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

[Serrafemme]

I wish nothing but failure for Epic. As an early backer of Fortnite on PC and what it was SUPPOSED to be, Apple, let loose your team of lawyers and take Epic for every cent you can get!

 

[Colonel Blimp]

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.

I suspect that Epic’s real target is not the iOS App Store, which accounts for only a small portion of Epic’s revenue from Fortnite, but the walled gardens of Microsoft, Sony, and Nintendo, all of whom also charge 30% to be on their consoles, and who account for the vast bulk of Epic’s revenue.

So while I think you’re right that Epic are waging a war against walled gardens, I think Epic hope their suit against Apple will be the thin edge of a wedge that pries open digital distribution on the consoles (which Tim Sweeney has said he would like to see happen), and that Epic are indeed doing this just for the money.

 

[theotherphil]

Does Apple have a monopoly on the software distribution on iOS? Yes.

Anti-Trust law allows you to have a monopoly on your own products. Much the same way Apple has a monopoly on iPhones, a monopoly on Macs, a monopoly on Apple Watches and a monopoly on Apple Pay. Does Apple have a monopoly on “Mobile App Stores”? The answer is of course no....there are a multitude of stores available on other mobile platforms.

You are free to install whatever OS and Apps you want on your device, Apple isn’t obligated to assist you to do so. iOS, the iOS App Store and the iPhone/ iPad are sold as a single product. They are fundamentally a singular experience and they always have been. They have never been sold individually and Apple is under no obligation to allow other app stores on their platform.

People seem to be confused with why this is different to the Microsoft and IE case many moons ago. Let me summarise:

1) Microsoft had a monopoly on desktop OS’s. Apple doesn’t have a monopoly in any market that it operates in. This is where any anti-trust case will fall down because it looks at international market share, not a single jurisdiction.

2) MS didn’t sell hardware but used it’s monopoly position in desktop OS’s to intimidate and force OEM’s to pre-install Windows on their hardware or face financial penalties (who would buy a desktop PC without an OS pre-installed back then) - this further increased their monopoly. Then MS argued that IE was fundamentally linked with Windows but the counter argument was that IE is available stand-alone on Mac. As per point 1, Apple isn’t a monopoly in any market AND Apple doesn’t force 3rd parties to install iOS or the App Store on non Apple Devices...in fact, it is ONLY available on Apple devices.

The biggest difference is the vertical integration - it is legal to have a monopoly on your own products.

 

[theotherphil]

That still doesn’t tell me what the “tremendous value” is. If there was something special or better that could only be done on iOS but I’m not aware of anything. But how far do we want to take this? Should my ISP and cell carrier get a cut? Without the internet an iPhone would be pretty worthless.

Apple Pay licensing fees on the modems that allow them to access the internet as do every other mobile manufacture. Not sure what your point is?

 

[Colonel Blimp]

Of course, it's about $$$. 🤑

Apple lists its expenses but fails to compare their actual costs with the ~$200M per year it's making from Fortnite alone.

200 app reviews! Oh, mercy. Epic could pay 10 reviewers' annual salary and it would be cheap by comparison.

Marketing opportunities! Apple promotes popular apps so developers can make more on their 70% cut. The fact that Apple makes more on its 30% is a fact that escaped its notice during its charitable marketing.

400 APIs used! This is really reaching. One could argue Apple should divide the substantial cost of iOS development across all developers, except they already do: they charge $99. That times 10+ million developers isn't nothing...BUT what Apple sidesteps completely is that apps on the iPhone make the iPhone more valuable which means that developers are helping Apple sell $100+ billion worth of iPhone every year. So this whole line about we have server costs and software engineer costs we have to recoup is just laughable.

It would seem that according to your way of thinking, the more money a person makes, the lower his rate of income tax should be.

I’m glad I don’t live in your world. Oh wait… I actually do.

 

[pasamio]

2) MS didn’t sell hardware but used it’s monopoly position in desktop OS’s to intimidate and force OEM’s to pre-install Windows on their hardware or face financial penalties (who would buy a desktop PC without an OS pre-installed back then) - this further increased their monopoly. Then MS argued that IE was fundamentally linked with Windows but the counter argument was that IE is available stand-alone on Mac. As per point 1, Apple isn’t a monopoly in any market AND Apple doesn’t force 3rd parties to install iOS or the App Store on non Apple Devices...in fact, it is ONLY available on Apple devices.

