A federal appeals court on Monday dealt a blow to Epic Games’ efforts to prove Apple wields a monopoly in its App Store, in a decision that could have wide-ranging implications for legal challenges against the concentration of power in the tech industry.

The Ninth Circuit Court of Appeals agreed with a lower court’s 2021 decision that Epic Games, the maker of Fortnite, failed to prove that Apple’s App Store policies constituted anticompetitive conduct in violation of federal antitrust laws. The court, however, upheld the lower court’s ruling that Apple ran afoul of California competition laws because it forces developers to use Apple’s payment processing service without allowing them to tell customers about cheaper alternatives.

The appeals court decision could mark a blow to the federal government’s efforts to challenge alleged monopoly behavior in Silicon Valley, amid ongoing litigation with tech giants including Google and Meta, the parent company of Facebook.

The case was portrayed as a David and Goliath battle between the world’s most valuable company and a popular video game maker – and widely seen as a bellwether of growing efforts to bring antitrust challenges against Silicon Valley.

Federal agencies and policymakers have highlighted ways that Apple and Google allegedly use singular authority over App Stores to boost their services and damage rivals. Epic’s case elevated long-running criticisms that the 30% commission Apple charges on purchases made on its App Store and in-app payment systems unfairly taxes developers.

The Department of Justice has investigated Apple’s App Store practices for years. Last year, the department filed a brief in the Ninth Circuit litigation arguing that the 2021 decision in the Apple and Epic litigation was overly narrow and could imperil the federal government’s efforts to enforce antitrust laws in the digital economy.

The federal appeals court nodded to the broader regulatory debate in Monday’s decision, arguing that its job was to consider facts put forth by Apple and Epic Games.

“There is a lively and important debate about the role played in our economy and democracy by online transaction platforms with market power,” the panel wrote.

As the litigation has played out in the United States, policymakers have considered new legislation that would impact Apple’s App Store practices. In the last Congress, lawmakers from both parties threw their support behind a bill that would break the company’s alleged grip on iPhones and iPads by forcing Apple to allow people to download apps outside the store or use alternative payment systems. Yet despite advancing out of committee, the legislation was never passed by the full Senate or House of Representatives.

Meanwhile, European policymakers have pushed ahead with their regulations, the Digital Markets Act, which will require Apple to allow developers to install alternative payment systems.

Apple spokeswoman Marni Goldberg celebrated the judge’s ruling as a “resounding victory,” saying it affirmed that the company abides by antitrust laws. However, the company said it disagreed with the court’s ruling that it violated California state competition law, signaling it may take further action.

Epic Games did not immediately respond to requests for comment.

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