Epic Games Unlikely to Win Injunction in Ongoing Fortnite Battle With Apple, Jury Trial Possible

[Martinpa]

Nintendo never sells hardware at a loss

I didn’t say they did... I was adding to the point mannyvel made.

 

[Cesar Battistini]

Apple should take 500 million dollars, make a game like Fortnite.

Use all Apples latest technologies, make the graphics impressive.

And just release the game for free. with coins you get from playing and no IAP.

Them release it for all major consoles, android and windows.

And them just watch Fortnite burn to the ground.

 

[I7guy]

... Apple will get its antitrust case in fed court some day and be split just like Microsoft....

Hypotheticals are fun.

...Maybe some of those iphone users will buy an android device and find its just as secure and has better encryption than apple iphones....

Android has security holes like swiss cheese, imo.

... yeah that sound monopolistic to me.

Sounding like monopolistic, anti-trust behavior and being the same the two different things.

when the fed govt takes 10% in taxes and stores(actual store fronts have to store stuff in warehouses) 30% is not fair nor reasonable.

Actually the fed government can take up to 37% in taxes. And as the judge acknowledged 30% is an industry standard.

your fine with trillion dollar companies pushing legislation and pushing reasonable repair shops out as well.

What does this have to do with the topic?

android is a free license and is protected by open sources licensing and is built on Linux which is made by Linus tovald who created it and gave it away for free. your silly to think any one pays for linux or could sell it with out fundamentally changing the way open source licenses work...

Android is not free, google charges a license fee and makes billions from it.

this is why I steer clear of apple products. its not worth it for subpar hardware and ideas that were taken from smaller devs and added to their own software to push them out. smh I hope epic kills it in a battle with an actual jury not a single judge that used to be a lying lawyer with control issues.

Your entitled to your opinions, but Apple is killing it financially with their sub-par hardware, full of holes ios operating system, copied functionality etc.

If Epic is going to "kill it" in a battle, they need to rally, because they got a very, very bad start off the line. It doesn't help when you portray yourself as a dishonest savior. And because the judge smacked down Epic, the judge must be a "lying lawyer with control issues?" (To quote Ralph Kramden: "ha-ha-hardy-har-har")

 

[Bandaman]

Having all 100+ games accessible to stream in one app. Not 100+ apps.

Imagine you had a Netflix account but on iOS you needed to download an app for each movie. Each show.

I agree 100%.

 

[Carnegie]

Question for any lawyers on the thread: is there a legal statute that says not allowing any sort of side loading is a anti-competitive or monopolistic practice? Or is this one of those tech things where the law simply hasn’t caught up?

Wondering what the legal argument would be if Apple were sued for not allowing installations outside the App Store rather than over the 30% fee for purchases made on the store.

I understand the security arguments on the Apple side, but I’m curious as to whether or not that, for instance, not allowing people to visit a link and install an app (like downloading an apk on Android) is evidence of some illegal or questionably legal stance.

I'm not a lawyer but the basics of U.S. antitrust law are pretty easy to sort out for those who wish to. And most people can read case law to gain a more nuanced understanding of how it applies if they're really interested.

The answer to your first question is: No, there isn't any provision of U.S. antitrust law which specifically prohibits not allowing side loading. As is the case in many areas of law, the actual statutory provisions are quite general and don't refer to specific practices - e.g., not allowing side loading. Case law builds up around those general provisions and provides greater clarity on what they mean and how they might be applied to different situations, and then based on such guidance from case law case-by-case decisions are made as to whether particular practices by particular parties are illegal.

There are two kinds of Sherman Act violations at issue here. (There are other provisions of U.S. antitrust law, but these Sherman Act violations are the ones at issue here.) There's a Section 1 violation and a Section 2 violation, and both sections are generally worded:

Section 1:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce mong the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

Section 2:

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

So, looking at Section 2, it makes it illegal to monopolize or attempt to monopolize any part of trade or commerce. The wording is very general and doesn't refer to specific practices which might constitute monopolization. But case law tells us more about what constitutes illegal monopolization. In U.S. v Grinnell Corp (1966), e.g., the Supreme Court said:

The offense of monopoly under 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.

