Y Combinator Brief in Epic vs. Apple
Y Combinator Brief in Epic vs. Apple
1, Page 1 of 24
No. 25-2935
v.
APPLE INC.,
Defendant-Appellant.
Pursuant to Federal Rule of Appellate Procedure 26.1 and Circuit Rule 26. l-
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TABLE OF CONTENTS
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TABLE OF AUTHORITIES
Cases
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
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
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submit this brief to share this perspective with the Court In our experience,
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
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
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
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
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have selected, funded, and fostered more than 5,000 startups and entrepreneurs and
This experience and perspective inform the input and analysis we submit as
amicus.
Rule 52 Order, 5-ER-961-64, Epic Games, Inc. V Apple, Inc., 67 F.4th 946, 1000-
technology startups to enter and thrive. But from the moment the Injunction issued,
district court properly entered the Enforcement Order in the face of Apple's
successful efforts to violate the Injunction and less successfully conceal that
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essential to serve the public interests in competition and innovation that undergird
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
that they would not pose a true alternative to in-app payments, and imposed
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
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).
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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
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
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
ARGUMENT
violated the district court's original Injunction, thus warranting the district court's
Enforcement Order, l-ER-14-43. The Program clearly violated the literal terms of
4
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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
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
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
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
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literal terms." Epic Br. at 38 (quoting Prohibit, 8lack is' Law Dictionary 1405 (10th
ed. 2014)).
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
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
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reported to this Court, "no developer ever steered pursuant to the Program." Epic
Br. at 39.
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
Section III, infra, this would have had profound negative implications for
of its 27% fee. See Enforcement Order, 1-ER-27-43. These additional restrictions
For example, imagine a person who typically reads books in e-book format
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
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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
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
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
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.
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before they could have made the purchase. (And 27% of the purchase price would
intuitive the prominent, orange "Get book" button dynamically linking the
consumer straight to a product detail webpage where they can easily purchase the
book.
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
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
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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
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
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
Dropbox's cloud. If their device is lost or broken, their files are still safe and secure
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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
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
satisfied paying customer of Dropbox for years, but never accesses Dropbox from
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
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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
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/.
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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
evolve into significant engines of growth and change in our economy helps to
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
Court affirms.
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
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
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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
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.
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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often insurmountable barrier to entry that stifles competition and innovation at its
source.
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
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
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
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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.
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
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.
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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
founded with the ambition to remain small businesses, rather, they seek
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
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Shaoul Sussman
Nicolas A. Stebinger
SIMONSEN SUSSMAN LLP
Of Counsel
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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).
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) :
CERTIFICATE OF SERVICE
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.