Apple Accuses Epic Games of 'Willful, Brazen, and Unlawful Conduct' in Countersuit Asking for Breach of Contract Damages

[mkldev]

When you get a job you sign an offer and get paid X, after realizing the company makes your X times 100000 you want 2X, you have two options. Renegotiate or quit. You can't just stop doing work unless you want to get fired.
Epic wants to renegotiate, Appl wants no part of that and Epic doesn't want to quit, because they know Apple is a huge revenue stream for them.

Actually, Epic did this because they want to renegotiate their contracts with the game console makers, and they know that Apple isn't a huge percentage of their revenue. They went after Apple because suing them would cost them a smaller part of their revenue if Apple threw them off the iOS App Store than if they did it to Sony or Microsoft.

So Apple should provide the App Store out the goodness of their heart?

Hardly. The iPhone is popular because the apps exist. Apple should provide the app store because, given Apple's unwillingness to allow third-party stores, providing the app store is a cost of doing business.

As it stands developers benefit from the App Store as does consumers and so does Apple seems to benefit all involved

The thing is, everything that Apple has done, when examined in isolation, looks fine. It's only the combination of those actions that is a problem. For example, Apple allowing apps to be on the store without a fee (beyond the $99 annual developer program membership) is a good thing at first glance. But because they did that, there was no incentive to provide any alternative means of allowing free apps onto the devices. If other app installation mechanisms existed, then no one would object to the App Store having that 30% rule.

But I'm not sure I agree with your assertion that consumers benefit from the iOS App Store. Consumers clearly benefit from installing apps onto their devices. But I'm unconvinced that consumers benefit from the curated store that Apple provides.

Ask yourself this: If a curated store is such a big benefit, why isn't the Mac App Store immensely popular, rather than an almost complete failure? Is there something magical about mobile devices that makes people unable to go to a developer's website, tap a link, and download and install the app from there?

Similarly, the App Store clearly does not benefit most developers. Developers would have more control without Apple's review process. They would not have to give Apple a cut of sales from products sold directly (and would pay a lower fee if there were competing payment processors). They would not be any more discoverable than they are now, because there have been websites that talk about new software and provide links to them since long before Apple even thought about creating an App Store. Some of them even do virus scans and other basic safety testing.

No, the iOS App Store benefits Apple, period. Anybody arguing otherwise hasn't seriously considered the alternatives, and is just assuming that the alternative is "no apps".

And this is why the counter-suit is necessary. Epic had all of this prepared. They KNEW they were going to break the contract and this would happen. If they KNEW it would happen, they can't claim "Ohhhh Apple is making our company lose sales and its harming us"

No, they knew that there was a possibility that Apple could react in this way. I suspect that they assumed that their game was too popular, and that Apple would never be crazy enough to actually kick them off the store, but they made preparations just in case the worst-case scenario happened. So when it did, they were prepared.

I have to say if Apple loses this and other companies can make competing stores on the iPhone it will really be a double edged sword for us as consumers.

On the one hand we would get software with features Apple won't allow on their own store and competition on price. On the other hand we will have to at some point install third party stores that may have a poorer user experience compared to the built in App Store or stores that allow apps which don't respect our privacy.

Users that care about privacy would be under no obligation to install a third-party store. Having options is almost never bad. And if, in the end, nobody puts their apps in Apple's store because it is too restrictive, then I guess the market has spoken, but I don't for even one minute think that this will occur. The iPhone is too popular, at least in the U.S., precisely because of Apple's commitment to privacy and security.

I would disagree. iPhones and iPads are sold at a loss if they are expected to pay for all the R&D needed to build them to the standard Apple has made them so far. They need to pay for not only the devices hardware and OS but also for development tools, and for other services that add to the devices value. Like the Apple TV, which can not possibly make enough in hardware sales to pay for iteself and which relies on services like the App Store to pay for it.

The Apple TV? Are you kidding me? The R&D cost for Apple TV is remarkably close to zero. The OS is basically a subset of iOS. The hardware is basically an iPad without the screen, just with a different board layout and an internal power supply. Nearly everything in an Apple TV that was designed by Apple was originally designed for use in some other device. As a percentage of Apple's iOS R&D costs, the portion spent on Apple TV is lost in the noise.

The Apple TV 4K starts at $180, and the hardware, including manufacturing, is estimated to cost less than $65 (and that may be an overestimate). So they bring in $115 per unit times O(60 million) units to cover their RD costs. For it to lose money would mean that the engineers required to do a new board layout every couple of years and maintain whatever shell script strips the iOS build into a tvOS build would have to add up to seven billion dollars per year.