Put another way, a violation of Section 2 requires (1) monopoly power, (2) exclusionary conduct and (3) a casual connection between the exclusionary conduct and the monopoly power. Monopoly power, by the way, doesn't necessarily mean complete control of a market. Something considerably less, even 60% market share, can constitute sufficient market power for Section 2 purposes.

So to answer the query in your second paragraph, Apple not allowing side loading of apps in iOS could (thought I'm not suggesting it should) constitute the exclusionary conduct required for a Section 2 violation. The argument would be that Apple unlawfully maintains its monopoly power in the iOS app distribution market (I won't get lost in antitrust market definition here, that's another aspect of the consideration) by creating technical and contractual barriers to competition. Its iOS software is designed to prevent, not always but generally, the loading of apps other than through the App Store. And Apple requires would-be iOS developers to agree not to distribute their apps other than through the App Store.

I want to be clear that I don't think Apple should be found to have violated antitrust laws in this way. But that is, more or less, the Section 2 argument you are asking about. It's why Apple's efforts to block side loading might, without regard to the 30% commissions it charges, be an antitrust problem. If it's decided that iOS app distribution is in itself a relevant antitrust market, then Apple could easily be found to have engaged in illegal exclusionary conduct meant to help it maintain its monopoly in that market. One question would be, does the anticompetitive conduct (i.e the technical and contractual barriers to competition) have procompetitive justifications? In other words, is Apple doing those things just to block competition in iOS app distribution? Or is it doing those things for other, legal, reasons - e.g., to provide better security for its customers.

 

[Carnegie]

People who are rooting for Apple on this: do you realize that if Epic loses you all get to keep paying Apple up to 30% tax every time you buy something from their App Store (even if it has nothing to do with Fortnite)? You're basically happy to pay more money to the company who has made $15 billion in revenue from the App Store alone last year. Do you actually believe it costs them $15 billion a year to run an online store?!

The fact that so many companies are charging the 30% tax while there's definitely a lot of backlash from developers (big and small) smells like some sort of price fixing to me. Maybe they're thinking: "If Apple are charging 30% and people are willing to pay why should we charge less?"

It isn't about being happy to pay more money. It's about respecting others' freedoms just as we wish our own freedoms to be respected.

Of course we'd like, other things being equal, businesses to have lower prices. And we'd like them to offer the services and products we want, just as we want them. But that's not necessarily how it works. They should, generally, be free to offer the services and products which they want to offer, as they want to offer them, just as we should be free to choose whether or not to use or buy those services and products.

I don't necessarily like all the results of other parties having freedom to act as they see fit. But I generally want them to have that freedom in part because not wanting them to, while wanting freedoms for myself, would be hypocritical. I value freedom - and not only my own - both because I think it has inherent value but also because I think it provides enormous societal benefits in the form of, e.g., innovation and the creation of economic activity.

I'd love it if Apple refunded to me all the money - or even just 30% of the money - I spend on iOS apps and services I buy through my Apple accounts. But I wouldn't want them to be forced to do that or to be forced to operate differently such that they weren't able to collect that money to begin with. I value what they offer me so I'm willing to pay for it. But more so, I value their ability to offer it - and for the most part operate as they see fit - because I think I, and society in general, greatly benefit from them and others and myself having such freedom.

 

[FrozenDarkness]

I think one aspect of this that I wish a lawyer can answer is if you can argue apple abused its monopoly powers when they were exercising such power over their store (no sideloading) when they weren't a monopoly. Like can a company who has been doing the exact same thing be charged with abusing their powers once they become successful?

This is just for the example of sideloading and requiring usage of apple's payment system.