Minor clarification here because I feel it's important, Microsoft threatened OEMs with not being able to pre-install Windows on their hardware if they shipped Netscape with it. This is the application of the desktop OS monopoly against the OEMs to be anticompetitive against Netscape. There was also the integration into the operating system in such a way that IE had access to private APIs that it's competitors and also at trial a lot of really shady business (forging evidence for example).

 

[H2SO4]

Epic likes to portray itself as an underdog and Robin Hood figure and appeals to writers of yellow journalism to attack Apple. But let’s take a look at the facts.

Apple is owned by thousands upon thousands of shareholders round the world, many of them moms and pops waiting to retire. Tim Apple is worth only about $1 billion and is one of the most frugal CEOs in the world.

Epic is largely owned by giant monopoly Tencent that is only answerable to the CCP. It’s CEO Tim Swiney is said to be worth about $30 billion. That’s 30 times more than the best CEO on the planet.

So who is the bad guy here? Apple who created a platform and SDK that revolutionized the global economy or this game developer who only created a game engine and are trying to get a free ride so that Tim Swiney and Tencent can fill their pockets and help China circumvent bans on spyware apps like WeChat and TikTok?

I gotta say, whilst Swiney is worth $30B, the fact that you say Tim is worth only a $1B makes me think you're out of touch.

 

[PickUrPoison]

Considering that iOS barely has 50% of the market, calling it a monopoly is laughable.

It depends on how you define the “relevant market”. If you zoom in far enough, there’s always a monopoly of the brands own products. McDonalds has a monopoly in selling you Big Macs.

Apple certainly does have a monopoly on “iOS app stores”. But is that the “relevant market” for the purposes of the Sherman Antitrust Act, which is the basis for this lawsuit? Apple contends the relevant market is smartphone OSes.

 

[gregohb]

Apple: If you don't want to make APIs, get out of the OS business
Sick and tired of this excuse that the App Store exists to pay for the OS, which I subsidized with the purchase of a $1200 phone.

If the App Store pays for everything Apple does, then stop charging me sky-high prices for the devices I buy.

Samsungs are not that much cheaper - and they get their OS for free instead of having to develop it because Google uses it harvest data

 

[fishkorp]

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

You keep claiming they aren’t “doing their job” but they are. The review process is not to inspect every line of code and analyze it and see what it does. That’s impossible. Large apps would be held in review for months (or longer). My guess is that you aren’t a developer and have little understanding of how this works? Anyone can do what Epic did, and plenty of companies do. The difference is they follow rules and guidelines, Epic didn’t. 2 biggest examples are Google and Facebook. They use feature flags to turn on/off things in apps without needing to submit a new update. Plenty of developers do it. When folks use it to skirt the rules, they pay the price when (not if) they get caught. This goes way back to early App Store days. There was that seemingly innocent app where if you tapped something a number of times (I think? Could be misremembering the steps) then it turned into a tethering app. And this was back before tethering was built into the os.
900 developers can all submit an app today that has a button, but in the code it checks for the date and once the date hits Dec 25 the action of the button changes to open a browser to buy in-app currency instead of using Apple’s IAP, I would bet anything all 900 of those apps pass review. You’re asking for something that just isn’t feasible, even for a company with the resources like Apple.

 

[fishkorp]

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?

The “free” mobile OS costs OEMs 10’s of thousands of dollars in licensing fees. It’s not free.

 

[Ethosik]

Grasping at straws as usual

They can't take action against you such as taking your bank accounts without a court, aka suing, which you just said is an option. Thats called a COURT my friend. COURT. Get it yet? Up until that point, you are voluntarily complying with an agreement without it being validated or invalidated.

Yes, they can fire you. If they believe you violated your side of an agreement, they can violate their side assuming it to no longer be in effect - or take the actions they have available to them within your relationship (being an employee) and fire you. Again, its not tested until it reaches court. In court, it could be found that firing is illegal.

Likewise, in a customer/vendor arrangement, if a customer breaks a contract, the vendor can CHOOSE not to do business with the customer. That isn't legal enforcement, that is managing their own business.

How is that grasping at straws? People here are making it sound like companies cannot do ANY ACTION after a contract is breached without court permission.