For reference, Apple's total annual R&D costs for iOS, tvOS, macOS, Mac hardware, iPhone hardware, iPod hardware, iPad Hardware, and Apple TV hardware put together were only $16 billion dollars last year.

So yes, the Apple TV pays for itself. By a large margin. It would still pay for itself at $99. It might even pay for itself at $75. Of all the products Apple makes, nothing is closer to being pure profit than the Apple TV.

 

[dguisinger]

Terrific legal argument: “They didn’t see me steal the diamonds, your honour. ‘twas only when I told ‘em I’d nicked them that they felt me collar, m’lud. And that’s why I’m standing here ‘afore you today, guv.”

Case closed, innocent!

How about:
"They didn't inspect our code like we pay them to, so why do we need to pay them?"

 

[TiggrToo]

How about:
"They didn't inspect our code like we pay them to, so why do we need to pay them?"

Epic purposely hid the code. Are Apple now to treat every developer as an adversary?

Besides, Apple have mitigations and controls - which they then used.

 

[Anson_431]

To be fair, even part of the argument made by Epic was reasonable, Epic did in fact blatantly violated the terms of service when they stirred this all up. And based on that, I don't see Epic escaping their responsibility when they knowingly and intentionally broke their contract with Apple.

 

[4jasontv]

Actually, Epic did this because they want to renegotiate their contracts with the game console makers, and they know that Apple isn't a huge percentage of their revenue. They went after Apple because suing them would cost them a smaller part of their revenue if Apple threw them off the iOS App Store than if they did it to Sony or Microsoft.




Hardly. The iPhone is popular because the apps exist. Apple should provide the app store because, given Apple's unwillingness to allow third-party stores, providing the app store is a cost of doing business.




The thing is, everything that Apple has done, when examined in isolation, looks fine. It's only the combination of those actions that is a problem. For example, Apple allowing apps to be on the store without a fee (beyond the $99 annual developer program membership) is a good thing at first glance. But because they did that, there was no incentive to provide any alternative means of allowing free apps onto the devices. If other app installation mechanisms existed, then no one would object to the App Store having that 30% rule.

But I'm not sure I agree with your assertion that consumers benefit from the iOS App Store. Consumers clearly benefit from installing apps onto their devices. But I'm unconvinced that consumers benefit from the curated store that Apple provides.

Ask yourself this: If a curated store is such a big benefit, why isn't the Mac App Store immensely popular, rather than an almost complete failure? Is there something magical about mobile devices that makes people unable to go to a developer's website, tap a link, and download and install the app from there?

Similarly, the App Store clearly does not benefit most developers. Developers would have more control without Apple's review process. They would not have to give Apple a cut of sales from products sold directly (and would pay a lower fee if there were competing payment processors). They would not be any more discoverable than they are now, because there have been websites that talk about new software and provide links to them since long before Apple even thought about creating an App Store. Some of them even do virus scans and other basic safety testing.

No, the iOS App Store benefits Apple, period. Anybody arguing otherwise hasn't seriously considered the alternatives, and is just assuming that the alternative is "no apps".




No, they knew that there was a possibility that Apple could react in this way. I suspect that they assumed that their game was too popular, and that Apple would never be crazy enough to actually kick them off the store, but they made preparations just in case the worst-case scenario happened. So when it did, they were prepared.




Users that care about privacy would be under no obligation to install a third-party store. Having options is almost never bad. And if, in the end, nobody puts their apps in Apple's store because it is too restrictive, then I guess the market has spoken, but I don't for even one minute think that this will occur. The iPhone is too popular, at least in the U.S., precisely because of Apple's commitment to privacy and security.



The Apple TV? Are you kidding me? The R&D cost for Apple TV is remarkably close to zero. The OS is basically a subset of iOS. The hardware is basically an iPad without the screen, just with a different board layout and an internal power supply. Nearly everything in an Apple TV that was designed by Apple was originally designed for use in some other device. As a percentage of Apple's iOS R&D costs, the portion spent on Apple TV is lost in the noise.

The Apple TV 4K starts at $180, and the hardware, including manufacturing, is estimated to cost less than $65 (and that may be an overestimate). So they bring in $115 per unit times O(60 million) units to cover their RD costs. For it to lose money would mean that the engineers required to do a new board layout every couple of years and maintain whatever shell script strips the iOS build into a tvOS build would have to add up to seven billion dollars per year.