 

[Carnegie]

Thank you. People throw around the term “monopoly”, when it seems a stretch to consider Apple as such. Most people would assume that means they have the dominant share of the smartphone market at large, not control over the means by which apps are distributed on their own platform. The “monopoly” accusation just hasn’t felt right.

I'd agree that iOS app distribution shouldn't, in itself, be considered an antitrust market. But the reality is that, under existing case law, it could be. Apple could be found to have sufficient market power (as part of a Sherman Act violation consideration) in that antitrust market even though it didn't have sufficient market power in the smartphone or mobile device markets. I'd still bet against that, but it's a real possibility. The waters surrounding this issue are, in the wake of Eastman Kodak, still murky.

 

[gnasher729]

Question for any lawyers on the thread: is there a legal statute that says not allowing any sort of side loading is a anti-competitive or monopolistic practice? Or is this one of those tech things where the law simply hasn’t caught up?

Neither / nor. There is a simple thing where this stumbles: Apple doesn't have a monopoly in any relevant market. "iPhones" is not a relevant market, "Smartphones" is. Why are "iPhones" and "Android" phones not markets? Because usually if you buy something in one market, that doesn't stop you from buying from another market. If you buy a movie ticket, that doesn't stop you from buying a CD - because cinemas and music are different markets. But if you check for "iPhones" and "Android phones" - few people buying an iPhone also buy and use an Android phone, and vice versa. That's because they are the same market, and a market where I only need one product from the whole market.

So because iPhones are not a market, and Android is not a market, neither Apple nor Google have a monopoly. Therefore they are not anti-competitive. And what would Epic's competitors be? Other app developers. Apple has the same terms for everyone, so does Google, therefore not anti-competitive. The law has caught up with this long ago. Actually, there was not much to catch up, because it is all just about sales, contracts, and revenues.

 

[pacalis]

I want to be clear that I don't think Apple should be found to have violated antitrust laws in this way. But that is, more or less, the Section 2 argument you are asking about. It's why Apple's efforts to block side loading might, without regard to the 30% commissions it charges, be an antitrust problem. If it's decided that iOS app distribution is in itself a relevant antitrust market, then Apple could easily be found to have engaged in illegal exclusionary conduct meant to help it maintain its monopoly in that market. One question would be, does the anticompetitive conduct (i.e the technical and contractual barriers to competition) have procompetitive justifications? In other words, is Apple doing those things just to block competition in iOS app distribution? Or is it doing those things for other, legal, reasons - e.g., to provide better security for its customers.

Good post, I have studied monopolistic behavior back in school and I can't see anything here. A big issue is that the product is not a market. Epic is reaching for a way to define the market such that they can argue an anti-trust violation (and making an ass of themselves doing so).

But even past the "better, more secure" product argument, there is little (outside of reasonable royalty judgements) that allow another company to access or modify one's products. If there was, Epic would quickly run into a variety of other issues including Apple's moral rights to it's products and likely (I'm guessing, having not done a six-figure patent review of this) would also find itself infringing Apple patents.

As I said earlier, if Tim Sweeny had a normal board and didn't have a controlling interest in Epic, he would have been fired on the spot for this stupidity.

 

[farewelwilliams]

cringe

likewise

 

[farewelwilliams]

Oh come on, gate keeping is such lazy way of trying to troll - you can do better.

Not trolling at all. I know what the develop experience is like across many platforms. the 30% pays for many essential iOS developer services that is lacking in other platforms. Most people who bash Apple for it have no idea what it is like to dev on this platform. That’s sad.

 

[Analog Kid]

People who are rooting for Apple on this: do you realize that if Epic loses you all get to keep paying Apple up to 30% tax every time you buy something from their App Store (even if it has nothing to do with Fortnite)? You're basically happy to pay more money to the company who has made $15 billion in revenue from the App Store alone last year. Do you actually believe it costs them $15 billion a year to run an online store?!

The fact that so many companies are charging the 30% tax while there's definitely a lot of backlash from developers (big and small) smells like some sort of price fixing to me. Maybe they're thinking: "If Apple are charging 30% and people are willing to pay why should we charge less?"

