The contrasting portraits were drawn on Monday as lawyers for Apple and its nemesis, Epic Games, presented their cases in federal court in Oakland, Calif., To U.S. District Judge Yvonne Gonzalez Rogers, who will decide whether the case.
While Apple described its App Store as an invaluable service enjoyed by consumers and developers, Epic Games attacked it as a breakthrough idea that turned into an instrument of financial exploitation that illegally blocks competition.
The trial, which is expected to last most of this month, revolves around the 15% to 30% commission Apple charges for subscriptions and purchases made from apps downloaded from its store – the only one accessible on iPhone, iPad and iPod.
Epic, the maker of the popular Fortnite video game, has presented evidence drawn primarily from internal Apple documents in an attempt to prove that the company has built a digital “walled garden” over the past 13 years as part of a strategy developed by its former co – founder, Steve Jobs. The formula, Epic argues, is designed to make it as difficult as possible for consumers to stop buying its products and services.
“The most common flower in the walled garden is the Venus fly trap,” said Epic lawyer Katherine Forrest. Later, Forrest pointed to expert testimony that will be submitted during the lawsuit that Apple reaped 75% to 78% profit margins in 2018 and 2019, even though Jobs has publicly stated that the company expected not to earn large sums of money with the store app when it opened in 2008.
The App Store is now an integral part of a services division that generated nearly $ 17 billion in revenue in the first three months of this year alone.
Apple has brushed aside Epic’s arguments as a case brimming with unsubstantiated allegations by a company that wants to ditch the App Store commission to boost its own profits while charging an iPhone ecosystem for free that cost more than 100 billion dollars to be built.
Karen Dunn, the attorney for Apple, pointed to internal Epic documents describing a strategy called “Project Liberty” that paved the way for Fortnite to deliberately sever its app store contract last summer and hold a confrontation on costs.
“Rather than investing in innovation, Epic invested in lawyers, public relations and policy advisors to get all the benefits that Apple offers without paying,” Dunn said.
In his affidavit, Epic CEO Tim Sweeney acknowledged that the company is trying to increase its current annual revenue by around $ 5.1 billion through its own app store. The Epic store, which is currently banned on the iPhone and other Apple products, charges a 12% commission on in-app transactions. This model is not yet profitable, Sweeney said, but he predicted the Epic store would start making money over the next three or four years.
“Epic is only looking to change Apple’s future behavior,” Sweeney said so the company doesn’t have to pay higher commissions and still be able to offer Fortnite and other games on the iPhone. Apple ousted Fortnite from its App Store last August after Epic attempted to use its own payment system.
Apple CEO Tim Cook, Jobs’ chosen successor, will also testify during the trial, but his appearance is not expected until the end of a court drama that will unfold before a handful of people wearing masks are not allowed to enter. every day due to pandemic restrictions.
While the lawsuit will involve moments of great intrigue that could divulge well-kept secrets, the nuts and bolts of the case will likely depend on more mundane matters such as market definitions.
Epic argues that the iPhone has become so entrenched in society that the device and its peripheral services such as the App Store have become a market in their own right. As part of that argument, Epic argues that Apple should be forced to open its walled garden to alternative options, such as allowing other app stores and payment options in addition to its own.
“The garden could have a door,” insisted Epic Forrest’s lawyer. “It was artificially closed.”
Apple Inc. is seeking a much broader market definition that would encompass consoles, computers, and other devices that people use to play video games. The company also refers to the roughly 2 billion other smartphones running on Google’s Android software, which allows for alternative ways of downloading apps.
The different way Google handles apps on Android is an example that Apple says proves consumers have other choices, but many prefer to keep their digital experiences in a carefully controlled walled garden.
Epic “asks us to remove our competitive edge,” Apple lawyer Dunn said. “Epic wants us to be Android, but we don’t want to be. “
Epic is also suing Google in a separate case, accusing the company of illegally hijacking apps through its Play Store for Android devices.
Michael Liedtke, The Associated Press