For reference, Apple's total annual R&D costs for iOS, tvOS, macOS, Mac hardware, iPhone hardware, iPod hardware, iPad Hardware, and Apple TV hardware put together were only $16 billion dollars last year.

So yes, the Apple TV pays for itself. By a large margin. It would still pay for itself at $99. It might even pay for itself at $75. Of all the products Apple makes, nothing is closer to being pure profit than the Apple TV.

You got so many things wrong it’s not worth trying to use a touchscreen to type it all out.

My favorite part was calling tvOS a subset of iOS and then listing every part that’s different.

The most infuriating part was when you implied something only has to make back what it costs to pay for itself.

 

[dguisinger]

Epic purposely hid the code. Are Apple now to treat every developer as an adversary?

Besides, Apple have mitigations and controls - which they then used.

Just saying... Apple should inspect apps better, they claim its one of the reasons they can justify 30%
I know its not really possible, I believe TWIT did the math on how much time a reviewer must have available to each app based on the volume of apps they review - I just think it kind of proves the point of both Epic and other developers that get hung up in the review process..... too many apps, too little review, too much control over everyone's future....and they don't do a very good job at it. They have some automated tools, but they don't even catch malware disguised as flash apparently.

 

[johannnn]

If I ever have my own App Store, there is no freaking way I’ll let Epic be part of it.
Instead of following the rules they’ve signed up for, they willingly breach it and then whines like a crybaby to the media about it.

 

[dguisinger]

If I ever have my own App Store, there is no freaking way I’ll let Epic be part of it.
Instead of following the rules they’ve signed up for, they willingly breach it and then whines like a crybaby to the media about it.

Luckily for the rest of us, nobody will ever let you have your own app store... which, i guess is part of the problem

 

[PickUrPoison]

Apple says Epic made $600M on the App Store with Fortnite. This means Apple has extracted over a quarter billion dollars in rent from Epic for https downloads and payment processing. Let that sink in.

That is only a very small part of what is included in the 30% revenue share, maybe 2-3 of the 30 percentage points. Those costs are very low.

 

[Colonel Blimp]

You must not do business. I can't just breach any contract I wish because I feel like it.

You most certainly can. Been there, done it. Been there, had others do it to me. You can't enforce a contract without going to court, its often not worth it.

Yes, you can break any contract you wish just because you feel like it, in the same way that you can punch strangers in the face, but in a civilized society, it just isn’t done.

I can't breach my work's non-compete contract one day just because I feel like it.

It depends on where you do business, actually. Here in California, most non-compete agreements are void as a matter of law.

But certainly the presumption should be that when one has given his word, he should keep it. Breaking one’s word just because he feels like it and thinks he can get away with it not only shows one to be terribly ill-bred, it’s also bad for business.

As @dguisinger observes, the time, trouble, and expense of going to court to enforce a contract is often not worth it. Alas, there are people who conclude from this fact that they can breach any contract they wish, just because they feel like it. Doubtless they think that to keep your word when when you could make more money (or, say, trade up to a younger, prettier wife) makes you a “sucker” and a “loser.”

That attitude tells us pretty much all we need to know about such people.

 

[dguisinger]

Yes, you can break any contract you wish just because you feel like it, in the same way that you can punch strangers in the face, but in a civilized society, it just isn’t done.

It depends on where you do business, actually. Here in California, most non-compete agreements are void as a matter of law.

But certainly the presumption should be that when one has given his word, he should keep it. Breaking one’s word just because he feels like it and thinks he can get away with it not only shows one to be terribly ill-bred, it’s also bad for business.

As @dguisinger observes, the time, trouble, and expense of going to court to enforce a contract is often not worth it. Alas, there are people who conclude from this fact that they can breach any contract they wish, just because they feel like it. Doubtless they think that to keep your word when when you could make more money (or trade up to a younger, prettier wife) makes you a “sucker” and a “loser.”

That attitude tells us pretty much all we need to know about such people.

Wait, you are saying I'm not supposed to punch strangers in the face? What about people I know? Is that okay?

 

[deevey]

Is there something magical about mobile devices that makes people unable to go to a developer's website, tap a link, and download and install the app from there?

Yes there multiple magical things that cannot be achieved by visiting a developers website and installing, registering and paying though their third party processor.

1. Instant Gratification/Whim Purchases and subscriptions would be virtually ZERO for many apps.
2. Convenience of purchasing though my pre-existing account and not needing to fill in multiple details.
3. Knowledge that the App has been vetted for security and my payment details are not being shared across 100 providers. .

A massive number of sales in any industry depend on getting the customer to pay before they have the time to reverse that decision.