So... I just looked at the Epic store and noticed that Civ VI is $59.99. I looked at the Mac AppStore and see that Civ VI is $59.99. Why would I buy anything from the Epic store?

 

[Martinpa]

To be fair, when Epic defended it actions, YGR noted that it provided "good evidence" that the App Store (primary market) is separate and distinct from IAP (aftermarket), running counter to Apple's longstanding claims that the two are integrated (both aftermarket, hardware being primary market) - a fact that Epic could not have otherwise proved. This has important implications for its anti-trust claims.

It’s funny, cause if you consider the gaming console market, which Epic argues are sold at cost/at a loss (and therefore them taking a cut is ok), that argument fits way better; why would console makers be ok with selling with low/no margins? Because the games are the primary market, and applying Epic’s logic, any DLC/in-game purchase would be secondary market. So the reason why Epic is fine with Sony/Microsoft/Nintendo’s 30% cut is also what makes these same companies an even better and clearer representation of that primary/secondary market distinction Epic is trying to attribute to Apple.

 

[31 Flavas]

Hmm ... we need alternative App stores.

Strange how she's asking when Apple became a monopoly -does it matter? They were a monopoly from day 1

I'd like to direct your attention to the FTC's own Guide to Antitrust wherein they explicitly state: "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." So your maxim of "any monopoly is illegal, mkay" is just flat out wrong. That said, as far as a businesses monopoly is concerned, what matters to the FTC is whether, "The law is violated [section 2, Sherman Act] only if the company tries to maintain or acquire a monopoly through unreasonable methods."

So, Boom. Apple unreasonably maintains their monopoly by not allowing any other App Store. There! Guilty! Guilty! Guilty! Break open the App store! Huzzah!

Except, uh... wait... why haven't Sony, Microsoft, and Nintendo's respective monopolized systems been broken open? We just said that not allowing anyone else access is "unreasonable" maintenance of a monopoly. Why is it that Sony, Microsoft, and Nintendo get to unreasonably maintain their monopolies on their systems? Retail sales are no saving grace. Whether it's online download or retail release - you have to pay 30%, you have to agree their terms and agreements as far as what is and is not allowed, go though their own review and approval process for your game or app, and agree to use their retail distribution channels or (possibly, and) online release. You do not get to sell or release independent from them.

Yeah. Monopolies are legal. What matter is whether a monopoly acts illegally. Which is where Epic really doesn't have a very good case. If everyone else was offering 12% commission where Apple was charging 30% it would be a different case. If Apple had decided to increase from 30% to 35 or 40 or 50% again, this would be a different case. If Apple sought to preclude you from writing Android apps as contractual requirement for the approval of your Apps - again, different and better case.

But, Apple isn't charging more. Apple hasn't increase fees. Apple isn't tying approval of Apps to exclusivity agreements. I'll quote the FTC again, "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."

Not that you will, but you could view this actual lawyers review of the just yesterday Epic v Apple oral arguments. I'd enjoy discussing this further with someone who cares to listen and consider what that lawyer opines on.

My device I can install whatever the hell I want on the hardware that I bought. No?

Actually, I can agree with you here. It is your hardware and you can do whatever you want with it. But, Apple has no obligation to allow arbitrary code execution. So if you can jailbreak it, that is fine and legal and your right to do so. Your hardware you can do what you want with it. But, where we differ is that Apple in no way has to make it easy for you to run code on it.

 

[djphat2000]

Even thought EPIC totally deserves to lose this. I think Apple should purchase them.
Use the Unreal engine in Final Cut and or other applications on the Mac. Make it part of the developer tools to create new games on the Mac. Could make it an exclusive thing or just exclusive on the Mac to make games on any platform. But being native to Mac, the games will always be and run great. From iOS, iPadOS to MacOS. I think this would be a good move. Since Microsoft purchased Bungie a million years ago and stole Halo (we did get it later on). And now, they are purchasing Bethesda (GOD NO!, but whatever). Why not have Apple own EPIC and Unreal engine? This could help get more games made on the Mac platform, while still working for PC gaming as well. Keep it cross platform.

