With Epic Games and Apple set to appear before a judge in their high-profile lawsuit in just a few weeks, new court filings from both companies outline the evidence and arguments each plans to make.
Unsurprisingly, each document paints a radically different picture of Apple’s App Store and its role in the gaming and technology industries.
The disagreement between the two companies escalated publicly as Epic attempted to introduce its own in-app payment system Fortnite, one of the most popular games on Apple’s App Store. This set in motion a series of events that led to Apple’s removal Fortnite from the App Store while Epic ran a social media campaign around the hashtag “#SaveFortnite”, pitting angry gamers against the tech giant.
Epic then went to court against Apple, alleging that the latter’s iOS App Store is a monopoly and that its policies requiring app developers publishing on iOS to use Apple’s own payment system (among other restrictions in Apple’s review process) are anticompetitive. is.
Both Apple and Epic had to file “Findings of Fact and Decisions of Law” in the run-up to the lawsuit. The documents are long and detailed, but some key arguments are summarized below.
Apple’s Argument
At the heart of Apple’s argument (the key aspects of which we went into detail earlier) is that developers have the ability to develop and publish games for many other competing devices and platforms, including storefronts from companies such as Sony or Nintendo. those comparable rules and rates. Developers can also publish to the web, where experiences are still available to iPhone users even if developers choose not to abide by the App Store rules and publish there.
Because Apple is just one of many players in a wider competitive video game transaction market, and it doesn’t control that entire market, it doesn’t have a monopoly, the company says. Here’s an excerpt from Apple’s application:
Apple has no monopoly or market power in the relevant product market for game app transactions. And there is no claim that it had such power when the restrictions involved were imposed around the launch of the App Store.
Further:
Apple is under no obligation to license its intellectual property, and subject to a limited exception that does not apply here, companies are free to choose the parties with whom they do business, as well as the prices, terms and conditions of that transaction. .
Apple says the 30 percent commission charged to developers who earn more than $1 million a year on the app marketplace is an industry-standard fee that doesn’t represent an anti-competitive strategy.
The filing argues that such a cut is reasonable, as Apple has spent billions building and maintaining infrastructure that enables developers’ success on the platform, from the App Store itself to various APIs and other software development tools. Apple Reveals Epic Made $700 Million in Just Two Years on the iOS Platform Fortnite available on iPhones and iPads.
Also key to Apple’s argument is the claim that the specific Epic update Fortnite that led to the game’s removal from the App Store was planned months or even years in advance with the specific intention of launching a wide-ranging public relations battle to make Apple look bad. If the judge agrees with that interpretation of Epic’s actions, it could weaken Epic’s case that Apple unfairly removed Fortnite from the App Store after Epic submits the game for approval in good faith.
Epic’s Argument
The main difference in Epic’s own argument is that iOS is an entire market in its own right, not just one of many competing products in a larger market of video game transactions. If the judge agrees with this classification, Apple is more likely to be seen as monopolistic.
Another important part of Epic’s argument is comparing and contrasting iOS with macOS. Apple claims that its strict rules about what apps can and cannot do in the iOS App Store are at least partly driven by security and privacy concerns for users. However, Epic points out that Apple claims that macOS is secure and private without imposing the same restrictions on the Mac operating system.
This is key to Epic’s argument that Apple enforced its rules on the iOS App Store for business reasons rather than user-centric reasons like security or privacy, which could undermine some of Apple’s business.
Epic claims that Apple’s controversial App Review process “does little to keep iOS devices safe”, and it claims that Apple has screened apps on multiple occasions “primarily for non-security issues, including specifically for anti-competitive purposes”.
Epic cites Apple’s policy that apps must use Apple’s own payment system (thus giving Apple a 15 or 30 percent cut in revenue) as one that has no security benefits. The declaration says:
There were no widespread or significant security vulnerabilities related to payment with the App Store prior to the introduction of IAP or the requirement that apps that sell subscriptions use IAP instead of alternative payment solutions, nor evidence that IAP is much better than third-party payment alternatives with regard to all the way to safety.
As a side note we thought it worth noting, Epic says in its filing that its own current PC-based gaming market will become profitable by 2023. The company spent a lot of money on marketing, user acquisition, and exclusives for its installation base in its early years, all of which led to expected losses in its early years of operation.
The Rorschach test
The judge’s ruling could have far-reaching consequences not only for Apple and Epic, but for many other companies dealing in digital software, from platforms to individual developers.
Both Apple and Epic have a huge interest in the outcome of this case. If the judge fully embraces Epic’s arguments, Apple faces an existential threat to a core part of its product development philosophy and business strategy dating back many years, and the ramifications of a ruling entirely in Epic’s favor would be far-reaching for the industry. future of apple.
Epic may not have that much to lose in terms of its status quo position, but the company has a huge amount to gain as it moves forward. If it beats Apple on this battlefield, the floodgates could open for Epic to launch its own store on iOS — and perhaps, after setting the precedent, on other gaming platforms like those from Nintendo, Sony, or Microsoft.
The two arguments characterize the nature of Apple’s App Store quite differently, and it’s clear that the App Store has become something of a Rorschach test for onlookers.
There are many aspects to the case that could ultimately be critical to the judge’s conclusions, such as whether Apple’s app review process actually provides security or privacy benefits to users, or whether Epic violates its app review policy. pushed Fortnite good faith updates, and more.
But the trial may primarily boil down to this question: Does Apple’s App Store — despite a minority install base in the mobile space (Google’s competing Android platform has more than 70 percent market share) and the presence of numerous strong competitors in the video game industry — its sheer size and ubiquity make it its own marketplace in which the company can have a monopoly?
Or is the App Store just one of many digital products in an expansive and healthy competitive gaming market — with the implication that Apple isn’t really restricting developers’ access to the market in an anti-competitive way, because Apple doesn’t have that kind of power over the larger market?
We’ll see the arguments move forward when the trial begins on May 3 in Oakland, California, provided there are no delays.