On Wednesday, Magistrate Judge Thomas S. Hixson sided with Apple Inc. in a discovery dispute wherein Apple requested that third-party Valve Corporation (Valve) produce sales data to permit Apple to analyze competition between the platforms, Valve’s Steam desktop application where users purchase video games and Apple’s iOS App Store.
The order pertains to three related cases, one of which was brought by Epic Games, Inc. (Epic) last year. The Fortnite game developer alleged that Apple impermissibly restrained trade with its app store policies, and in particular, its 30% levy on the sale of every app and digital in-app purchase.
The instant discovery decision follows a letter brief submitted by Apple and Valve last week and a hearing that took place Wednesday morning. The order opened by explaining that Valve is a company that exclusively develops PC video games and operates Steam, an online platform that allows users to purchase and play PC, and only PC, games on their laptops and desktops.
Apple and Valve disagreed about whether Valve should be required to produce several categories of sales information regarding its PC games sales platform. The court found that both of Apple’s requests for production were “relevant and proportional to these three related actions.”
First, the aggregate financial information sought was relevant to market definition, the court held, noting that market parameters present a “major issue” in this litigation. Second, the court ruled that Apple’s pared down request for the sales data of 436 specific games sold in both Steam and Epic’s stores sought information relevant to the effects of competition.
In so ruling, the court recounted the plaintiffs’ collective argument that “Apple’s 30% commission on sales through its App Store is anti-competitive and that allowing iOS apps to be sold through other stores would force Apple to reduce its commission to a more competitive level.” Judge Hixson next explained that Steam is one of the largest video game stores for PCs, and like Apple, charges a 30% commission, while Epic Games opened its video game store for PCs in December 2018, and charges a commission lower than 30%.
The court concluded that by requesting the games’ sales data across platforms, Apple was rightfully probing whether the availability of other stores in fact affects commissions in the manner the plaintiffs allege. Judge Hixson slightly narrowed the scope of both requests for production in order to alleviate some of the difficulty Valve claimed it would have in fulfilling the requests.
Apple and Valve also contested whether Valve’s redactions on a previously produced batch of documents were valid. The court held that the protective orders in place were sufficient to allay Valve’s concern about sharing its highly confidential sales and revenue information. In turn, Judge Hixson ordered Valve to remove the redactions except for those claimed under the attorney-client or work product privilege.
Apple is represented by McDermott Will & Emery LLP, Valve by Fox Rothschild LLP, and Epic by Faegre Drinker Biddle & Reath LLP and Cravath, Swaine & Moore LLP.
