Apple

Apple And Epic’s Battle May Head To Trial in 2021

The ongoing war between Apple and Epic Games over the future of Fortnite on iOS seems to be heading for a trial showdown that could have drastic effects on what the future of the digital economy will be, and what entities will play the role of gatekeeper.

At the base of the issue that found itself in front of a federal judge Monday (Sept. 28) was whether or not Fortnite would be able to secure a temporary court order forcing Apple to let Fortnite back into the iOS App Store. Apple blocked the app in August because a new update allowed players to circumvent Apple’s proprietary in-app payment system — a move that app makers are barred from by their contracts with Apple.

For its part, Apple has said it would let the popular multiplayer game back into its App Store if Epic removed the update.

Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California did not decide today on the injunction. She noted that a full trial would likely go forward in July of 2021 because of her busy schedule.

Epic’s Argument

At the hearing, Epic conceded it knew its latest update violated its contract with Apple but included it anyway. Apple countered that those policies to which Epic was contractually obligated are aimed at protecting consumer privacy and data security. That argument Epic countered with an assertion that its app had been in the App Store for several years and had never presented much in the way of a security threat.

Gonzales Rogers seemed less than persuaded by Epic’s line of argument, noting that its dishonesty seems to have introduced a security issue to the situation.

“You did something, you lied about it by omission, by not being forthcoming. That’s the security issue. That’s the security issue!” Gonzalez Rogers told Epic. “There are a lot of people in the public who consider you guys heroes for what you guys did, but it’s still not honest.”

Epic conceded dishonesty — but asserted that Apple’s contracts are anti-competitive and that it intended to provoke an issue that could be decided in court.

“When you are taking on the biggest company in the world, and you’re taking it on where you know it’s going to retaliate, you don’t lie down in the street and die,” said Epic’s attorney Katherine Forrest. “You plan very carefully on how you’re going to respond.”

As for more specific allegations — Epic repeated many of the arguments it has made thus far around the issue: Apple develops rules that have been created to consolidate its control of the App Store, which, in turn, limits competition and innovation in the marketplace, which limits consumers to an inferior selection of goods. There are tens of millions of Fortnite fans out there that can’t play on their phones because Apple removed the game from its App Store.

The decision, according to Epic, is an illustration of Apple’s monopolistic tendencies and it also called out Apple’s in-app payment system as an example of illegal tying — when a company bundles two products together for anti-competitive gain.

The judge, point by point, offered a lot of pushback.  On the bundling question, Gonzalez Rogers said she didn’t see two bundled products as much as a single product with multiple features. She also questioned how much Apple had harmed Fornite’s distribution powers via its control of its app store. Fortnite players on iOS have a variety of choices to access the game even if it is no longer available on iOS, she said.

“Walled gardens have existed for decades,” she said. “Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. What Apple’s doing is not much different ... It’s hard to ignore the economics of the industry, which is what you’re asking me to do.”

Epic countered that those walled ecosystems were different — as their consoles are sold at a loss  — but the judge didn’t seem to see an inherent difference.

As for its complaints about the 30 percent commission fee Apple charges, that was shot down by the judge who said 30 percent seemed to be an industry standard collected by PlayStation, Xbox, Nintendo, Amazon, Walmart, Best Buy and Google.

Apple’s Case 

For its part in the hearing, Apple accused Epic of essentially attempting to destabilize its entire business model by stirring up what it described as “a developer revolt.”

Epic Games CEO Tim “Sweeney is trying to be the Pied Piper of other developers,” said Apple lawyer Ted Boutrous. He said Epic wants others to “cheat, breach [their] agreement [and] sneak in software to bypass app review.”

Something, he noted, that could end with a dangerous outcome as it would undermine Apple’s ability to do what its business model was fundamentally designed to do by controlling what can, and can’t, be in its App Store and its included apps.

Apple’s lawyers argued the request was an indictment of Apple’s “entire business model” focused on the “safety, security, and privacy of its users.”

Epic and Apple will have to wait until next summer to square off in court. The injunction is still undecided and the judge did not offer any official guidance as to when it would be decided.

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