The Epic vs Apple trial is wrapping up, but the battle has just begun
- Reference: 1622031611
- News link: https://www.theregister.co.uk/2021/05/26/the_epic_vs_apple_trial/
- Source link:
The [1]previous three weeks demonstrated what happens when two companies with market capitalizations the size of nation states try to use the legal system to fundamentally shape their opponent’s business model. Ugly? Yes.
Entertaining? Sometimes.
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In the case of Epic, it wanted to weaponise the force of the US judicial system to change the way developers distribute and monetise software on the iOS App Store.
The [5]move on 13 August that kicked this all off was the activation of "allegedly hidden code in Fortnite allowing Epic Games to collect in-app purchases directly" via its "Fortnite Mega Drop", which meant Apple couldn't get its traditional 30 per cent cut. It [6]duly booted the developer out of the store . Later that day Epic filed its initial complaint
[7]PDF
, alleging Apple was abusing its dominant position by seeking to "control markets, block competition, and stifle innovation."Apple, for its part, [8]hit back a week later , alleging
[9]PDF
Epic orchestrated its own banning as part of a plan to plug its own service and get out of giving Apple its commission, saying "Epic’s plan was to violate the agreements intentionally in order to manufacture an emergency."[10]
It also filed a [11]counterclaim alleging breach of contract in September.
For years, Epic had tired of giving Apple 30 per cent of the revenue it generated on the App Store — a practice Sweeney had characterised as rent-seeking. While the company has attempted to re-brand its fight as a crusade for all developers, with [12]some support , it nonetheless stands to benefit from a win.
Apple entered the melee from a fundamentally defensive position. Company execs — like its CEO Tim Cook and Apple Fellow Phil Schiller — were summoned to the stand and forced to justify its policies.
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We heard Schiller defend iOS's locked-down nature as necessary for user security. Craig Federighi, Apple's SVP of Software Engineering, was [14]forced to concede that MacOS has a malware problem . Cook was grilled — extensively — about whether the 30 per cent commission exacted from large developers was [15]justified .
That’s not to say Apple didn’t land a few body blows itself. It strived to portray Epic Games as greedy, aiming to get the benefits of the iOS app store but without paying towards it.
We also learned how much Epic’s teen-classic Fortnite earned from the iOS store alone — $700m in the two years leading up to its ban. Schiller brought up various ecosystem features, [16]like Apple’s Metal API , which it argued was essential to Epic Games’ success in the mobile gaming sphere.
And Tim Sweeney, Epic Games’ co-founder, was portrayed as capricious. We heard how Apple’s leadership was “ [17]blindsided ” when they learned Epic had snuck an unauthorised payment system into Fortnite, after what was previously a productive and cordial working relationship.
All wars are ugly, inlcuding legal ones. Here, the opposing sides have the power of discovery.
It was through this process we saw the inner machinations of Apple’s leadership team, gaining a level of transparency. We witnessed, in stark language, how Apple saw its locked-down content marketplaces as [18]tools to prevent customers from switching to Android .
For now, the lawyers can rest easy. The burden of judgement rests on Judge Yvonne Gonzalez Rogers' shoulders.
Judge Rodgers must weigh up whether Apple’s ironclad control of the iOS platform is justified, or whether it constitutes an abuse of monopoly power. If she agrees with Epic Games’ arguments, what are the appropriate remedies? Can Apple loosen its grip without risking user safety or privacy?
If she finds in Apple’s favour, Epic will be forced to [19]turtle , and ponder its next step. Does it try to repair its shattered relationship with a rival? Or does it continue the crusade, leading a quixotic fight across appeal courts and statehouses?
The arguments may be over, but the fight has just begun. ®
Get our [20]Tech Resources
[1] https://www.theregister.com/2021/05/04/apple_vs_epic_trial/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YK5wnDt6zR9F2YgoEb-JsQAAANU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YK5wnDt6zR9F2YgoEb-JsQAAANU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YK5wnDt6zR9F2YgoEb-JsQAAANU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2020/08/14/epic_games_apple/
[6] https://www.theregister.com/2020/08/14/epic_games_apple/
[7] https://regmedia.co.uk/2020/08/14/epic_apple_complaint.pdf
[8] https://www.theregister.com/2020/08/22/apple_epic_lawsuit/
[9] https://regmedia.co.uk/2020/08/21/appleepic.pdf
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YK5wnDt6zR9F2YgoEb-JsQAAANU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2020/09/09/apple_epic_counterclaim/
[12] https://www.theregister.com/2020/08/24/microsoft_sides_with_epic_over/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YK5wnDt6zR9F2YgoEb-JsQAAANU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.theregister.com/2021/05/12/ios_lock_in_epic_trial/
[15] https://www.theregister.com/2020/08/25/epic_vs_apple/
[16] https://www.theregister.com/2021/05/18/apple_phil_schiller_epic_trial/
[17] https://www.theregister.com/2021/05/07/epic_apple_day_4/
[18] https://www.theregister.com/2021/05/12/ios_lock_in_epic_trial/
[19] https://fortniteintel.com/how-to-efficiently-pressure-turtling-fortnite-opponents/15225/
[20] https://whitepapers.theregister.com/
Re: "Apple’s ironclad control of the iOS platform"
But the question is whether that dispute over money means Apple has to be forced to lower it's rates or if "if you don't like it bugger off to a different OS/Marketplace" is a sufficient answer. Because if the judge rules that Apple cannot reasonably take 30% on it's own platform or must allow other marketplaces in it's OS then that sets a rather nasty precedent that's likely going to work it's way all the way up to the Supreme Court before getting settled and will make much noise all the way along.
