Epic CEO: Judge's Decision 'Isn't a Win for Developers or for Consumers,' Fortnite Not Immediately Returning to App Store

[gregmancuso]

With phone ecosystems, there can be incredible barriers to switching platforms and Apple themselves acknowledge this. It’s not as simple as saying I don’t like this I’m leaving and buying an Android, (i.e. shopping somewhere else). Aside from paying for a new phone, if you have loads of apps you paid for or accessory devices like an Apple Watch or HomeKit devices, you may have to spend considerable sums to switch platforms and get back to where you were. That’s a very different scenario than simply not renewing your membership to Sam’s Club or Costco.

And also quite irrelevant. The fact is you are locked in. There are no barred windows or gates blocking your way. The issue is cost only. Other than that you are free to move at any time.

lock in is nothing new. Game consoles have done it for years. Switch from Xbox to PlayStation you need to rebuy any (most likely comparable) games on the platform.

Buy your ebooks from Amazon and you are locked into Kindle hardware (or the app for as long as Amazon supports it). Apple Books purchases are limited to the Books app which at this time is only available for iOS and macOS. Nothing is preventing Apple from releasing a PC or Android version. It would not be unheard of. They have an some apps on Android and Windows today.

DRM makes it impossible to move movie purchases between iTunes, Amazon, Disney, etc. same with audiobook purchases (Audible vs Audiobooks vs GoodReads, etc.)

edit - corrected underlined text.

 

[jlc1978]

lock in is nothing new. Game consoles have done it for years. Switch from Xbox to PlayStation you need to rebuy any (most likely comparable) games on the platform.

There is probably less lock in, especially for games that can be played on mobile devices, since cross device play is becoming more common. If you have an account, you can have the ability to login to it on different devices, so switching would be a lot less costly since most mobile games are freemium anyway.

Given the bulk of apple's revenue comes from a small segment of game developers, the actual switching costs in toto would be a lot less than most suspect.

One challenge is, of course, finding equivalents if the developer is exclusive to one device; but even then there generally is one so it's a matter of learning a new UI. Another is you lose the tight integration with other Apple products.

As a result, I'd argue the argument of "high switching costs is a barrier to entry and consumer choice" is not that valid for arguing Apple has a monopoly, give the market includes Android and a few other smaller players.

 

[31 Flavas]

It isn’t a monopoly. That’s like saying McDonalds has a monopoly on Happy Meals
🤣🤣🤣

First of all, i was listing off the parade of horribles that opponents of Apple list when damning Apple. That "monopoly" bit you're having a laugh at is that of Epic's and critics. Not mine.

If you define markets narrowly enough, as Epic and critics of Apple want, then 'yes' Apple has a "monopoly". Epic and critics of Apple want to say "the market" is iOS devices. Not mobile phones and tablets as a whole. Or even, gaming as a whole, because then Epic's case and their arguments of Apple being this boogy boo monster that strangles developers who have no where else to publish their games or mobile apps - is demonstrably false.

So they want the iPhone, iPad, AppleTV, Apple Watch, or presumably Apple Silicon Mac computers that can run iOS apps to be the "monopoly".

This is silly. You'll not find me defending that view point. But, critics of Apple and Epic games want to define it that way.

 

[neuropsychguy]

iOS has no good games with or without Fortnite.

I’d love to hear what games you consider good. Maybe you’re not looking hard enough.

I don’t play games on mobile but there are excellent ones on iOS: Company of Heroes, Northgard, Baulder’s Gate, Stardew Valley, Bastion, Minecraft, Terraria, Star Wars: KOTOR 2, etc.

 

[Michael Scrip]

Correct me if I am wrong, but isn’t it actually more expensive to use a third party payment option for an app costing $1?

Exactly.

If a developer is in the 30% bracket... Apple takes 30 cents from every $1 transaction.

But if you use a 3rd-party payment processor like Stripe... they charge 3% plus 30 cents per transaction.

So it'll cost the developer 30 cents regardless. And there's the extra hassle of maintaining this 3rd-party account in addition to their App Store account.

And apparently Apple will still charge some kind of commission even if you use 3rd-party payments... which will cost the developer even more!

So for $1 transactions... it definitely does not make sense to use a 3rd-party payment processor.

But for larger purchases... it could be cheaper for a developer to use a 3rd-party. They'll just have the extra hassle of dealing with Stripe or whoever. And they'll have to send money to Apple for their commission.

