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

[Apple_Robert]

I agree with Apple‘s statement and think they summed it up very succinctly.

“Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store. Epic's demands for special treatment and cries of "retaliation" cannot be reconciled with its flagrant breach of contract and its own business practices, as it rakes in billions by taking commissions on game developers' sales and charging consumers up to $99.99 for bundles of "V-Bucks."

 

[Stewie]

Ok, if you bought MSN at CompUSA, CompUSA didn't take their cut of your dialup fees
If you buy a magazine off the shelf at Barns & Noble, B&N didn't take your subscription fees if you sent in the post card to subscribe.

In what "old-world" business model did the original point of sale FORCE all follow up business between the consumer to go through and enrich the middle man?

You are so close. If I go to epics website and buy my vbucks apple doesn't get a cut. If I buy my vbuck via the app store apple gets it cut.

If I subscribe to a magazine directly no one else gets a cut. If it sign up for the subscription to that magazine on B&N's site, they most likely are taking a percentage.

 

[Michael Scrip]

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.

Now we need to see the numbers from Sony's store, Microsoft's store, and Google's store.

ALL those stores charge "rent" as you call it.

And "rent" isn't illegal. Neither are rules or contracts.

But violating those contracts... that's the fault of the offender.

 

[dguisinger]

You are so close. If I go to epics website and buy my vbucks apple doesn't get a cut. If I buy my vbuck via the app store apple gets it cut.

If I subscribe to a magazine directly no one else gets a cut. If it sign up for the subscription to that magazine on B&N's site, they most likely are taking a percentage.

The magazine, or Microsoft Windows (with bundled MSN) provided you with ways to pay via the product you bought (post card, in application signup) that bypassed the store.

Apple prohibits mentioning that there is another way

 

[Art Mark]

lol. This has turned in to a giant 💩show and isn't anywhere near being over. Any facet of Apple being the 'better person' in this whole charade has gone out the window now. Gotta pay those expensive Apple lawyers somehow!

I'm not sure that Apple responding means they are equally to blame. A countersuit is exactly what any lawyer would deem the right path. It demonstrates to the court that Apple isn't trying to run away from the charges and how they see it mainly as a breach of contract law. To burden the defendant to no active recourse is not only unfair, it is unwise. Now both are claimants. It's not a big deal law wise.

 

[jlocker]

Ok, if you bought MSN at CompUSA, CompUSA didn't take their cut of your dialup fees
If you buy a magazine off the shelf at Barns & Noble, B&N didn't take your subscription fees if you sent in the post card to subscribe.

In what "old-world" business model did the original point of sale FORCE all follow up business between the consumer to go through and enrich the middle man?

So Apple does nothing, they don't review the software before it goes on the site and look for virus or malware, they don't check out the software developer company for issues. They don't test the software before it goes on store to run on devices? They just fling things up on to the store? Oh that was androids old model.

 

[Rogifan]

Not defending Epic but can someone tell us what the “tremendous value” it’s receiving from the App Store is? Apple speaks as though any money derived from an app on the App Store belongs to Apple and we should be bowing down and thanking Apple for giving 70% of it to developers. That’s totally unfair considering the only way to distribute an app for iOS is via Apple’s App Store. Developers have no choice. Also Epic the company has existed since well before iOS and the App Store. Fortnite exists on many platforms. I think it’s highly questionable for Apple to suggest they’re responsible for Epic’s success.

 

[PlainBelliedSneetch]

Interesting counter argument. Apple came out swinging. I'm with Apple, although I wonder if the 30% will be challenged.

I hope not because then I probably won’t be able to get iTunes gift cards for 20% off.

 

[Art Mark]

I've said it before & will say it again, it comes down to Marketing !

If AAPL has ever promoted an App, then AAPL is entitled to their just cut !

However, if AAPL has NEVER promoted an App, then, IMO, AAPL should NOT get any more than a 10% cut of Revenue !

Epic has benefited significantly from AAPL's marketing, & as such, I side with AAPL on this one !

And, I agree with AAPL that it is ALL-about money, nothing else !!

App Discovery is the other, more important problem, with the existing App Store ... hopefully, it too will soon have its Day in the Sun !

That's a nice rule you just made up. Tell my agent that. Tell any store that buys your products and sells to consumers. Tell publishers this when bookstores send back 90% of the books they bought and get a full refund on them but keep the 50% mark-up on what they sell. And define 'marketing', 'promoted' and 'access'. You are way underwater with the thinking on this, at least as you state it. I'm surprised how unrealistic people are being about this entire situation. Most of this economy, for good and for bad, is built on people taking a 'cut' of a transaction. Especially when they deliver the customer to your service.

 

[GarySchiltz]

I've never liked Apple's stranglehold on its platform (for example, no side loading of apps), or I should probably say that I have mixed emotions about it. But every developer and potential developer certainly should understand the terms under which Apple allows an app in its store. Epic surely understood that from the outset.

 

[dguisinger]

So Apple does nothing, they don't review the software before it goes on the site and look for virus or malware, they don't check out the software developer company for issues. They don't test the software before it goes on store to run on devices? They just fling things up on to the store? Oh that was androids old model.

And what a great job they are doing on keeping malware out, glad they are making billions doing it.

 

[Rogifan]

If you only had another platform option that allows the freedoms you seem to crave..

So you’re saying the $1200 they spent on an iPhone doesn’t go to the development of the OS and APIs? Where does that money go then? Tim Cook’s salary?