Re: "Apple’s ironclad control of the iOS platform"
You forgot option 3: Allow app makers to use other payment providers, even if it's watered down to "Allow app makers to tell customers that it's cheaper pay via a website rather than in app"
Re: "Apple’s ironclad control of the iOS platform"
So who gets the other 90%? After all, Epic are also just selling “the same bytes over and over again” so they’re also only entitled to 5% because you think them getting 70% is egregious too, right?
I mean, their platform is done and dusted - they make their money selling cosmetics and other in-game tat to their playerbase. They’ve made the money they invested in the game many times over already, same as Apple have with the iPlatform.
It’s going to take something more than your gut feeling that Apple charges too much to make me feel sympathy for either side in this case. Epic could quite easily have just gone “Sorry people, Apple charges too much so we’re dropping support for the iDevice market”. That would have earned my respect and may even have caused some pain to Apple. Instead, they pulled an Apple and went to court.
A pox on both their houses.
Re: "Apple’s ironclad control of the iOS platform"
"I think that that is way too much for a platform that is done and dusted and resells the same bytes over and over again 24/7."
It depends on the costs incurred, and also on the relative market costs to achieve the same publishing reach by other means. That 30% also gets your product marketed to hundreds of millions of potential punters; if you're Epic you might have a similar kind of reach, but for the vast majority of app publishers 30% is a steal compared to what you'd have to pay to reach the same client base through other means.
Knock on effect
This seems to me to potentially have far larger ramifications, similar to Google vs Oracle. Regardless of which way this goes, I believe this is going to affect all closed marketplaces, such as traditional game console companies.
no point
Neither of them have respectable business practices. Just greed. 30% is to much, and cheating on your contract is dirty. I hope they both suffer huge fines. But the fines will just go to the criminal body pretending to regulate them just to skim their own 25% off.
Bunch of dirtbags fighting over who gets to con -us- out of our money.
This is why I don't buy apps.
Re: no point
"Just greed. 30% is to much"
How do you know? It's a lot, certainly, but do you have insight into Apple's costs of maintaining the ecosystem, plus the costs of achieving the same marketing reach through other means?
Most products out there are priced way beyond the wholesale commodity cost of the product itself, and you're paying for a 'value layer' around the product because most of us don't have the skill or can't be bothered to put all the various bits together for a complete solution.
Apple offers that complete solution, and until you've analysed the economics it's not accurate to say 30% is 'too much'.
Re: no point
"How do you know? It's a lot, certainly, but do you have insight into Apple's costs of maintaining the ecosystem, plus the costs of achieving the same marketing reach through other means?"
Apple did go through a bunch of these things during the trial. As soon as they linked the store profits to developing new hardware like the M1 chip then statements like the one you make above loses credibility more so when the statements implied that the iPhone itself was a loss leader.
Re: Colin Wilson 2 - Apple have got this right!
Epic was not cheating, they demonstrated that the 30% you pay for a supposed iron-clad control over the application and the respect of the store requirements by application developers is a scam, by managing to slip into their application a feature that is explicitly banned by Apple.
Are Apple doing a good job at securing the iStore
As apple has conceded the following
> Apple’s leadership was “blindsided” when they learned Epic had snuck an unauthorised payment system into Fortnite, after what was previously a productive and cordial working relationship.
Then how well are they securing the store. After all their biggest apps should get the tightest scrutiny as they will have the biggest impact.
"Craig Federighi, Apple's SVP of Software Engineering, was [1]forced to concede that MacOS has a malware problem ."
He wasn't 'forced to concede' anything of the sort, and twisting the sentence "Apple blocks billions of dollars of fraudulent transactions" into the implication that MacOS has a malware problem is an epic (pun intended) mischaracterisation. Almost libellous in its deceit. That Apple won't take your calls is no excuse for lies and petty jealousy Reg; people come here for the unvarnished truth, and not unrecognisably biased spin.
Footnote: the linked article says this about Apple/fraud/malware detection: "Apple announcing earlier this week - the timing was impeccable - that it blocked $1.5bn in potentially fraudulent transactions during 2020, with more than three million stolen credit cards blocked from the platform.
The iGiant also claimed to have blocked 215,000 apps for privacy violations, as well as 48,000 apps containing hidden or undocumented features, ultimately resulting in 470,000 developer accounts terminated."
[1] https://www.theregister.com/2021/05/12/ios_lock_in_epic_trial/
The lawyers have more paydays coming
Whichever side loses will appeal against the judgement - and this case will probably end up being settled by the Supreme Court.
Both sides have enough money to fund long running appeals.
As far as Apple "taxing" in app purchases, it is very difficult to see any justification for the "tax". Apple are not providing any service - they are just demanding money with menaces.
When it comes to the initial purchases of apps, there is one major difference between Apple and Google - with Android it is easy to install applications from locations other than the Play Store, with IOS on iPhones this is not possible. Google might well be able to argue in court that it is not a monopoly supplier of apps for Android but Apple most certainly IS a monopoly supplier of apps to iPhones/iPads.
Icon for what should happen to lawyers ===========>
"Apple’s ironclad control of the iOS platform"
Nobody is disputing "Apple’s ironclad control". Apple has every right to police its Store as it sees fit.
The dispute is over money. 30%, to be precise, and I think that that is way too much for a platform that is done and dusted and resells the same bytes over and over again 24/7.
5%.
That's the limit.