The nice thing about Apple handling everything is... Apple handles everything! They subtract their fees and the money you get from them is all yours. You get paid and you're done.

But if you go down the 3rd-party route... now you're getting money from Stripe... and then you'll be sending money back to Apple for their commission. That'll add a little more work to your accounting and reporting.

Seems like a lot of hoops to jump through. I expect only the largest developers will want to deal with all that.

I'm still hoping Apple will just drop ALL fees to 15%. That'll make 3rd-party payment even less attractive.

I can dream...

 

[cmaier]

I’d love to hear what games you consider good. Maybe you’re not looking hard enough.

I don’t play games on mobile but there are excellent ones on iOS: Company of Heroes, Northgard, Baulder’s Gate, Stardew Valley, Bastion, Minecraft, Terraria, Star Wars: KOTOR 2, etc.

Civilization…

 

[webpoet73]

Am I the only one that thinks that iOS is their platform and they can run it as they see fit? All devs are treated equally. I don't see what Epic's hubbub is all about. They aren't making enough money? While 30% seems high, it has always been that way. They didn't have a problem back them. What changed?

 

[bgillander]

If Walmart setup, enforced, and maintained a system whereby they were the only store that over half of consumers were even allowed to shop at, you might have an argument that made an iota of sense.

If Apple forced you to buy your iPhone you might have an argument that made an iota of sense.

 

[pacalis]

All this fuss over a store to sell a free game.

Perhaps the bigger issue is that our courts should be a little less sympathetic to business models that peddle freemium to preteens.

 

[Michael Scrip]

All this fuss over a store to sell a free game.

A free game that earns BILLIONS in microtransactions... which leads to:

Perhaps the bigger issue is that our courts should be a little less sympathetic to business models that peddle freemium to preteens.

Exactly.

I wish the judge had looked at Epic and said... "so basically your entire business is taking people's real dollars and giving them virtual dollars?"

But... Apple, Google and others are guilty of allowing it in the first place. So I dunno who to be mad at...

Maybe we need parents groups or consumer-activist groups suing these companies to prevent freemium microtransactions.

 

[hot-gril]

I’d love to hear what games you consider good. Maybe you’re not looking hard enough.

I don’t play games on mobile but there are excellent ones on iOS: Company of Heroes, Northgard, Baulder’s Gate, Stardew Valley, Bastion, Minecraft, Terraria, Star Wars: KOTOR 2, etc.

Csgo, AssaultCube, Total War games, regular Minecraft, and every good Nintendo game.
Idc, though. Video games are a waste of time.

 

[hot-gril]

🤣🤣🤣
It isn’t a monopoly. That’s like saying McDonalds has a monopoly on Happy Meals
🤣🤣🤣

Hey, once you buy a Happy Meal, you're locked in to collecting the other toys. There's nothing you can do about it.

 

[Mrjoedot]

Netflix did not have a problem with that.
Spotify did not have a problem with that.

They've got their own payment portals outside the app. pay through the website

Epic Games is being a crying baby

 

[vipergts2207]

If Apple forced you to buy your iPhone you might have an argument that made an iota of sense.

Hard to turn crap (original argument) into gold.

 

[vipergts2207]

And also quite irrelevant. The fact is you are locked in. There are no barred windows or gates blocking your way. The issue is cost only. Other than that you are free to move at any time.

lock in is nothing new. Game consoles have done it for years. Switch from Xbox to PlayStation you need to rebuy any (most likely comparable) games on the platform.

Buy your ebooks from Amazon and you are locked into Kindle hardware (or the app for as long as Amazon supports it). Apple Books purchases are limited to the Books app which at this time is only available for iOS and macOS. Nothing is preventing Apple from releasing a PC or Android version. It would not be unheard of. They have an some apps on Android and Windows today.

DRM makes it impossible to move movie purchases between iTunes, Amazon, Disney, etc. same with audiobook purchases (Audible vs Audiobooks vs GoodReads, etc.)

edit - corrected underlined text.

In none of your examples do the other companies have the same market power Apple does. The judge even stated that Apple has significant market power, potentially monopoly power, though Epic themselves failed to prove it. Additionally it’s not uncommon in the gaming market to have multiple systems to game on. Having multiple phones is very uncommon, usually when you have a work phone and a personal phone. Even then, you’d be unlikely to get yourself locked in to whatever ecosystem your work phone is.


