By initiating the opening arguments of Epic’s bench trial against Apple, the Fortnite studio noted that it “was not suing for damages” or “a special case”. Instead, Epic’s board said it is “asking for the change, not just for itself, but for all developers.”
While “Epic is far from the only disgruntled Apple developer and distributor,” Epic’s lawyers said it was precisely the only company that could “finally [say] enough to Apple’s monopolistic conduct “in” attacking the world’s largest company “in court on the matter.
Apple, meanwhile, used its opening arguments to characterize Epic’s lawsuit as “just an attack on Apple’s 30% commission that Epic doesn’t want to pay” and Epic as a company that “Decided that she no longer wanted to pay for Apple’s innovations. . “
“Rather than investing in innovation, Epic [is] invest in lawyers and public relations… to take advantage of the advantages offered by Apple for free, ”said Apple.
Lock-in and the bait-and-switch developer
Much of Epic’s opening argument has focused on the idea that iOS users and developers are indeed locked into Apple’s mobile ecosystem and that Apple knew from the start of the game. iPhone story “what to do to lock out users.” Epic has produced a number of emails from Apple executives intended to demonstrate this point, including a 2013 email from Eddy Cue regarding how to get users “hooked into the ecosystem.”
As Cue wrote to Apple’s Tim Cook and Phil Schiller in 2013:
The more people use our stores, the more likely they are to purchase additional Apple products and upgrade to the latest versions. Who is going to use a Samsung phone if they have already purchased apps, movies, etc.? They now have to spend hundreds more to get to where they are today.
Epic said Apple lured in developers with the initial promise that the App Store itself was not going to be a major profit generator for Apple. Steve Jobs said in 2008 that the company did not “intend to make money on the App Store”, but rather using the existence of an app market to increase the value of the hardware. Profitable iOS itself.
It worked well for everyone at first, according to Epic’s account. But around 2008, Apple realized that some free iOS games were starting to sell additional levels “for a fee.” Apple Vice President Greg Joswiak identified this in an email as “a possible system leak” and said, “We will have to make sure our terms don’t allow it. In 2009, a new requirement was imposed to use Apple’s Integrated Purchasing System (IAP) for such sales, with a 30% discount for Apple. In 2011, subscriptions made through apps also had the same requirements.
Epic argued that this imposition of in-app purchase fees was capricious and had nothing to do with security risks, the amount of support Apple offered, or the costs of processing user payments. And Epic points out that Apple ultimately reduced its requested fee to 15% for the second year of auto-renewing subscriptions, despite no change in costs. “There is a name for companies that set prices without regard to cost,” Epic’s lawyer said. “Monopolies”.
Despite Jobs’ expectations, Epic says internal Apple documents show that the iOS App Store is now making profit margins of over 75% on hundreds of millions of dollars in annual revenue. Apple says these numbers are misleading and do not take into account the costs of the iOS SDK and APIs that are recorded in other parts of the business, such as the software division.
Either way, Epic characterized this massive profit taking on app revenue as bait and change by Apple. “The most attractive flower in the garden was a Venus fly trap,” said Epic Counsel. The developers “helped add value to iOS, and once they got involved in the iOS ecosystem… their businesses depended on Apple. “
Consumers, on the other hand, have invested real and sunk costs in the iOS ecosystem and would incur significant costs of change, Epic said. Epic cited studies showing that “a developer like Epic could not leave the iOS platform even in the face of a price increase without suffering a loss of profit.”
But Apple cited its own data to suggest that 12-26% of iOS users who bought a new phone in the past few quarters have switched to another mobile platform, showing that there are competitive alternatives even for them. allegedly “locked up” users. “And when the use of iOS from Fortnite decreased after the removal of the iOS App Store, gaming on competing gaming platforms increased simultaneously, according to data presented by Apple, suggesting other alternatives in this use case.
Safety precaution or pretext
Epic argued that Apple could have built the iOS software’s “walled garden” with a gate, as it did for MacOS, which shares the same kernel but allows the installation of unsigned apps not sold through the Apple’s official Mac App Store. Forcing iOS apps through the App Store and its review process was “not a technical decision, but a political one,” Epic argued.
But Apple responded that locking down the iOS App Store was also a security decision and that “putting [unreviewed] Native third-party apps on the iPhone could compromise the phone itself. “A mobile device offers a larger and more attractive attack surface than a desktop operating system,” said Apple, “thanks to the additional capabilities of the mobile device and its near constant operating state. This requires additional layers of security to protect users, Apple said.
“It’s a rare time when someone leaves a Mac on a bus or a movie theater,” Apple lawyers said. “A Mac doesn’t know where you or your kids are. “
Epic said this argument is just a pretext for what amounts to a business decision to exercise full control over the iOS app market. Epic’s attorney cited executives and Apple documents as saying that MacOS is secure, and the attorney argued that there was “no [security] MacOS failure that iOS cured. “