Just my 2c. However, I already knew this Judge would treat EPIC this way. Going to a jury trial will just make it worse. Best to walk away from this while they can...

 

[compwiz1202]

Nintendo never sells hardware at a loss

They have no reason, especially when I tried buy a Wii 1-2 YEARS after launch and ended up getting an Xbox because they were never in stock. I'm amazed they didn't up the price to balance supply and demand.

 

[ArtOfWarfare]

Let's take this to it's logical extent. Would Epic be willing to offer it's own store space, free of charge, to anyone that wants to not pay Epic the 12% cut they ask for?

Epic does not want to use Apple's store. Epic wants to use their own store. Every other OS with a web browser allows for applications to be installed via it. Permitting this requires negative effort on Apple's part - they're actively blocking it right now, all they have to do is start permitting it.

If they'd like, they could copy over the security settings from macOS where you have to go into settings and explicitly permit apps to be downloaded in Safari.

 

[ArtOfWarfare]

They have no reason, especially when I tried buy a Wii 1-2 YEARS after launch and ended up getting an Xbox because they were never in stock. I'm amazed they didn't up the price to balance supply and demand.

Nintendo treasures their brand. They don't want it to be viewed as greedy, so they don't take price increases lightly.

I think Nintendo enjoys the optics of having a best selling console that is perpetually out of stock.

 

[Carnegie]

Epic does not want to use Apple's store. Epic wants to use their own store. Every other OS with a web browser allows for applications to be installed via it. Permitting this requires negative effort on Apple's part - they're actively blocking it right now, all they have to do is start permitting it.

If they'd like, they could copy over the security settings from macOS where you have to go into settings and explicitly permit apps to be downloaded in Safari.

Epic does want to use Apple’s App Store. It has asked to be able to use the App Store to distribute apps but have its own payment system within the apps. It’s also asked to be able to have its own Epic Games Store distributed through the App Store and having access to the same OS installation features that the App Store does.

 

[Ubuntu]

Not trolling at all. I know what the develop experience is like across many platforms. the 30% pays for many essential iOS developer services that is lacking in other platforms. Most people who bash Apple for it have no idea what it is like to dev on this platform. That’s sad.

Could you list some of those services? I'm not one to deny your own personal experiences but am skeptical. I'll be surprised if StoreKit is in that list, recent improvements aside .

Also, the 30% isn't the big deal for me (as I do find some of the App Store services like international distribution & tax management) to be good value alone. It's more the control Apple has and how they can easily use this to their own competitive advantage but you assumed I was focused on the 30% anyway. I don't like the idea that one day Apple might reject my app update because they have something in the works, for example.

Also, fundamentally, competition is good. It took them years to make IAP sandbox testing actually reasonable. Can you imagine if there was another App Store in iOS, for example? I'd still 100% stick with the App Store (as both a developer and a user) as I prefer the quality of apps that comes out of it but if it meant Apple actually improved their turnaround time for such developer tools I'd be 100% for it.

 

[Ubuntu]

The changes that happen might not benefit the small developer and even cause them to leave this market. But having any positive outcome from Epic is far from assured. Epic could have accomplished the same thing without being dishonest and that killed their credibility in court.

And it's a far cry from a slam-dunk that Apple will be found to have a "monopoly" in the app store, which is what Epic wants to cause.

Apple likely made a good amount of money from Epic's IAP as well as Epic raking in the $$$. Yet Apple kicked them out of the app store. Now google is joining the bandwagon. This is going to be interesting.

That is certainly a risk, but one I'd be willing to take. I think if Epic was to win we'd have more choice in the App Store, which could only be better. That is if Epic is truly not looking for a special deal.

