Epic Games Denied Preliminary Injunction for Fortnite, But Apple Can't Block Unreal Engine

[cmaier]

Pages 11 through 20 of the preliminary injunction decision were very interesting, as the Court hinted that there may be merit to Epic's argument on the Sherman Act (without the ability yet to comment on the California State law until trial). No wonder Epic doesn't want a jury trial, as the Court noted it raises "serious questions."

The court was actually just making her opinion appeal-proof and trying to split the baby (which helps lead to settlements). She essentially says "well, maybe they have something. But I need to hear actual evidence, so can't decide on it now."

 

[Carnegie]

please explain how this is a monopoly when iOS holds a smaller percentage of the market compared to other companies?

One of Epic's arguments is that iOS app distribution is, in itself, a relevant antitrust market. And as Judge Rogers suggested, that's a plausible argument.

She offered a pretty good overview of the market definition issue in this order.

 

[cmaier]

One of Epic's arguments is that iOS app distribution is, in itself, a relevant antitrust market. And as Judge Rogers indicated, that's a plausible market definition.

She offered a pretty good overview of the market definition issue in this order.

She did say it was “plausible.” Then she went on for several paragraphs explaining why that’s going to be an uphill climb.

Still, it’s at least possible.

 

[mkldev]

As cmaier indicated, it was Epic which described this is a hot fix.

That's unfortunate. Their lawyer needs to learn the difference between a server-gated launch and a hot fix. This is the former. As I said, the latter can't be done (meaningfully) in iOS, because it is not possible for iOS to run code that was not compiled into the executable when it was signed. (The OS will quite literally kill the process instantly if it tries; that's why UIWebView is so slow compared with WKWebView; it's a pure interpreter because it can't do run-time compilation of the JS into native code.)

If I remember previous filings correctly, Epic claims that it had long included check-on-start-up functionality in Fortnite. With version 13.40, Epic built into the app the ability to show multiple payment options for IAPs. At start-up the app would check with the server to find out if it should show an additional payment option. At some point Epic's servers started telling the Fortnite app, when it checked, that it should show the additional payment option. So it did. That was the hot fix at issue here.

And again, not a hot fix.

You do understand that this is quite literally EXACTLY what nearly EVERY app on the iOS App Store does, and that it is how most developers launch features, right? The only thing even slightly unusual is that they're doing it with their own servers rather than using Firebase or some other A/B testing framework that talks to a server owned by somebody else. Otherwise, yes, that's how modern software development is done, typically.

 

[Unregistered 4U]

Well, if thats the case, I suppose Apple could actually work harder for their 30% and inspect the bundles more closely to see what functionality is in the hot fix.

And they likely do, for NEW developers without a history of trust. Once you’ve delivered an app for awhile, they will lower your pain because you’ve proven to be a trusted partner. This is valued from a developer perspective because you get some benefit from playing by the rules.

 

[CarlJ]

Same. They were actually working on a new version of Unreal Tournament but then Fortnite ended up being so successful so they just stopped.

Oh well, UT99 is still awesome.

Curious about the "UT99 is still awesome" - what are you running it on? I spent a lot of time in UT2004, back in the day.

 

[Carnegie]

She did say it was “plausible.” Then she went on for several paragraphs explaining why that’s going to be an uphill climb.

Still, it’s at least possible.

Yeah, I think that's always been the case. It's always been a plausible market definition, but it's always been far from a given that such a definition would be accepted. I myself don't think iOS app distribution should be considered a relevant antitrust market.

I would say that I think Ninth Circuit law on this issue favors Epic more than that of other circuits in general.

 

[robertcoogan]

Good. Epic needs to get a new CEO. And a life.

 

[cmaier]

Yeah, I think that's always been the case. It's always been a plausible market definition, but it's always been far from a given that such a definition would be accepted. I myself don't think iOS app distribution should be considered a relevant antitrust market.

I would say that I think Ninth Circuit law on this issue favors Epic more than that of other circuits in general.

Likely to go to SCOTUS, in the end. And given how the oracle/google thing went, who knows.

 

[nwcs]

30% is the industry standard. This is not something Apple does out of the blue. Epic knew this going in.

I think Apple created the standard when they first implemented the 30%. Google and later Amazon/Microsoft followed after.