“On the one hand, only a small number of platforms, and their attendant licenses on which to distribute mobile games, exist—namely iOS and Android. Moreover, economies of scale in the form of network effects favor these established digital gaming stores and platforms over new entrants. Finally, new entrants may face information barriers to entry, as users may not know that cheaper game distribution may be available on alternative platforms. Although these factors do not create “lock-in,” they are evidence of some entry barriers for new companies providing mobile game transactions.”

“In sum, given the totality of the record, and its underdeveloped state, while the Court can conclude that Apple exercises market power in the mobile gaming market, the Court cannot conclude that Apple’s market power reaches the status of monopoly power in the mobile gaming market. That said, the evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share. Apple is only saved by the fact that its share is not higher, that competitors from related submarkets are making inroads into the mobile gaming submarket, and, perhaps, because plaintiff did not focus on this topic.”

If Epic had gone about their arguing their case in a better way, they may have actually proven that Apple has monopoly power. Unfortunately, as the judge said, Epic did not focus on the topic. This case may even offer a roadmap to a Spotify or some other developer to argue that Apple is in fact a monopoly power. Let’s not forget, this ruling relates to the market the judge defined, which is mobile gaming specifically.

 

[cmaier]

In none of your examples do the other companies have the same market power Apple does. The judge even stated that Apple has significant market power, potentially monopoly power, though Epic themselves failed to prove it. Additionally it’s not uncommon in the gaming market to have multiple systems to game on. Having multiple phones is very uncommon, usually when you have a work phone and a personal phone. Even then, you’d be unlikely to get yourself locked in to whatever ecosystem your work phone is.

No, the court did not say apple ”potentially“ had “monopoly power.”

 

[vipergts2207]

No, the court did not say apple ”potentially“ had “monopoly power.”

Read my updated post.

 

[cmaier]

Read my updated post.

Near the precipice means “apple does not have monopoly power.”

 

[vipergts2207]

Near the precipice means “apple does not have monopoly power.”

And as the judge said, had Epic expounded on the topic, the monopoly ruling may very well have been different. The next case against Apple will likely fix the flaws in Epic’s arguments. The fact that Epic put forth as bad of a case as they did while still allowing the judge to say “the evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share” doesn’t seem to portend good things to come for Apple in a future case.

 

[cmaier]

And as the judge said, had Epic expounded on the topic, the monopoly ruling may very well have been different. The next case against Apple will likely fix the flaws in Epic’s arguments. The fact that Epic put forth as bad of a case as they did while still allowing the judge to say “the evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share” doesn’t seem to portend good things to come for Apple in a future case.

Unfortunately, the next case will likely fail as res judicata unless there is a very new theory.

 

[vipergts2207]

Unfortunately, the next case will likely fail as res judicata unless there is a very new theory.

The next case would likely not involve Epic and further would likely involve a different market entirely, not mobile gaming.

And to go back to your previous statement “apple does not have monopoly power” is different from “the Court cannot conclude that Apple’s market power reaches the status of monopoly power in the mobile gaming market.”

Yours is a definitive statement, while what the judge actually said leaves it as an open question.

 

[cmaier]

The next case would likely not involve Epic and further would likely involve a different market.

And to go back to your previous statement “apple does not have monopoly power” is different from “the Court cannot conclude that Apple’s market power reaches the status of monopoly power in the mobile gaming market.”

Yours is a definitive statement, while what the judge actually said leaves it as an open question.

You are pretending the court is allowed to offer advisory opinions. It’s not. It can only ever say to the plaintiff “you win”or “you lose.”

 

[vipergts2207]

You are pretending the court is allowed to offer advisory opinions. It’s not. It can only ever say to the plaintiff “you win”or “you lose.”

That doesn’t negate anything that I said.

 

[cmaier]

That doesn’t negate anything that I said.

People keep trying to imply that somehow the court didn’t clear Apple. It did. What these people are trying to imply is that if the judge doesn’t say “you are not a monopoly“ and instead says “epic has not proven you are a monopoly,” that means the judge is suggesting that apple may be a monopoly. That’s a fallacy.

 

[vipergts2207]

People keep trying to imply that somehow the court didn’t clear Apple. It did. What these people are trying to imply is that if the judge doesn’t say “you are not a monopoly“ and instead says “epic has not proven you are a monopoly,” that means the judge is suggesting that apple may be a monopoly. That’s a fallacy.

It sounds like you have an issue with the judges own words. Take it up with her.

“While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal. The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.”