The more steps you require to make a purchase the longer a potential customer has the option of deciding that they don't really need the item or take time to open youtube, do some research, read reviews etc ....

Anyone in sales will tell you they absolutely HATE an informed buyer.

The Apple TV 4K starts at $180, and the hardware, including manufacturing, is estimated to cost less than $65 (and that may be an overestimate). So they bring in $115 per unit times O(60 million) units to cover their RD costs. For it to lose money would mean that the engineers required to do a new board layout every couple of years and maintain whatever shell script strips the iOS build into a tvOS build would have to add up to seven billion dollars per year.

Source ?

Apple TV 4K And AirPods Sold At Cost, HomePod At Loss: Report

According to Daring Fireball's John Gruber, Apple sells its Apple TV 4K and AirPods at cost and the HomePod at a loss. He also says that the company's products aren't overpriced, just 'too good of a product.'

www.techtimes.com

 

[NotTooLate]

Come on, it's not that black and white. Both companies have done bad things here. Sure, Apple did revolutionise the way we deliver software but why do you think there are more and more anti-trust complaints popping up these days? Also, stop calling him Tim Swiney if you want your comment to be taken seriously - it comes across as incredibly immature.

The why so many anti trust is easy to answer , the world is usually not in favor of all out attack against american corps (fear) , usually its just the EU that goes after them (and in extreme cases as well) , but now that Congress is doing his thing , why wouldnt the rest of the world join ? there is money to be made for each and every country that the american tech companies operate (and dominate) in , the EU has no alternatives so they fine in the billions for example , and this wont be Apple only , the entire American tech sector will be under fire as Congress encouraged it , expect big fines and taxes to be added to those companies across the world in the upcoming years.

 

[4jasontv]

Just saying... Apple should inspect apps better, they claim its one of the reasons they can justify 30%
I know its not really possible, I believe TWIT did the math on how much time a reviewer must have available to each app based on the volume of apps they review - I just think it kind of proves the point of both Epic and other developers that get hung up in the review process..... too many apps, too little review, too much control over everyone's future....and they don't do a very good job at it. They have some automated tools, but they don't even catch malware disguised as flash apparently.

It sounds like you are arguing that developers need to learn patience and be willing to pay Apple a higher cut so that Apple can give their app more time to find issues.

 

[simonmet]

This is hilarious. Apple is complaining that they didn’t monitor or enforce they’re own policies well enough? Too funny.

Of course, I suspect Apple’s lawyers know it’s ridiculous, but it’s part of a broader strategy to paint themselves as a victim. They’ll stop at nothing to protect that 30% commission for the privilege of being on their platform.

 

[dguisinger]

It sounds like you are arguing that developers need to learn patience and be willing to pay Apple a higher cut so that Apple can give their app more time to find issues.

Just saying that Apple really isn't doing what they claim to be doing. They have a few tools to scan for known malware and to scan for APIs to make sure only published APIs are being used.

Someone goes through and tests the app and reads the screens, but they clearly don't spend a lot of time in it, nor do they necessarily comprehend what the app is doing or likely even personally care. It's just a job... a rather mindless job of tapping through things.

Kind of reminds me of the patent system. You can patent some really stupid things that shouldn't be patentable if you get a clerk who isn't all that knowledgable or is overworked, or likewise could have a really hard time patenting something that truly is patentable..... all depending on the luck of the draw.

 

[4jasontv]

Just saying that Apple really isn't doing what they claim to be doing. They have a few tools to scan for known malware and to scan for APIs to make sure only published APIs are being used.

Someone goes through and tests the app and reads the screens, but they clearly don't spend a lot of time in it, nor do they necessarily comprehend what the app is doing or likely even personally care. It's just a job... a rather mindless job of tapping through things.

Kind of reminds me of the patent system. You can patent some really stupid things that shouldn't be patentable if you get a clerk who isn't all that knowledgable or is overworked, or likewise could have a really hard time patenting something that truly is patentable..... all depending on the luck of the draw.

True, but again, that justifies Apple taking a larger cut and slowing down the review process.

My understanding of Epics behavior was that they snuck the payment option in. It was custom malware that Apple couldn’t have prevented via automated or human review.

 

[NotTooLate]

I'd venture to say legislation will tame Apple for its arrogance and dominance this decade. It has already started. It is inevitable at this point. Same thing will happen to Google.