 

[Carnegie]

That's unfortunate. Their lawyer needs to learn the difference between a server-gated launch and a hot fix. This is the former. As I said, the latter can't be done (meaningfully) in iOS, because it is not possible for iOS to run code that was not compiled into the executable when it was signed. (The OS will quite literally kill the process instantly if it tries; that's why UIWebView is so slow compared with WKWebView; it's a pure interpreter because it can't do run-time compilation of the JS into native code.)




And again, not a hot fix.

You do understand that this is quite literally EXACTLY what nearly EVERY app on the iOS App Store does, and that it is how most developers launch features, right? The only thing even slightly unusual is that they're doing it with their own servers rather than using Firebase or some other A/B testing framework that talks to a server owned by somebody else. Otherwise, yes, that's how modern software development is done, typically.

I understand that this kind of thing isn't uncommon, sure. But the point was that Judge Rogers isn't the one who decided to call it a hot fix. That was Epic.

The larger point is that Epic was deceptive in how it used this hot fix, as Epic describes it. It doesn't matter that such techniques - whether you call them hot fixes or not - are commonly used. What matters is how they were used in this situation. It doesn't matter that people have sex all the time. If someone has 'sex' without consent from their partner, that's rape. And responding to an accusation of rape by pointing out that people have sex all the time isn't likely to persuade many people of your innocence.

 

[CarlJ]

Basically. They shot themselves in the foot and pissed off millions of iOS users. Epic fail.

"Instead of 70% of $millions, we'd rather have 100% of nothing!"

 

[Carnegie]

I wondered about this part too. If Epic hasn’t been able to prove it at the very least has a strong case, why hasn’t this just been thrown out as breach of contract, end of.

In part because there are fact-dependent considerations and the parties haven't yet been able to fully present their evidence in attempts to demonstrate the facts they assert (or will assert). They haven't even been through the discovery phase yet where they might find evidence which helps them to make their cases.

The relevant market definition, e.g., is fact-dependent. The judge hasn't decided whether Epic or Apple (or neither) is right on that issue. She can't yet because the evidence needed to make that determination hasn't been presented.

 

[Carnegie]

@mkldev

This is part of what Andrew Grant, Technical Director of Engineering at Epic, says about hotfixes:

4. App developers can and do make real-time changes to an approved app without adding new code and without requiring users to download a new update from the App Store. There are a number of names and methods for this process including feature flag, hot patch, bug flag, hotfix, feature toggle and server based update, but each describes the same process. For the purpose of this discussion, I will refer to the process generally as a “hotfix”, which is how the process is typically referred to within Epic.

5. Hotfixes work by coding the app to check for new content that is available on the developer’s server or new instructions on what to make accessible in the app. Hotfixes are commonplace, including for apps designed to run on Apple’s mobile devices.

6. Many apps run a check for hotfixes as part of their normal startup process.

7. A developer can use hotfixes to make accessible content or features in an app that are in the code but are not initially available to users. The content or feature is accessible only after the app checks the developer’s server and is “notified” by the server to display the new content or feature. For example, game developers often include new characters, new items, or new levels in the code submitted to Apple, which are not initially available to users but become accessible at a later date, once the app is “notified” by the game developer’s server that it should make these features accessible.

 

[Fabercon]

Apple is a closed system, but its competitor is not really Google or Android.

Its more like a railroad system where Amtrak or Santa Fe owns the track and the train engines... we as consumers might own something of the system such as the devices (cars) but developers do not actually own anything. The software they write is copyrighted and protected but the developers are essentially just renting space and using the service. As an owner of the system, Apple could decide to not allow certain individuals or players access if they do not follow the rules.

Google owns their own set of tracks and they can determine what is run on their platform.

If anything this system puts Apple and Google more in the role of a utility except that the consumer has all of the control on deciding which system they want to support and participate in.

And in regards to the 30% rule, Apple is providing less regarding payment systems and support and more about the retail replacement for the digital.

Do you think that Walmart and Target pay their suppliers 70% of what they sell in the stores? How would retail be able to offer sales for 40% off? In reality, because retailers buy in bulk and take a risk on the profitability and interest in a product, they almost never pay the manufacturers more than 50% of what they sell the item at full price. Some high traffic and consumable items might be a smaller markup, but a minimum of 30% markup is almost required for any retailer to stay in business.