Yes that is MY ONLY POINT that there are consequences to breaking a contract. If I breach a non-compete, and its stated in a contract that immediate termination of employment occurs, they can FULFILL/ENFORCE a contract without court approval. They do not need to get permission from the court to fire me. I can go to court and CHALLENGE their enforcement of the contract, but the contract was still ENFORCED without the court saying "Yes you can fire this employee".

And yes you can file a lawsuit without going through courts. I can technically sue someone for falling in their yard, but it might not even make it to a court case.

 

[Kmad86]

No matter what side you’re on, the outcome of this fight will impact everyone. It’s really interesting to watch it play out.

Personally, I’m team Epic. I don’t think device makers like Apple, Sony, or Microsoft should also be allowed exclusive access to be the only storefront. It’s anti competitive.

But Apple took the risk, spent the r&d and created the whole platform! They’re the reason epic has the iOS route to go to. If epic thinks too high, then leave and maybe it will fail and the users will leave (LOL). There are other options.

That’s no different than me wanting to start selling my own clothes and dance moves in Fartnite.

If I don’t like the fee somewhere, I don’t use their service. I move on. Epic sees the value in the AppStore but now that they’ve been successful partially because of the large platform that Apples marketing and R&d from years of creating the iPhone have given them, they’re trying to big dick. I don’t see how anyone could be pro epic.

tldr; if the fees seem too high, move on. It’s their phone!

 

[pasamio]

The “free” mobile OS costs OEMs 10’s of thousands of dollars in licensing fees. It’s not free.

So AOSP isn't free?

 

[Wowfunhappy]

Here's the two CPUs side by side (current AppleTV and latest Roku)

Apple A10 Fusion vs ARM Cortex-A53: What is the difference?

What is the difference between Apple A10 Fusion and ARM Cortex-A53? Find out which is better and their overall performance in the mobile chipset ranking.

versus.com

The list price disparity is shocking. Also the A10X runs 6 cores at 2.3ghz, compared to the 1.2ghz quad core Cortex. Add in memory (the Roku has 1GB and the cheapest AppleTV has 32GB.

So yeah, I can see the reason for the price difference...

The reason the A10X has such a high list price is because you can’t buy an A10X except as part of an Apple device. If you click the link on that website to but an A10X, it takes you to the purchase page for an iPad.

No way in heck they cost Apple that much.

To be clear, I’m not hating on the Apple TV! Apple put a lot of design work into it to make it worth a higher retail price! I just don’t think it’s that expensive to manufacture. You’re paying extra for design and for software, not hardware.

 

[Amazing Iceman]

Ugh! We have to wait a whole week! That’s a long time!

 

[nexusrule]

Apple: If you don't want to make APIs, get out of the OS business
Sick and tired of this excuse that the App Store exists to pay for the OS, which I subsidized with the purchase of a $1200 phone.

If the App Store pays for everything Apple does, then stop charging me sky-high prices for the devices I buy.

You are not forced to buy any product, if you disagree with a company business model to the right thing and stop supporting them with your money, it’s simple. You can’t have your cake and eat it too.

 

[Romeo_Nightfall]

Epic likes to portray itself as an underdog and Robin Hood figure and appeals to writers of yellow journalism to attack Apple. But let’s take a look at the facts.

Apple is owned by thousands upon thousands of shareholders round the world, many of them moms and pops waiting to retire. Tim Apple is worth only about $1 billion and is one of the most frugal CEOs in the world.

Epic is largely owned by giant monopoly Tencent that is only answerable to the CCP. It’s CEO Tim Swiney is said to be worth about $30 billion. That’s 30 times more than the best CEO on the planet.

So who is the bad guy here? Apple who created a platform and SDK that revolutionized the global economy or this game developer who only created a game engine and are trying to get a free ride so that Tim Swiney and Tencent can fill their pockets and help China circumvent bans on spyware apps like WeChat and TikTok?

wait wait wait ... i can accept anything you are writing here - BUT cook is definetely NOT the best CEO on the planet!!!
We have for example a guy who just kicks us into sustainable energy on the whole planet !!!

 

[jonblatho]

It boggles my simple little mind that people can’t understand this most basic concept.

Your “simple little mind” (your words, not mine) realizes it’s not actually that simple and if it were the case would be either over or effectively over by now, right?

