3 Things You Need To Know About The Legal Battle Between Apple and Epic Games
The ongoing legal battle between Epic Games and Apple continues to heat up as a recent ruling stated that Apple is breaking the law by forcing users to pay for in-app items through the App Store.
Last week, a federal judge made a long-awaited ruling in the Epic Games lawsuit against Apple, holding that Apple is breaking the law by forcing users to pay for apps and in-app items through the App Store, while taking a 30% commission on that purchase price.
In the 185-page ruling, both Epic Games and Apple brought their arguments to the table, both coming out with a win, but nothing powerful enough to sway the litigation in favor of one party or the other.
U.S. District Judge Yvonne Gonzalez Rogers deemed that based on its current pricing structure, Apple is breaking the law, and asked Apple to implement different payment methods within 90 days. Court documents show that Apple has until December to implement the use of additional payment links.
Adding to the complexity of the case is the fact that the court’s decision was a split decision. While the court held that Apple is breaking the law with respect to its pricing structure of the App Store, it also states that Apple does not have an illegal monopoly over how developers can process payments for mobile games.
A Brief Recap
In May 2021, video game developer Epic Games sued Apple for the way it runs its App Store, arguing that the App Store in and of itself is a monopoly, charging exorbitant prices on games, like Epic’s popular game Fortnite. Currently, Apple charges companies like Epic Games a 30% commission on in-app payments.
From January 2017 to October 2020, Epic reportedly paid $237 million in commissions to Apple for in-game purchases through its game Fortnite, according to The Washington Post. However, for Epic, that amount is less than the amount it pays out to companies like Microsoft and Sony, whereby in 2020, the company reported paying out $245 million and $451 million, respectively.
In a recent ruling in the lawsuit against Apple, Epic Games’ CEO Tim Sweeney stated that he believes Apple will blacklist Fortnite from the entire Apple ecosystem, including its App Store, iOS, and Mac platforms for at least five years, or until its appeals process makes the company’s judgment final.
#1 – Is Apple Holding Fortnite “Hostage?”
As part of Epic’s lawsuit against Apple, the video game developer hopes to expand the definition of what a “game” constitutes in 2021, applying this lawsuit to all applications currently available in the App Store and arguing that Fortnite is more than just a “game,” and rather a “metaverse.”
“Apple lied,” Sweeney said in a Twitter post. “Apple spent a year telling the world, the court, and the press they’d ‘welcome Epic’s return to the App Store if they agree to play by the same rules as everyone else.’ Epic agreed, and now Apple has reneged in another abuse of its monopoly power over a billion users.”
Ultimately, Epic argues that for gaming platforms like Microsoft and Sony, who sell their consoles at a loss, it makes sense to charge developers, whereas companies like Apple bring in large amounts of money just off their iPhone devices alone.
Sweeney’s claims speak to a much bigger issue surrounding Apple’s place in the world of tech and Silicon Valley, with nationwide concerns that Apple is in violation of antitrust laws, serving as the only player able to prevent or allow companies from competing against it.
#2 – Apple’s CEO Tim Cook Doesn’t Know Much About the App Store
During cross-examination, Apple CEO Tim Cook was asked several questions about Apple’s business that he said he couldn’t answer, according to BBC News.
For example, in a conversation between Judge Rogers and Cook, Cook was unable to answer questions surrounding the App Store’s profitability, Cook was unable to answer.
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#3 – How This Affects Apple Consumers
Ultimately, the results of this ruling could work to the benefit of all Apple users. With a new payment structure, a user could pay for a Spotify or third party subscription, but have the option to pay directly through those platforms’ own systems, rather than paying Apple for the subscription.
It is very possible that the court’s ruling could see prices for applications in the App Store become cheaper, as Apple would no longer be able to charge the 30% commission for in-game purchases.
That 30% commission has been a contentious subject for quite some time, and despite many consumers’ desire, unfortunately, won’t go away. However, that doesn’t mean that Apple won’t drop the rate, as it has been known to drop it for certain developers in the past.
Apple has had a nice defense network against antitrust scrutiny on its large presence throughout Silicon Valley, however, it’s unlikely to continue further.
After last week’s court ruling, Apple is expected to appeal Judge Rogers’ ruling that the tech giant is violating the law by preventing alternative payment methods, by relying upon its “anti-steering provision.”
Epic Games has expressed its displeasure with the court’s ruling, emphasizing that the ongoing litigation is not about how digital video games are distributed, but rather how digital video game payments are processed.
For more information on the Epic Games lawsuit against Apple, please visit Epic Games, Inc. v. Apple Inc., 493 F. Supp. 3d 817 (N.D. Cal. 2020).