 

[the8thark]

One could ask the same thing about Apple choosing roughly 35% as their gross profit margin on hardware.

That's simple. Apple roughly fixed what margins they want to avoid the gradual slide to the bottom of the barrel like other companies do. Till eventually these other companies only make single figure percent margins and rely on huge qualtities of sales of low quality garbage to make ends meet.

The rough explanation is
Selling things two things at $1 profit each or selling 1 thing at $2 profit each. Apple prefer the latter style of margins.
Sure the actual numbers are meaningless but I am sure you get my overall point.

 

[jlocker]

And what a great job they are doing on keeping malware out, glad they are making billions doing it.

Hmm I worked as a mobile phone manager for 6 years and have had a iPhone from 2007 never had malware? Now let's talk about the dozens and dozens of android phones, I had to wipe because of malware and customers loosing data.

 

[Stewie]

Not defending Epic but can someone tell us what the “tremendous value” it’s receiving from the App Store is? Apple speaks as though any money derived from an app on the App Store belongs to Apple and we should be bowing down and thanking Apple for giving 70% of it to developers. That’s totally unfair considering the only way to distribute an app for iOS is via Apple’s App Store. Developers have no choice. Also Epic the company has existed since well before iOS and the App Store. Fortnite exists on many platforms. I think it’s highly questionable for Apple to suggest they’re responsible for Epic’s success.

Getting it's product view by a billion users. Fortnite players would already know to look for this, but everyone one else, Epic would have to spend a fortune on advertising and still not have it app in front of so many people.

 

[john katos]

This story is about apple suing Epic.

And EPIC is trying to destroy the app store. So EPIC leave the app store alone!

 

[the8thark]

Based on what? Apple has rotted under Tim Cook. Look at Apple's product lines and sources of revenues in 2000, 2010, and 2020.

Apple's 2000 products are doing okay in 2010, but they're been dwarfed by the iPod and iPhone.

Apple's 2020 lineup? Virtually unchanged from 2010. They added in the HomePod, AirPods, and Apple Watch. Three devices that are nothing compared to the iPod, iPhone, and iPad (even the Apple TV, itself something of a failure, has done better than some of these newer products).

Apple is a one ring circus - a house of cards. The iPhone will fail someday, and when it does, Apple has nothing to fall on. Tim Cook is solely responsible as the one who allowed this to happen.

I remember reading that the Mac on it's own is large enough to be a fortune 500 company.
Even if the iPhone went away, Apple would still survive. Just not as a 2T market cap company anymore.

 

[jlocker]

Hmm interesting article from 2 years ago. https://www.theguardian.com/games/2018/aug/10/fortnite-on-android-phones-risk-malware-infections

 

[m11rphy]

So you’re saying the $1200 they spent on an iPhone doesn’t go to the development of the OS and APIs? Where does that money go then? Tim Cook’s salary?

Interested to hear why its wrong for apple a public traded company to want to have more than one revenue stream? Do you see this as immoral?

 

[Scottsoapbox]

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.

 

[mannyvel]

Not defending Epic but can someone tell us what the “tremendous value” it’s receiving from the App Store is?

Apple created a store and platform where people actually buy digital content. It's one of the most valuable properties in the world. That's why Epic is fighting. If the store was worth nothing (like the Windows Mobile app store) this wouldn't be an issue.

 

[Yojimbo007]

Looking forward to an Epic loss for Epic Brats!

 

[the8thark]

This countersuit might be cutting off their nose to spite their face. They are under global assault as a company right now for potential monopolistic and anti-competitive practices in the US and EU, and their counter to all has potential to be turned back against them if done right. Pitting benefits gained by a developer that can be argued to be requirement by Apple is an interesting approach but they need to put up a big fight on this case because it could be precedent setting and they are under fire by regulators.

You are not wrong but we need to put this into perspective.

Many of those against Apple want a larger slice of the revenue pie by changing the goalposts. Editing how the game is played. Blaming everyone except themselves for their supposed lack of revenue from their games or whatever they make/sell.

The other option is it actually improve what you do or what you sell so more people want to actully go out and spend money of your product or service.

The sad part of modern society is many people and many corporations feel it's easier to use whatever cunning tactics (often involving lawyers) and do whatever they can apart from improving themselves to make money. Capitalism used to be about one upping your competition with better products and/or services them them. Now (as epic is proving) it's about destroying your competition, changing the goalposts so they can't legally compete with you anymore.

The real sad part?
Even if people/corporations like Epic win and tear down their opposition as they want, move the goalposts as they want to make money. There is zero incentive to actually make a better product. So we consumers lose out with the product stagnating with no push for it to get better over time. Well apart from more innovative ways to suck money out of the customers.

 

[Krizoitz]

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.

If you don’t like Apples prices don’t buy their products. It’s that simple.

Developing and maintaining iOS and the App Store costs money. Apple isn’t a charity. So yeah they want to make money for that work.

Finally, it might surprise you but Most companies make money from multiple sources. It’s a terrible idea in business to only make money from one source, because if something happens where that source isn’t profitable anymore, they are out of business.

 

[Telomar]

Most of this economy, for good and for bad, is built on people taking a 'cut' of a transaction. Especially when they deliver the customer to your service.

Yeah this is the part I think people miss. Stores have their markup, affiliates take a cut when they refer someone. Everybody that isn’t direct is taking a share.

The only question here should be is the % unreasonable given you can’t distribute via another channel (monopoly rent).

Unfortunately for Epic though they could fight this out and then sue for damages after the fact but instead they have breached their contract.