify, have explained the immediate impact the
Enforcement Order had on their businesses. Spotify Amicus Br. at 10-12, DCN

Amicus Br. at 10-11. But the Enforcement Order will have a longer-term and

much more significant beneficial impact on investment in innovation if this

Court affirms.

Y Combinator's investment strategy focuses on identifying startups with a

strong founding team, a compelling idea, and a large potential market. We look for

founders who have a deep understanding of a problem and are determined to solve

it. When we evaluate digital-products companies, we consider how a startup's

monetization model will fare under the rules of maj or app ecosystems, including

Apple's. Historically, it was crucial to identify business models that could thrive

despite the 30% Apple Tax and Apple's anti-steering restraints. Accordingly, we

primarily focused on startups whose products were exempt from the Apple Tax and

13
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 18 of 24

Apple's anti-steering restraints, or their products were only marginally or

incidentally consumed (and purchased) through an app.

For example DoorDash (a 2013 graduate of Y Combinator) is a food

delivery service that connects users to local restaurants and delivery drivers.

DoorDash's category exemption from the Apple Tax as an app that facilitated the

delivery of real-world services was a significant factor in its favor when Y

Combinator was considering investing in the company: Doordash could invest

more of every dollar it earned back into the business rather than giving Apple a 30¢

cut off the top, enabling what has proven to be explosive growth. Another example

is Dropbox. For the many consumers who largely use Dropbox on their computers,

they can and do pay for their subscriptions via a browser at www.dropbox.com,

enabling Dropbox to substantially avoid the 30% Apple Tax applied to in-app

purchases. As a result, the Apple Tax has not compromised Dropbox's business

model.

In contrast to these types of businesses, Y Combinator and the larger

venture capital community have long been hesitant to back app-based businesses

that were poor investments due to the Apple Tax. A 30% revenue share can easily

be the difference between a company that can afford to scale, hire new employees,

and reinvest in its product, and one that is perpetually struggling to stay afloat.

Understood in this light, the 30% Apple Tax protected from erosion by Apple's

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Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 19 of 24

anti-steering restraints is not merely a cost of doing business, it is a profound and

often insurmountable barrier to entry that stifles competition and innovation at its

source.

Recent legal developments and a renewed focus on platform fairness have,

however, created a palpable change in the market. See, et., Epic Games, Inc. V

Google LLC (In re Google Play Store Antitrust Litig), Nos. 24-6256, 24-6274 25-

303, 2025 U.s. App. LEXIS 19185, *48, *83 (9th Cir. July 31, 2025) (upholding in

full injunction prohibiting anticoinpetitive arrangements that insulated Google's

Play Store and Google Play Billing from competition). Since the district court

issued its Enforcement Order, we have witnessed a surge of interest from investors

and founders in business models that previously were considered too risky or

simply not viable in light of the Apple Tax. Market participants are seeing the

writing on the wall: If this Court affirms, Apple will finally be forced to comply

with the Injunction. Apple will permit steering to lower-cost options, which will

put downward pressure on the Apple Tax and will open up the possibility of

becoming the next DoorDash or Dropbox to entire new categories of businesses.

See Int'l Salt Co. V United States, 332 U.S. 392, 401 (1947) (effective antitrust

remedy should "pry open to competition a market that has been closed by

defendants' illegal restraints") .

15
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 20 of 24

Iv. Rather than Threatening Small Businesses' Access to Apple's Platform,


the Enforcement Order Benefits Small Businesses

Contrary to the commonsense principles discussed above, backed by

decades orlY Combinator's experience incubating small businesses, amicus ACT n

The App Association ("ACT") argues that allowing the Enforcement Order to

remain in place will be "devastat[ing]" for small businesses. ACT Amicus Br. at 9.

ACT's argument seems to be that iflApple cannot charge a 27% fee on linked-out

transactions, Apple will have to get that money from somewhere else, and Apple

will have no alternative but to take it from the hands of small businesses. See id.

