Apple goes head to head with Epic in court today as Fortnite maker challenges its iron grip over its App Store
- Federal court case is being brought forward by Epic Games, maker of Fortnite
- Legal battle is in relation to the 30 per cent cut Apple takes of in-app purchases
- Apple removed all of Epic Games’ products from its App Store back in August
The next chapter of the legal battle between Apple and video games developer Epic Games is due to begin on Monday.
The trial is being brought forward by Epic, maker of the popular video game Fortnite, in relation to Apple’s dominant App Store.
Epic alleges that Apple has transformed App Store, a once-tiny digital storefront, into an illegal monopoly that squeezes mobile apps for a significant slice of their earnings, which Apple denies.
Epic wants to topple the so-called ‘walled garden’ of the App Store, which Apple started building 13 years ago as part of a strategy masterminded by co-founder Steve Jobs.
App Store brings in billions of dollars each year while feeding more than 1.6 billion iPhones, iPads and other devices made by Apple.
Both Apple CEO Tim Cook and Epic CEO Tim Sweeney will testify in a Oakland, California federal courtroom today, kicking off a trial expected to last most of May.
An Apple logo adorns the facade of the downtown Brooklyn Apple store in New York. Apple is heading into a trial that threatens to upend the app store that brings in billions of dollars each year while feeding the more than 1.6 billion iPhones, iPads, and other devices at the core of its digital empire
The court case stems from Epic’s issue with Apple taking a commission of 15 per cent to 30 per cent on purchases made within apps, including everything from digital items in games to subscriptions.
Apple’s is one of the world’s most profitable companies with a market value that now tops $2.2 trillion, while privately held Epic’s estimated market value of $30 billion is puny in comparison.
Its aspirations to get bigger hinge in part on its plan to offer an alternative app store on the iPhone.
Epic Games apps, including Fortnite, were free to download on the App Store before August 2020.
However, users had usually been required to make in-app purchases when they begin playing.
iPhone and iPad users reportedly spent around $90 million on the in-app purchases in the space of three months in 2020.
However, Epic Games only received approximately $60 million of that revenue, as they are required to give a 30 per cent cut to Apple for hosting the games on their App Store.
So in July 2020, Epic rolled out a direct payment feature inside the games, which meant that they could avoid paying any profits to Apple.
Then in August, Apple removed all Epic Games products from its App Store amid a legal battle with the video game developer over in-app purchases. The ugly legal battle ensued.
In October, a California judge denied Epic’s request to reinstate Fortnite on Apple’s app store pending the outcome of the trial.
At that time, the judge, Gonzalez Rogers. asserted that Epic’s claims were ‘at the frontier edges of antitrust law’.
The North Carolina company was expelled from its app store last August, after Epic added a payment system that bypassed Apple.
Epic then sued Apple, prompting a courtroom drama that could shed new light on Apple’s management of its app store.
Neither side wanted a jury trial, leaving the decision to US District Judge Yvonne Gonzalez Rogers, Associated Press reports.
Much of the evidence will revolve around arcane but crucial arguments about market definitions, it says.
Epic contends the iPhone has become so ingrained in society that the device and its ecosystem have turned into a monopoly Apple can exploit to unfairly enrich itself and thwart competition.
Apple claims it faces significant competition from various alternatives to video games on iPhones, like the approximately 2 billion smartphones don’t run iPhone software or work with its app store – primarily those using Google’s Android system.
Epic has filed a separate case against Google, accusing it of illegally gouging apps through its own app store for Android devices.
Apple will also depict Epic as a desperate company hungry for sources of revenue beyond Fortnite, which has been a massive success for the firm.
Apple claims Epic merely wants to freeload off an iPhone ecosystem in which Apple has invested more than $100 billion over the past 15 years.
Estimates of Apple’s app store revenue range from $15 billion to $18 billion annually, although Apple – which doesn’t publicly disclose its own figures – disputes these estimates.
Instead, it has emphasised that it doesn’t collect a cent from 85 per cent of the apps in its store.
Under Apple’s current policy, it takes a 30 per cent cut of all in-app purchases in its App Store (pictured)
The commissions it pockets, Apple says, are a reasonable way for the company to recoup its investment while financing an app review process it calls essential to preserving the security of apps and their users.
About 40 per cent of the roughly 100,000 apps submitted for review each week are rejected for some sort of problem, according to Kyle Andeer, Apple’s chief compliance officer.
Epic will try to prove that Apple uses the security issue to disguise its true motivation – maintaining a monopoly that wrings more profits from app makers who can’t afford not to be available on the iPhone.
WHAT IS FORTNITE? THE FREE TO PLAY GAME LAUNCHED IN 2017 AND HAS TAKEN THE WORLD BY STORM
Fortnite is a game that originally launched as a disk back in July 2017 and was then turned into a free-to-download game by its developer, Epic Games, in September.
There are three forms of the game: ‘Battle Royale’, ‘Save The World’ and ‘Playground’.
Save the world is the original form of the game and is currently not available to play as part of the free-to-download game, instead it comes as part of a £30 ($40) extra.
It is a co-op mode with a story that’s playable solo or online with friends.
Fortnite is a battle royale-style survival shooter where players create a superhero avatar and compete against each other on a dystopian island
Users compete in teams of up to three to complete a variety of missions.
It is rumoured that the game will be added to the free-to-play version of the game in the future.
Whilst Save The World may be the original version of the game, its sister mode is by far the most popular.
Battle Royale is a game of survival where players create a superhero avatar and compete against each other on a dystopian island.
Each game, or ‘match’ as each competition is known, starts with 100 players.
The aim of the game is to be the last one standing. Users can form allegiances and play in small groups.
To enable this and the interactive experience, the game allows completely open communication between players.
Inspired by the Hunger Games novels and films, gamers search for weapons to help them survive.
Armed with quirky weapons and amusing dances, the game has swept across the gaming world, with children flocking to it.
While there is no exact figure on how many children play Fortnite, the game has so far pulled in an audience of over 125 million players.
Playground is the latest addition to the game and is a consequence free mode with more loot and unlimited respawning to allow players to get creative.
It involved groups of up to four people working as a team and the players can hone their skills as the practise in advance of entering Battle Royale where they will face better players.
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