Back in August 2020, Apple removed Fortnite from the App Store after an update that bypassed the App Store’s in-app purchases system. Since then, Apple and Epic Games have been fighting in court — and now the findings of fact and conclusions of law filed by Apple with the court give us more details of what to expect from this trial.
Apple’s conclusions became public on Thursday with the arguments it expects to prove at trial. Once again, Apple argues in its legal fillings that the App Store has created new opportunities that didn’t exist before. The company says that the App Store has become extremely important to the economy as the app business moves millions of dollars worldwide.
One of the arguments against the accusations of anti-competitive practices states that “the vast majority of apps are free to download,” which means that the company doesn’t earn a commission from them. Apple notes that the App Store competes with other digital platforms such as Google Play, Microsoft Store, and PlayStation Store, suggesting that developers can always choose to offer their apps for other devices as well.
The findings point out that some of these platforms even prohibit players from having something called “cross-wallet play,” which results in in-game purchases not being synchronized with other devices. Interestingly, the fillings also state that “online game streaming services promises yet more competitive pressure,” but Apple itself still restricts how streaming games work in iOS.
However, a key argument that Apple has reiterated is that, contrary to what Epic says, App Store doesn’t lead the gaming market, so consequently it cannot be considered a monopoly. “Apple has no monopoly or market power in the relevant product market for game app transactions. And there is no claim that it had any such power when the restrictions at issue were imposed around the launch of the App Store,” said the company.
According to Apple, Epic Games has hired PR firms in 2019 to work on a media strategy called “Project Library” aimed at portraying Apple “as the bad guy.” In October 2020, Judge Yvonne Rogers had concerns that Epic knew exactly what they were doing with the controversial Fortnite update, so this doesn’t come as a surprise.
In its defense, the Cupertino-based company says that the App Store, iOS, and all of its software are intellectual properties, and it has no obligation to license such properties to third parties.
Epic’s monopoly maintenance claim is premised on the notion that the antitrust laws preclude Apple from imposing conditions on the licensed use of its intellectual property, and impose on Apple a duty to deal with Epic on the terms preferred by Epic—to the detriment of other developers and consumers alike. But Apple has no obligation to license its intellectual property, and aside from a limited exception not applicable here, businesses are free to choose the parties with whom they will deal, as well as the prices, terms and conditions of that dealing.
Apple also appeals that Epic Games earned more than $700 million in revenue from iOS consumers with Fortnite when the game was available on the App Store, and that the company also pays commissions to other platforms on which Fortnite is distributed.
Finally, Apple believes that the 30% commission it charges developers — which is now only 15% for those making less than $1 million a year — is a fair deal since this money is used to maintain the App Store. This includes reviewing all apps to ensure the security and privacy of iOS devices. For Apple, developers who disagree with App Store guidelines are free to offer web apps, which don’t have to be approved by the company.
Trial may take place next month
Judge Rogers recently said that the trial of Epic Games’ case against Apple is expected to take place on May 3, but things may change due to the pandemic. She also wants the trial to be in person rather than by videoconference due to its revelation.
At the same time, Apple CEO Tim Cook, Apple’s SVP of Software Craig Federighi, and other company executives have been requested to testify at the trial. Last month, Apple told 9to5Mac that its “senior executives look forward to sharing with the court the very positive impact the App Store has had on innovation.”
Apple’s legal filings can be found on Public Access to Court Electronic Records (PACER).
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