In Y Combinator's experience, these concerns are misplaced. First, there is

no reason to believe Apple will depart from its longstanding tradition of charging

small and low-revenue-generating businesses lower fees. If Apple really had "no

choice" but to raise fees on small businesses as a result of the Enforcement Order,

Apple would have sounded that alarm in its own brief, and would have explained

why the only option left to this immensely profitable company with a market

capitalization of nearly $3.5 trillion would be to wring incremental loose change

from developers with the lowest revenues. Indeed, the amount by which Apple

would have to raise fees on small businesses to make up for its 27% out-of-app

commission "loss" on its largest apps would self-defeatingly drive small businesses

out of the App Store altogether. In other words, from a practical perspective, it will

never happen.

16
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 21 of 24

But more to the point, the argument that the App Store's commission

structure, with its reduced rate for developers earning annual revenues under $1

million, protects and nurtures small developers is fundamentally flawed. This

perspective, often advanced by Apple and other Big Tech-funded groups,

misunderstands the fundamental orientation of tech startups. Startups are not

founded with the ambition to remain small businesses, rather, they seek

exponential, uncapped growth, and a trajectory that quickly exceeds $1 million in

revenues per year. Their savings resulting from a temporary exemption from the

Apple Tax while their annual revenues briefly hover below $1 million are a

rounding error at most. What will drive true value to these important small

businesses is the ability to scale, free of the 30% Apple Tax, as a result of the

steering that the district court's Enforcement Order, if affirmed, will enable.

CONCLUSION

The Court should affirm the district court's Enforcement Order and the

Injunction's continued prohibition on Apple's anti-steering restraints.

//

//

//

//

//

17
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 22 of 24

Date : August 21, 2025 Respectfully submitted,

By: /s/ Catherine S. Simonsen


Catherine S. Simonsen
SIMONSEN SUSSMAN LLP
418 Bamboo Lane, Suite C-18
Los Angeles, CA 90012
Tel: (917) 747-5196
catherine@simonsensussman.com
Counsel for Amicus Curiae Y
Combinator LLC

Shaoul Sussman
Nicolas A. Stebinger
SIMONSEN SUSSMAN LLP
Of Counsel

18
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 23 of 24

UNITED STATES COURT OF APPEALS


FOR THE NINTH CIRCUIT

Form 8. Certificate of Compliance for Briefs

Insmlctionsfor f/lis form: http://www.ca9.uscourts.gov/for'ms/form08instruetions.pdf

9th Cir. Case Number(s) 25-2935

I am the attorney or self-represented party.


3,952 words, including 0
This brief contains words

manually counted in any visual images, and excluding the items exempted by FRAP

32(f). The briefs type size and typeface comply with FRAP 32(a)(5) and (6).

I certify that this brief (select only one) :

O complies with the word limit of Cir. R. 32-1.

O is a cross-appeal brief and complies with the word limit of Cir. R. 28. 1-1.

@ is an amicus brief and complies with the word limit of FRAP 29(a)(5), Cir. R.
29-2(c)(2), or Cir. R. 29-2(c)(3).

O is for a death penalty case and complies with the word limit of Cir. R. 32-4.
O complies with the longer length limit permitted by Cir. R. 32-2(b) because (select
only one) :

JI] it is a joint brief submitted by separately represented parties.


a party or parties are filing a single brief in response to multiple briefs.
a party or parties are filing a single brief in response to a longer joint brief.

O complies with the length limit designated by court order dated


O is accompanied by a motion to file a longer brief pursuant to Cir. R. 32-2(a).
/s/ Catherine Simonsen 8/21/2025
Signature Date
(use "s/[typed name] " to sign elecIronicallvJiIed documents)
Feedback or questions about thzlsform ? Email us a1'forms@ea9.uscourfs.gov
Form 8 Rev. 12/0]/22
Case: 25-2935, 08/21/2025, DktEntry: 128.1, Page 24 of 24

CERTIFICATE OF SERVICE

I hereby certify that on August 21 , 2025, I caused to be filed electronically

the foregoing Brief of Y Combinator, LLC as Amicus Curiae in Support of

Plaintiff-Appellee Epic Games, Inc.'s Argument for Affirmance of the District

Court's Enforcement Order with the Clerk of the Court for the United States Court

of Appeals for the Ninth Circuit using the appellate ACMS system. Participants in

the case who are registered ACMS users will be served by the appellate ACMS

system.

Date : August 21, 2025


By: /s/ Catherine S. Simonsen
Catherine S. Simonsen
SIMONSEN SUSSMAN LLP
Counsel for Amicus Curiae Y
Combinator LLC

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