Epic Games vs Apple - Got Ugly just Before the Trial

Epic Games vs Apple - Got Ugly just Before the Trial

The Apple v. Epic trial is scheduled to be heard within the next few weeks, and things are clearly heating up. Here is a summary of what is happening in this important trial for those who need to get up to speed.

Epic, the makers of Fortnite, have long objected to Apple and Google's gatekeeping on their respective platforms, and in August 2020, Epic decided enough was enough and decided that they would not use Apple or Google's payment systems to It allowed users to purchase credits in-game. However, offering a 20% discount for direct purchases violated Apple and Google's developer rules.

Fortnite was subsequently removed from both the App Store and Google Play, and Epic hired lawyers; a civil suit was filed against Apple for violating antitrust laws, and the case will be heard in May.

As that date approached, both Apple and Epic made findings of fact in separate documents, each over 300 pages long; Apple's can be read here and Epic's here.

Apple would argue that its 30% cut is very standard in electronic stores. Some companies, like Valve, for example, have publicly announced their 30% cut, while others, like Sony, have not provided a clear price. However, all of these companies have set rates comparable to Apple's.

Cupertino's tech giant would also argue that it faces competition from other phone makers and gaming consoles. They will also emphasize the benefits that consumers have enjoyed from the continued development of iOS and the App Store, and that companies have also seen a significant increase in profits from the sale of their apps.

Epic, on the other hand, would argue that Apple dominates the iOS app distribution market and that its profit margins are extraordinary. They would also likely argue that there is no way to reach Apple's users without an app store, and that those users represent roughly half of the total smartphone market.

They also cite cache size limitations and direct access to Apple hardware as reasons why this is not a practical solution for game developers, arguing that web app development is not a substitute for downloadable apps. The document also states that Epic states that Apple's price reductions are causing app prices to rise, to the detriment of consumers.

In October, according to The Verge, Epic issued a statement that seems rather contentious, saying that Apple "has no rights to the fruits of Epic's labor." This seems like an outrageous position to take, arguing that a company like Epic should be allowed to take advantage of the fruits of Apple's labor, a very large base of potential customers; Epic also operates an app store and gets 12% of developers' profits.

Extrapolating from this argument, one could also conclude that Epic is fine with retailers stocking iPhones, but not with Apple having someone stand in front of the cash register to collect money directly.

One thing is certain: Apple is taking this case very seriously; CNBC reports that top executives, including Tim Cook, are likely to testify; Apple, and all companies that operate platform-specific stores, including Sony and Microsoft, will be facing serious consequences. For companies, the case could have serious implications; on Epic's side, Epic founder and CEO Tim Sweeney is also likely to appear.

Apple recently made changes to the App Store, and small developers with less than $1 million will pay Apple a 15% reduction. According to a third-party analysis firm, 98% of developers qualify for this reduced rate.

It will be interesting to see which direction the trial, which begins May 3 in Oakland, California, will develop.

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