 

[Romeo_Nightfall]

Point #1 assumes that the contract is enforceable. A contract is only enforceable if a Court rules that it is enforceable. Epic's argument is that the contract violates the Sherman Anti-Trust Act of 1890 and is therefore asking the Court to rule Apple's contract is unenforceable. Apple is claiming that it is not engaging in anti-trust behavior, and therefore the contract is enforcable. If the Court finds Apple's contract as unenforceable, Apple is not entitled to any damages or restitution. Likewise, if the Court finds Apple's contract as enforceable, then Epic's relationship with Apple is severed and they will likely owe very large legal fees.

Point #2 is very true! And one that Apple is taking. But, Apple does not allow Epic to advertise this within app. Traditionally, that is called anti-competitive behavior as a competitive market necessitates full information -- i.e. I can get the same item for less elsewhere. The technical term for Apple's behavior is market failure: https://en.wikipedia.org/wiki/Market_failure

Point #3 is a misunderstanding. Epic is not asking the court to re-write the contract. Epic is asking the Court to rule that portions of the contract, which they believe violate the law, are unenforceable (because they violate the law). So, those portions can remain in the contract but Apple may not punish developers if they choose not to follow those portions of the contact.

dont overfeed them with really good acurate information here, haha!
but thanks for this interesting explanation

 

[mosher]

from comments above you can clearly see people who play (used to play) fortnite on their devices

 

[Ethosik]

I’m honestly shocked that people here say a contract is only enforceable if a court decides so. So a Fortune 500 company is illegal when they immediately terminate employment if you breach a non-compete? Guess what that action is called? Enforcing a contract! It’s in the contract that I get fired immediately if I breach it. that action is enforcing a contract. I would not be employed for hours or days until the court says I should be fired.

 

[Stewie]

Your “simple little mind” (your words, not mine) realizes it’s not actually that simple and if it were the case would be either over or effectively over by now, right?

Or that fact that the law states “Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not illegal for a company to have a monopoly, to charge "high prices," or to try to achieve a monopoly position by what might be viewed by some as particularly aggressive methods. The law is violated only if the company tries to maintain or acquire a monopoly through unreasonable methods.”

So everyone saying apple is a monopoly so that is illegal is wrong on two fronts. First just having a monopoly doesn’t make it illegal. And second if apple has a monopoly they so does Microsoft, Sony, Nintendo, Epic, steam, Best Buy, Walmart, target and the list goes on. I don’t see how the courts can rule that apple has a monopoly without opening the door for all of these other companies to be ruled as monopolies. That would hurt so many business and stifle innovation.

So yes I think this case is over before it gets started. Epic is going to lose. Will have to pay apple a percentage of all sales made while they were in violation along with additional penalties and I wouldn’t be surprised if apple doesn’t let them back in. Apple is probably already working on a plan to help devs migrate to unity or metal at their own cost.

 

[woodynet]

Is it worth Apple dropping the 30% rate though, could they still do this at a 20% rate, the vast majority of developers would appreciate that .. OK the big guys have a win fall, but the smaller guys get a bit of a kick along, and everyone is happy. (except Epic)

 

[jonblatho]

Or that fact that the law states “Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not illegal for a company to have a monopoly, to charge "high prices," or to try to achieve a monopoly position by what might be viewed by some as particularly aggressive methods. The law is violated only if the company tries to maintain or acquire a monopoly through unreasonable methods.”

So everyone saying apple is a monopoly so that is illegal is wrong on two fronts. First just having a monopoly doesn’t make it illegal. And second if apple has a monopoly they so does Microsoft, Sony, Nintendo, Epic, steam, Best Buy, Walmart, target and the list goes on. I don’t see how the courts can rule that apple has a monopoly without opening the door for all of these other companies to be ruled as monopolies. That would hurt so many business and stifle innovation.

So yes I think this case is over before it gets started. Epic is going to lose. Will have to pay apple a percentage of all sales made while they were in violation along with additional penalties and I wouldn’t be surprised if apple doesn’t let them back in. Apple is probably already working on a plan to help devs migrate to unity or metal at their own cost.

Quick. Tell Apple’s lawyers so they can move to dismiss.

Speaking of Best Buy, ask Apple’s lawyers how referencing Best Buy’s business model went for them during the TRO hearing.