The Epic v. Apple lawsuit alleging monopolistic practices by the latter will begin next month, and today the main arguments of each company were published, having been trimmed down somewhat at the court’s discretion. With the basic facts agreed upon, the two companies will go to battle over what they mean, and their CEOs will likely take the (virtual) stand to do so.
As we’ve covered in previous months, the thrust of Epic’s argument is that Apple’s hold over the app market and 30 percent standard fee amount to anti-competitive behavior that must be regulated by antitrust law. It rebelled against what it describes as an unlawful practice by slipping its own in-game currency store into the popular game Fortnite, circumventing Apple payment methods. (CEO Tim Sweeney would later, and unadvisedly, compare this to resisting unjust laws in the civil rights movement.)
Apple denies the charge of monopoly, pointing out it faces enormous competition all over the market, just not within its own App Store. And as for the size of the fees — well, perhaps it’s a matter that could stand some adjustment (the company dropped its take to 15% for any developer’s first million following criticism throughout 2020), but it hardly amounts to unlawfulness.
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For its part, Apple contends that the whole antitrust allegation and associated dust-kicking is little more than a PR stunt, and it has something in the way of receipts.
Epic did, after all, have a whole PR strategy ready to go when it filed the lawsuit, and the filings describe “Project Liberty,” a long-term program within the company to, in Apple’s opinion, shore up sagging revenues from Fortnite. Epic does seem to have paid a PR firm some $300K to advise on the “two-phase communications plan,” involving a multi-company complaint campaign against Apple and google via the “Coalition for App Fairness.”
Project Liberty makes up a whole section in Apple’s filing, detailing how the company and Sweeney planned to “draw Google into a legal battle over anti-trust,” (and presumably Apple) according to internal emails, by getting banned by the companies’ app stores for circumventing their payment systems. Epic only mentions Project Liberty in one paragraph, explaining that it kept the program secret because “Epic could not have disclosed it without causing Apple to reject Version 13.40 of Fortnite,” viz. the one with the offending payment system built in. It’s not much of a defense.
Whether Apple’s fees are too high, and whether Epic is doing this to extend Fortnite’s profitable days, the case itself will be determined on the basis of antitrust law and doctrine, and on this front things do not look particularly dire for Apple.
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Although the legal arguments and summaries of fact run to hundreds of pages from both sides, the whole thing is summed up pretty well in the very first sentence of Epic’s filing: “This case is about Apple’s conduct to monopolize two markets within its iOS ecosystem.”
To be specific, it is about whether Apple can be said to be a monopolist over an ecosystem it created and administrated from the very beginning, and one that is provably assailed on all sides by competitors in the digital distribution and gaming space. This is a novel application of antitrust law and one that would carry a heavy burden of proof for Epic — and that an (admittedly amateur) review of the arguments doesn’t suggest there’s much chance of success.
But the opinion of a random reporter is not much in the accounting of things; there will have to be a trial, and one is scheduled to occur next month. There’s a lot of ground to cover, as Epic’s presentation of its arguments will need to be as meticulous as Apple’s dismantling of them. To that end we can expect live testimony from Apple CEO Tim Cook, Epic CEO Tim Sweeney, Apple’s former head of marketing and familiar face Phil Schiller, among others.
The timing and nature of that testimony or questioning will not be known until later, but it’s likely there will be some interesting interactions worth hearing about. The trial is scheduled to begin May 3 and last for about 3 weeks.
Notably there are a handful of other lawsuits hovering about relating to this, such as Apple’s countersuit against Epic alleging breach of contract. Many of these will depend entirely on the outcome of the main case — e.g. if Apple’s terms were found to be unlawful, there was no contract to break, or if not, Epic pretty much admitted to breaking the rules so the case is practically over already.
You can read the full “proposed findings of fact” documents from each party on the invaluable RECAP; the case number is 4:20-cv-05640.
‘Willful, brazen, and unlawful’: Apple files breach-of-contract countersuit against Epic