 

[KonaBlend]

"Epic Games' adamant refusal to understand this basic distinction is not only baffling, but undermines its credibility with this Court."

I can't stop laughing at this. It really does make them look silly.

It does but only within the context of letting them back in the store right now. The real process is the '2021 trial which is about monopoly and free apps and in-game purchases and whether it is actually legal to make this distinction.

Funnily enough, Epic could skirt the issue and simply ship a physical item for every purchase like a T-shirt, coffee mug or baseball cap but they'd probably have to make minimum purchase amounts of $30 to make it financially superior.

offer: buy this Fortnite T-shirt for $30 and get 3000 free V-bucks

And then Apple would say "$30 is too much for a T-shirt" and then Epic would say "30% is too much for in-app purchase tax". GRIN.

 

[I7guy]

The App Store monopoly will eventually come tumbling down.

It might take 20 years or so for that to happen, though.

 

[cmaier]

It does but only within the context of letting them back in the store right now. The real process is the '2021 trial which is about monopoly and free apps and in-game purchases and whether it is actually legal to make this distinction.

Funnily enough, Epic could skirt the issue and simply ship a physical item for every purchase like a T-shirt, coffee mug or baseball cap but they'd probably have to make minimum purchase amounts of $30 to make it financially superior.

offer: buy this Fortnite T-shirt for $30 and get 3000 free V-bucks

And then Apple would say "$30 is too much for a T-shirt" and then Epic would say "30% is too much for in-app purchase tax". GRIN.

This is like bad Epic fanfic.

 

[mazz0]

I don’t get why they’re not allowed to ban all Epic’s accounts. The T&Cs say if you break the contract then your account *and related accounts* will be closed, don’t they? What would happen to any developer that didn’t have Epic’s lawyer money if they tried this?

 

[cmaier]

I don’t get why they’re not allowed to ban all Epic’s accounts. The T&Cs say if you break the contract then your account *and related accounts* will be closed, don’t they? What would happen to any developer that didn’t have Epic’s lawyer money if they tried this?

Balance of equities. It doesn’t harm apple much to prevent them from doing it right now, and it would harm a lot of other people if they were allowed to do it. If apple wins the case, they can ban the other account then. In the mean time, apple isn’t actually really harmed by not being able to do so. Or at least that’s the court’s reasoning.

 

[firewood]

I think Apple created the standard when they first implemented the 30%.

Nope. 30% was the standard rate for mobile app sales from the PalmGear and Handango app stores from the PalmPilot and Treo mobile phone days. Many of the app stores for PocketPC, Windows Mobile, Brew, and Nokia Symbian apps as well. Not sure about BlackBerry.

 

[Bandaman]

"Instead of 70% of $millions, we'd rather have 100% of nothing!"

Basically.

 

[hot-gril]

Sad to see Epic behaving this way. Fine if they want to complain about Apple's practices, but really, sneaking in a patch that blatantly breaks the rules? That crosses a line for no good reason. I'd be in support of them otherwise.

Anyone who thinks they're just those annoying Fortnite people: They made Unreal Engine, which has been a big deal since 1998. And always supported Mac OS. I don't like what video games do to society, but I respect all technical achievements in them. Tim Sweeney is a great man.

 

[hot-gril]

Same. They were actually working on a new version of Unreal Tournament but then Fortnite ended up being so successful so they just stopped.

Oh well, UT99 is still awesome.

AssaultCube is a great open source game in that same genre. I find it much... crisper, if that makes sense.

 

[hot-gril]

Umm.. no. Gating new features behind flags so that they can be turned on after an app has been shipped to the user has been standard industry practice in the mobile space for a very long time — pretty much since the dawn of iOS development. I don't know any company out there that doesn't do that, precisely because fully testing a new feature perfectly is hard. So instead, they test it to the maximum extent possible, then turn it on for some subset of users, then eventually turn it on for all users.

The judge's adamant refusal to understand how flag-guarded features work or the difference between a hot patch (uploading new executable code to run on the device itself, which is almost completely infeasible in iOS) and changing server-side or server-gated client-side behavior is not only baffling, but undermines her credibility with the industry.

Some React Native apps are even loaded entirely from a server, I think (might be wrong). Not sure how Apple reviews those.

But yeah, standard practice either way. The problem is only in using it to circumvent rules.