Apple and Epic did not immediately respond to requests for comment.
The hearing laid the foundation for what the experts said would become a landmark antitrust case against Apple, which could threaten the profits of the world’s most valuable company and reshape the entire digital economy.
In order to challenge the status quo, Epic also sued Google. Google withdrew Fortnite from its app store in August for similar reasons as Apple.
John Bergmayer, a lawyer for consumer rights organization Public Knowledge, said: “This case involves not only a video game, but also whether Apple and Google can control the terms of distributing software to millions of users.”
This is the showdown you need to know.
Why should Apple and Epic appear in court?
It all boils down to the way Apple gets paid.
When you make in-app purchases through the iOS app, Apple will cut costs by 30%, and Apple says the services it provides are reasonable. Apple’s contract prohibits attempts to circumvent the rules.
Last month, Epic decided to challenge the rule. In Fortnite’s software update, it encourages iOS players to purchase the game’s digital currency, called V-Bucks, directly from Epic, rather than through Apple’s in-app purchase system. In order to make the transaction smoother, Epic offers discounts to those who purchase V-Bucks directly.
Although consumers may see it as a loyalty reward, Apple sees it as a serious breach of its contract with Epic and is trying to weaken the main source of income.
Apple’s lawyer Douglas Vetter wrote in a letter to Epic that Epic wanted “all the benefits that Apple and the App Store provide without spending a penny.” He added: “Apple cannot give in to this. Unreasonable demand.”
Apple immediately eliminated Fortnite from the App Store and largely canceled access to Unreal Engine, the Epic software increasingly used by game developers and Hollywood to create realistic digital scenes and surroundings. The technology has been used in Disney’s recently awarded series “The Mandalorian”.
This got us into a debate on Monday. Epic called for a preliminary injunction to prevent Apple from taking action against Epic. Apple opposed the proposed ban, saying that if there was no intentional breach of contract, Epic would not be in such a difficult situation. Epic did not deny this fact. (The judge in this case has issued a temporary restraining order against Apple, forcing the company to restore Unreal Engine, but Fortnite is still banned.)
Why does Epic violate the rules?
The battle between Epic and Apple began on June 30, when Sweeney challenged Apple’s Tim Cook, Phil Schiller and Craig Federich. (Craig Federighi) sent out an email with a request.
Sweeney (Sweeney) proposed a way to accept payments from users other than Apple in-app purchases, and suggested that Epic open a competitive app store in the Apple App Store.
It caused a fire. Apple’s legal counsel responded to Sweeney’s email, calling it “disappointing” and rejected both requests. Sweeney retorted that the legal response was “a self-righteous, self-interested screed” and said that he would continue to solve the “injustice” in this industry and bring changes as long as necessary, and it would take years if necessary . ”
Why is this important?
This is not just a struggle between Apple and Epic, or even a struggle between app store fees. The entire foundation of the application economy is threatened.
Epic is not just asking the court to stop Apple from banning Fortnite. Allegations that Apple holds an illegal and anti-competitive monopoly have stifled innovation in the iOS application sales market and actively harmed consumers.
One day, the final ruling on Apple may change the way all app stores operate in the United States. Moreover, this could weaken Apple’s decades-long strategy of creating a tightly controlled technology ecosystem (or walled garden) that prevents the iPhone from installing apps from outside the iOS App Store.
Epic is not the only company entangled with Apple. Project management software company Basecamp gave testimony to members of the House of Representatives this year about Apple’s fee structure and rules.
David Heinemeier Hansson, the founder of Basecamp, said: “Rules are often interpreted in different ways by different reviewers because they are deliberately ambiguous.” “Therefore, we have always worried that we might violate these vague rules and our application The next update of the program will be blocked by Apple.”
Hansen has become one of Apple’s strongest opponents. A few months later, when he launched the email application Hey.com, he met with Apple again and the application was banned by the iOS App Store.
The lawsuit against Apple also comes from a broader antitrust review of the company and its peers including Amazon, Facebook and Google. European competition enforcers are also investigating Apple’s app store policy.
The case reflects the upsurge of resistance by app developers that began in 2016. At the time, Spotify said it would no longer support in-app subscription payments on iOS, and instructed customers to pay subscription fees through its own website. (Spotify complained to EU regulators about Apple’s subsequent retaliatory actions.) Then, last year Netflix followed suit.
What did Apple say?
Apple has defended its App Store policy, which is an important mechanism to ensure users are protected from malicious software. Some have argued that the fees it charges only reflect the immense value provided by Apple as the operator of one of the world’s largest (safest) app stores.
Apple pointed out in a court document: “It is precisely because of the standards and security measures in place and the mechanisms Apple has developed to implement these applications, the App Store is the most trusted application market in the world.”
Experts say that in competition cases like this, many lawsuits will depend on Apple’s alleged dominance in the market. Therefore, it is in Apple’s best interest to define the market as broadly as possible. If Apple succeeds in persuading the judge to treat the relevant market as “all smartphones,” it can be argued that monopoly is not easy: Apple only occupies 13.3% of the global mobile phone market, which is far from the majority. (Epic’s strategy is to narrow the market definition as much as possible: Apple says it controls 100% of the iOS app store market.)
Apple can also argue that 30% of the cost is the cost of running the App Store, which makes apps like Fortnite easy to attract consumers, and its app review process helps protect consumers from security risks.
Jeffrey Blumenfeld, a partner at Lowenstein Sandler, said he had “difficult to believe” that the court would benefit Epic and stated that “Apple does not allow controlling the distribution of applications through its App Store.” He said that for the court to do this, it must be “very confident” that consumers will be better in the long run.
Monday’s argument may determine whether Judge Yvonne Gonzalez Rogers ordered Apple to restore Fortnite to the iOS App Store while the lawsuit continues. It can also determine whether Apple may take other actions against Epic in the ongoing lawsuit. The final resolution of the case may take several years.
Gonzalez Rogers sympathizes with the epic argument, if not its strategy. Although she accused Epic of not having “clean hands,” Gonzalez Rogers recently challenged Apple to explain why Apple does not have a monopoly.
“The problem is, if you have an iPhone, you can’t buy [apps] She said, “You can’t. You can only buy from Apple. I can’t buy from Google. I can’t buy from Amazon. There is no competition. So the question is, without competition, where does this 30% come from? Why is it Not 10%, 15%, 20%?”
Apple responded that consumers will have many choices when choosing a smartphone platform (iOS or Android).
Bergmayer said that the final decision in the case may strongly affect these two ecosystems.
He said: “This has broad implications for business, culture, and personal free expression.” “The modern digital economy is built on the Internet. The Internet is an open platform. No company can completely shut anyone out. .”
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