Apple scrambles to claw back Small Business Program emails 'inadvertently' sent to Epic

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What you need to know

  • Apple is seeking to claw back documents it 'inadvertently' sent to Epic Games as part of its pre-trial discovery.
  • The company says that three documents discussing Apple's Small Business Program are in fact privileged.
  • Filings show Apple discussed various SBP risks including competition and money laundering.

Apple is desperately trying to claw back emails it 'inadvertently' sent to Epic Games as part of its pre-trial discovery for its upcoming antitrust lawsuit against the Fortnite-Maker.

Court documents submitted Tuesday and Wednesday note that parties are in disagreement over three emails between Apple executives "reflecting their planning and evaluation of the Small Business Program announced in late 2020."

In a court filing reviewed by iMore, Apple states:

Reviewing millions of documents in a few months, Apple inadvertently produced a handful of privileged documents about the development of its recently launched Small Business Program (the "SBP"). Apple learned in February that 13 such documents had been produced and clawed them back.

Epic Games claims Apple's clawback is "improper", stating that Apple reviewed the documents "repeatedly" and only tried to get them withdrawn when Epic told Apple it was going to cite two of them in its proposed findings of fact, at which point Apple "purported to determine they were privileged". The two parties are in dispute over whether the documents are privileged, and whether Apple may have waived that privilege.

A separate court filing in support of the motion contains a declaration from Phil Schiller, Apple Fellow and former SVP of Worldwide Marketing, who says he was "closely involved in the creation and development" of the SBP. Schiller says that himself, Apple CEO Tim Cook, Luca Maestri, Eddy Cue, and Carson Oliver "regularly sought legal advice" over the SBP regarding any potential legal implications and effects of the program. Schiller notes the risks discussed in his declaration:

Some of the legal risks that Apple attorneys advised me and other Apple business people on in connection with the Small Business Program included the following: competition (e.g., determining eligibility for the program and the potential legal implications of treating some developers differently than others), data privacy (e.g., opt in vs. automatic enrollment, as well as providing notice to and obtaining consent of developers), false advertising (e.g., Apple's communications with developers about the program), fraud (e.g., how some participants may try to obscure their finances or corporate structures to become or remain eligible for the program), and money laundering (e.g., the commission could not be zero because that could result in opportunities for developers to engage in money laundering). The regular advice and consistent support of these members of the Apple Legal team was critical to me and other executives in considering and implementing this program in a way that would be effective and also limit unnecessary legal risk.

Schiller says the email chain in question, dated September 12, 2020, is labeled "privileged and confidential" and that Apple's General Counsel Kate Adams was included in the correspondence.

Apple announced its Small Business Program on November 18, 2020, cutting the App Store's rate of commission from 30% to 15% for "the vast majority of developers". The filing from Schiller indicates Apple was aware there could be competition concerns over the program because it would mean some developers being treated differently based on their App Store revenue. Apple also discussed risks around fraud and money laundering, the latter the purported reason why the App Store's commission rate cannot be zero:

The commission could not be zero because that could result in opportunities for developers to engage in money laundering

Apple and Epic have submitted the joint letter to the court seeking a ruling on the dispute regarding the "inadvertently" disclosed documents.

Stephen Warwick
News Editor

Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design. Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple. Follow him on Twitter @stephenwarwick9