In introducing the opening arguments in Epic’s highly anticipated lawsuit against Apple, the Fortnite studio noted it was “not suing for damages” or a “special deal”. Instead, Epic’s counsel said it “advances change, not just for itself, but for all developers.”
While “Epic is far from the only hapless Apple developer and distributor,” Epic’s lawyers said it happened to be the only company that “finally [say] enough for Apple’s monopolistic behavior” by “tackling the world’s largest company” in court on the matter.
Apple, meanwhile, used its opening arguments to characterize Epic’s lawsuit as “just an attack on Apple’s 30 percent commission that Epic won’t pay” and Epic as a company that “has decided it won’t pay more for Apple’s innovations.”
“Instead of investing in innovation, Epic . invests [is] invest in lawyers and PR… to get the benefits that Apple offers for free,” Apple said.
Lock-in and the developer’s bait and switch
Much of Epic’s opening argument centered on the idea that iOS users and developers are effectively locked into Apple’s mobile ecosystem and that early in the iPhone’s history, Apple knew “what it had to do to get users up to speed.” Close”. Epic produced a number of emails from Apple executives designed to demonstrate this argument, including a 2013 email from Eddy Cue about how users can become “addicted to the ecosystem”.
As Cue wrote to Tim Cook and Phil Schiller of Apple in 2013,
The more people who use our stores, the more likely they are to purchase additional Apple products and upgrade to the latest versions. Who is going to buy a Samsung phone when they have already bought apps, movies, etc.? They now have to spend hundreds of dollars more to get to where they are today.
Epic said Apple enticed developers with an initial promise that the App Store itself wouldn’t be a big profit generator for Apple. Steve Jobs said in 2008 that the company didn’t “intend to monetize the App Store,” but used the existence of an app marketplace to increase the value of profitable iOS hardware itself.
That worked well for everyone in the beginning, Epic says. But around 2008, Apple realized that some free iOS games were starting to sell extra levels “for a fee.” Apple VP Greg Joswiak identified that in an email as “a potential leak in the system” and said, “we’ll have to make sure our terms don’t allow it.” In 2009, a new requirement was imposed to use Apple’s In-App Purchase System (IAP) for such sales, complete with a 30 percent discount for Apple. In 2011, subscriptions via apps also came with the same requirements.
Epic argued that the imposition of fees for in-app purchases was erratic and had nothing to do with security risks, the amount of support provided by Apple, or the cost of processing user payments. And Epic points out that Apple eventually lowered its asking price to 15 percent for its second year of auto-renewing subscriptions, despite there being no change in cost. “There is a name for companies that set prices without regard for costs,” said Epic’s attorney. “Monopolies.”
Despite Jobs’ expectations, Epic says internal Apple documents show that the iOS App Store is now making profit margins of more than 75 percent on hundreds of millions of dollars in annual revenue. Apple says these numbers are misleading and don’t take into account iOS SDK and API costs filed in other parts of the company, such as the software division.
In any case, Epic characterized this huge profit-taking on app revenues as a bait and switch by Apple. “The most appealing flower in the garden was a Venus flytrap,” said Epic Counsel. Developers “helped add value to iOS, and once they were committed to the iOS ecosystem… their businesses depended on Apple.”
Consumers, meanwhile, have invested real, sunk costs into the iOS ecosystem and would incur significant costs if they switch, Epic said. Epic cited studies showing that “a developer like Epic couldn’t leave the iOS platform, even with a price increase without losing any profits.”
But Apple quoted its own data to suggest that somewhere between 12 and 26 percent of iOS users who bought a new phone in the past few quarters switched to another mobile platform, showing that there are competing alternatives, even for users who don’t. so-called “stuck”. And when iOS using Fortnite shrank after the removal of the iOS App Store, play on competing game platforms went up simultaneously, according to data Apple presented, suggesting further alternatives in that case.
Security measure or pretext
Epic argued that Apple could have built the iOS software “walled garden” with a door, as it did for macOS, which shares the same kernel but still allows installation of unsigned apps not sold through the official Mac App. Store from Apple. Forcing iOS apps through the App Store and the review process was “not a technical decision, but a policy decision,” Epic argued.
But Apple replied that closing the iOS App Store was also a security decision and that [unreviewed] third-party native apps on the iPhone can compromise the phone itself.” A mobile device offers a larger and more attractive attack surface than a desktop operating system, Apple argued, thanks to the mobile device’s added capabilities and near-constant powered-on state. requires additional layers of security to protect users, Apple said.
“It’s rare for someone to leave a Mac on a bus or movie theater,” Apple’s attorneys said. “A Mac doesn’t know where you are or your kids are.”
Epic said that argument is just a pretext for what amounts to a business decision to exercise total control over the iOS app market. Epic counselors quoted Apple executives and materials as saying macOS is safe, and counsel argued that there are “no” [security] failure in macOS that healed iOS.”