I've tuned out a bit of the whole situation but where was Epic dishonest? Was it how they've been playing the victim despite bringing this on themselves or something else?

I'd say Apple does have a monopoly in the App Store because they 100% control what can run on iOS - that's a powerful position to be in. Yes, it's their device and people can claim that it's a console but really it's a computer that one company decides what it can and can't do based on their commercial interests (e.g. game streaming).

It'll certainly be interesting. I started out being mostly with Epic in a "the enemy of my enemy is my friend" mentality but as it's progressed I've held less and less support for them. The Fortnite cup with the anti-Apple items was lame, as was the recent coalition development imo. Interesting times indeed.

 

[Michael Scrip]

The Kindle app is free on the App Store... but you can't buy books inside the Kindle app because Apple would get 30% from every purchase. So you have to go to Amazon in a web browser to buy Kindle books.

Fortnite is free on the App Store... but you can't buy VBucks inside Fortnite because Apple would get 30% from every purchase....

Do you see where I'm going with this?

Why can't people just buy their VBucks on Epic's website? Make it something like vbucks.epicgames.com or something.

Everybody who plays Fortnite has an Epic Games account. And we understand how websites work.

Amazon figured this out... why can't Epic?

 

[ArtOfWarfare]

Epic does want to use Apple’s App Store. It has asked to be able to use the App Store to distribute apps but have its own payment system within the apps. It’s also asked to be able to have its own Epic Games Store distributed through the App Store and having access to the same OS installation features that the App Store does.

This is a set of ORs. Any of them will satisfy Epic. Permitting their store to be installed via Safari would also satisfy them.

 

[farewelwilliams]

Could you list some of those services? I'm not one to deny your own personal experiences but am skeptical. I'll be surprised if StoreKit is in that list, recent improvements aside .

Also, the 30% isn't the big deal for me (as I do find some of the App Store services like international distribution & tax management) to be good value alone. It's more the control Apple has and how they can easily use this to their own competitive advantage but you assumed I was focused on the 30% anyway. I don't like the idea that one day Apple might reject my app update because they have something in the works, for example.

Also, fundamentally, competition is good. It took them years to make IAP sandbox testing actually reasonable. Can you imagine if there was another App Store in iOS, for example? I'd still 100% stick with the App Store (as both a developer and a user) as I prefer the quality of apps that comes out of it but if it meant Apple actually improved their turnaround time for such developer tools I'd be 100% for it.

Sure.
- we developers get up to 1 petabyte of user storage via CloudKit 100% free. Bear notes app does this and they manage 0 servers for their subscription-paid users.
- we could submit 1000 app and app updates in a year which translates to Apple paying about 1000 man-hours worth of paychecks at about $30/hr or ~$30k for app review
- we have free access to using Apple Maps instead of paying Google tons of money to use their mapping API keys (for those high volume users). this saves Yelp and Facebook a ton of money as well as small developers.
- we get many more new features every single year via the SDK compared to Android (like ARKit, Core ML, SwiftUI, Vision, etc... just to name a few).
- we get global distribution for free (including China, you know, where Google Play doesn't exist. also developers generally have to setup their own servers in China because of the great firewall, but if you used CloudKit, it just works without any extra setup).
- we get app store curated editorial with a chance to reach front page in front of 500 million customers a week.
- we have no credit card fees or international taxes to worry about
- Apple provides support to customers asking for refund for an app and app store support in general
- Testflight service is free (for public and private testing)
- app store automatically creates many different binaries of our app and distributes device-optimized versions to each customer. a 1 gigabyte app with many different permutations of versions across hundreds of servers around the world means Apple is hosting about several terabytes in the cloud for us from one single app
- push notifications/push notification sandbox servers
- Web SDK version of cloudkit/mapkit so that you can use it for a web version of your app
- Apple sign in
- Mac notarization service which improves trust by the user for downloading an app from the web
- yearly major releases of Xcode with new features
- analytics dashboard and crash reporting
- and the list goes on and on.