No doubt the american companies are dominating the tech world , and the world leaders doesnt like it , Congress gave the world a big push with its own anti trust , this will come to bite the american public in the ass , the big losers will be the American corps and public who will lose jobs and pension networth (as they are invested in the S&P500 and directly in those stocks).
There is no competition to the American tech companies , the legislation you are talking about will be nothing more then additional local tax each country will add to allow those companies to do business in their country and the reasoning will be monopoly/anti trust , EU will also fine in the billions as they always do , but make no mistake , there is NO alternative and because of that this will amount in money grab from countries and nothing more , the dominance of the American tech companies is not going to change anytime soon , arrogance and dominance is not a crime , just ask Ronaldo/Bolt/Jordan

 

[dguisinger]

True, but again, that justifies Apple taking a larger cut and slowing down the review process.

My understanding of Epics behavior was that they snuck the payment option in. It was custom malware that Apple couldn’t have prevented via automated or human review.

Well, seeing the app store has massive profits - maybe that wouldn't be as justified as just performing the job they are telling developers they are doing for that money. They are reviewing things about as well as Facebook reviews content for accuracy LOL ok, ok, maybe not that bad

 

[Colonel Blimp]

iOS is not the same as Steam, Xbox, PS etc despite what you and others wish were true. How do I know? Simple.

1. Where can I get games for my pc, Xbox, PS, Switch etc?

If you’re asking about digital distribution, then:

For your Xbox, you can get games from Microsoft and from nowhere else. Microsoft take 30% of the price.
For your Playstation, you can get games from Sony and from nowhere else. Sony take 30% of the price.
For your Switch, you can get games from Nintendo and from nowhere else. Nintendo take 30% of the price.

If you’re asking about physical distribution, then the console vendors take 30% and the retailers take a further cut of the price, leaving the publisher even less.

 

[NotTooLate]

If Epic was doing this "just for the money", they would have reverted to Apple payment in Fortnite for the time being.
They are in it for something much deeper and fundamental than just for the money, a war against walled gardens.

One the most naive posts in a forum i EVER saw dude , do you really think they are on some crusade for some greater cause ? they are suing Google dont they ? which have alt stores and side loading and what not , they are suing them because Google doesnt allow them to monoplize their war chest to allow exclusive deals with manufacturers , if Epic had their way in the Google world , that will be very anti competitive no ? "who pays the most will get our game bonuses , the rest , rot in the dirt , now BID".
In Apple case , its clear they want their own store , nothing more nothing less , they get that , they stop everything they do in court , and they want their store for money , they are making little money in iOS compared to a store if they ever get one , imagine the markups on a store , you dont pay for the debug,developers tools/compilers/OS development/HW marketing/Brand marketing , so you get Apple to do all the heavy lifting for you and then you just captilize with 10% less commission AND you allow porn , gambling , tracking for extra apps that were never there.

Epic sells virtual coins to kids to make most of their money , they have NO deeper/fundamental agenda , no need to over play their cause.

 

[4jasontv]

Well, seeing the app store has massive profits - maybe that wouldn't be as justified as just performing the job they are telling developers they are doing for that money. They are reviewing things about as well as Facebook reviews content for accuracy LOL ok, ok, maybe not that bad

I don’t get why Apple’s profits have anything to do with what they charge. If I want to make a million per transaction, and you want me to do something that increases my cost I am going to raise my prices because my livelihood is more important to me than yours is to me.

 

[dguisinger]

I don’t get why Apple’s profits have anything to do with what they charge. If I want to make a million per transaction, and you want me to do something that increases my cost I am going to raise my prices because my livelihood is more important to me than yours is to me.

If they are charging enough and aren't doing the job, then they should just do the job....not charge more. If contractually they are claiming they do X for Y, and they get Y, and don't do X...... then I don't know what needs more explanation for you

 

[pasamio]

Lowering your prices so much that it puts the competition out of business and potentially the entire future of an industry at risk.

E.g. If Walmart decided to price every item at below cost for 6 months (which they could easily afford), virtually every other retailer in the surrounding area would not survive.

What if Google decided to give away a mobile phone operating system for free so that other mobile phone operating system vendors like Microsoft couldn't compete and you ended up having the majority of OEMs use your operating system, would that be an example?

 

[pasamio]

How about:
"They didn't inspect our code like we pay them to, so why do we need to pay them?"

I don't think the App Store review does a deep dive in the code, they do an automated scan to make sure you're not using any private libraries and a few other malware but the primary inspection is looking through the app and what it does.

Furthermore for the review process it was listed as a hotfix/bug fix release and Epic was at the time likely regarded as a developer in good standing and didn't get as thorough a review because of both of those reasons.