UPDATED with Apple opening argument: Epic Games Monday slammed Apple for making billions of dollars off the back of developers, describing an arbitrary and dictatorial regime by the Tim Cook-led company that draws apps to the iOS operating system and takes a big chunk of their business – after claiming early on that it didn’t intend to make a profit on the App Store.
“Developers found themselves caught in a trap of Apple’s making. They had accepted Apples assurances that it would not make profit on the App Store and once they committed themselves to working in the ecosystem they found non-negotiable termination provisions … a ‘take it or leave it’ infrastructure,” said Epic attorney Katherine Forrest.
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Last August, summer Epic Games, the powerful company behind Fortnite drew a line in the sand. Today Epic Games, Inc. v. Apple Inc. is finally in court. The case is the result of Epic Games updating the Fortnite iPhone app so gamers could pay Epic directly, bypassing Apple’s payment system and controversial 30% commission. Apple hit back by yanking Fortnite from the App Store.
Epic launched a “FreeFortnite” ad campaign and sued. It has accused Apple of monopolistic practices. Its App Store is the only way to install software on Apple’s mobile operating system, iOS. Developers who make software for iOS must follow Apple’s rules and use its payment system, which charges a commission on every sale.
Epic CEO Tim Sweeney was the first witness, testifying for several hours. Tim Cook will also be on hand for the bench trial, which is expected to run about three weeks.
“Apple was making more profit from selling developer apps in the App Store than developers,” said Sweeney.
Epic, which has enormous resources, has cast itself as a kind of proxy for the larger developer community positioned to take the biggest company in the world ($2.2 trillion in market cap). “It’s “far from the only distributor and developer” with a problem, Forrest said.
Apple attracted millions of users to its system, said Forrest. “After it lured in enough users and developers to its walled Garden, they became trapped and Apple imposed ever more numerous restrictions and threw away the key.”
A bench trial means the case will be decided by Judge Yvonne Gonzalez Rogers of U.S. District Court for Northern California in Oakland.
The court provided a conference call number to listen in but the audio got off to a rocky start as hundreds called — many Fortnite fans apparently — and administrators had trouble muting the lines, resulting in a late start to the proceedings. “I’m going to tell my mom, ‘Don’t pick up the phone ever, I want to listen to this sh-t,'” said one voice audible over the cacophony.
“Your honor, please bring back mobile! Bring back Battle Royale!” said another. “If Apple wins, I’m selling my iPhone!”
Apple’s opening drove hard on the concept that the burden of proof in this suit is on Epic, which is true. Attorney Karen Dunn said Epic is flat wrong on how it defines “relevant market” because it’s sweeping many or most apps across the entire app store into one group.
“Epic “is going to have to twist itself into a pretzel to define a relevant market” where Apple is a monopolist, she said, arguing that Epic did and cannot demonstrate anticompetitive conduct or effects. She said Apple, for it’s part, can show pro-competitive effects from the App Store and takes credit for enhanced consumer trust and choice, security and privacy, reliability, quality, user experience and protection of intellectual property.
And a key point is that Apple makes money for developers, and the amounts go up alongside the explosion of iPhone users and growth in the App Store itself.
Apple has lowered its commissions in some cases and took issue with Epic’s description of the high margins it generates from the App Store. Furthermore, Apple’s argued that Fortnite is available on other platforms, not just through the Apple App Store.
MORE to come — (Below is Tweet that started it all.)
Apple removed Fortnite from the App Store and has informed Epic that on Friday, August 28 Apple will terminate all our developer accounts and cut Epic off from iOS and Mac development tools. We are asking the court to stop this retaliation. Details here: https://t.co/3br1EHmyd8
— Epic Games Newsroom (@EpicNewsroom) August 17, 2020
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