Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh." Ivan covers Big Tech, India, policy, AI, security, platforms, and apps for TNW. That's one heck of a mixed bag. He likes to say "Bleh."
In the last month or so, tech news has been dominated by Epic Games’ court case against Apple. While the ruling could bring a major pivot point for either of the companies, it might also affect us as consumers. In this story, we’ll try to explain the core of the case, arguments from both sides, and how it will impact users.
Why are Apple and Epic fighting?
In August last year, Apple and Google booted Epic’s hit battle royale game Fortnite from their app stores. The reason was that the game company had included a payment method that evaded these stores’ systems, and allowed users to buy the game’s internal currency, called V-bucks, directly from Epic.
The game company thought that was against the 30% cut taken by Apple and Google from developers was unfair, and people needed alternative methods to make in-app purchases.
Android users were not worried much as you can install third-party apps or app stores on your phones.
However, if you use an iPhone, you have to use the App Store to install the apps. By that logic, you couldn’t install Fortnite on your phone. Plus V-bucks were cheaper to buy outside the iOS ecosystem.
To fight Apple’s control over installing apps on your iPhone, Epic filed a lawsuit against the company in August 2020. In May, both companies fought against each other to make their case in a trial that lasted nearly three weeks.
The game company and founder Tim Sweeny’s demand is simple: scrap the 30% cut rule enforced in the App Store and give ways for people to pay for services or install apps in a different way. Sweeny has also tried to win public sympathy with marketing campaigns, such as mocking Apple’s 1984 ad and #FreeFortnite.
Participated in the #FreeFortnite cup. 12 matches, 3 eliminations, 30 points. Am I the only one competing as Jellie? https://t.co/7RgqHx0dp9 pic.twitter.com/TpxdKAnWuI
— Tim Sweeney (@TimSweeneyEpic) August 23, 2020
Epic also argued that Apple gave special treatment to companies like Netflix and offered them a better deal.
Plus, there was a whole argument about how Fortnite is a ‘Metaverse’, and not just a game — so Apple should treat it as a platform. There was a lot of back and forth between the two companies around the definition of a game. You can read more about that here.
The game company wanted to break Apple’s illusion of App Store’s quality control by bringing forward developer testimonies that complained about “arbitrary review processes” and the issue of many “outdated, low-quality apps” on the app distribution platform.
There’s no denying that the App Store for iPhones and iPads is a walled garden. But Apple says it’s that way for a reason.
Apple allows you to install third-party apps on Mac. To that argument, Apple’s VP, Craig Frederighi, said that Mac is like driving a car you need to drive responsibly, unlike iOS:
“With iOS, we were able to create something where children — heck, even infants — are able to operate an iOS device and be safe in doing so. It’s really a different product.”
Last month, the company also wrote a lengthy whitepaper arguing about the dangers of sideloading and how it has affected Android. It also made a strong argument about how App Store is the best protection for you against these hazards.
Apple has repeatedly argued that the App Store helps developers earn money in a big way. In 2020, its gross sales were estimated to be $64 billion. That means the company earned billions of dollars through the commission.
When CEO Tim Cook took the stand, he evaded the question about the App Store’s earnings and said he had a “feeling” that it was profitable. Come on Tim, you don’t get to multi-trillion dollar market cap without knowing numbers, do you?
He also said that the fee also includes Apple’s intellectual property work as the company has made the platform ripe for distribution:
If we allowed people to link out like that, we would in essence give up our total return on our IP.
What’s in it for you?
If you’re a user waiting for Fortnite to return to iPhones, there’s no straight answer right now. It’s unlikely that the federal Judge Yvonne Gonzalez Rogers will rule entirely in favor of either of the companies. Plus, she has to go through more than 4,500 pages of testimonies. So we might not get a result soon.
During the closing arguments, she acknowledged that the App Store had some monopolistic tendencies, but courts don’t run businesses. So it might hard to pass a solid verdict like asking Apple to allow alternative app stores.
Judge Gonzalez Rogers didn’t give Epic a free pass, and said the company has “ulterior motives” for a favorable outcome:
Epic is here because if relief is granted, they go from a multibillion-dollar company to a maybe-trillion-dollar company, who knows. But they won’t do it out of the kindness of their heart.
It’s important to keep in mind that Apple has earned over $100 million from Fortnite, as revealed during the trial. While the iPhone maker is now a $2 trillion market cap company, it’s no small amount by any means.
There is a chance that the judge might ask Apple to tweak its guidelines, and Epic to make some compromises to its stance.
As Cook said during the trial, “The user is caught between two companies.” It’s best for these two to make amends.
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