Apple and the company behind Fortnite are in an epic battle antitrust. (Get used to these jokes)
Apple and Epic, the developer behind the hit game Fortnite, began arguments in a California courtroom Monday for their high profile antitrust lawsuit over the future of the iPhone and iPad App Store. In their opening statements, the two companies dueled over Apple’s policies, and whether its notoriously tight control over its devices constitutes a monopoly.
Epic argued Apple’s App Store policies, which require that developers submit apps to Apple for review before they can be sold or given away for free, was unnecessary. Epic also said the up to 30% commission Apple charges on some purchases of items in apps, such as a new look for a Fortnite character, raises costs on iPhone and iPad owners and locks them into its system.
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“Epic is not suing for damages,” one of Epic’s lawyers said. “Epic is suing for change, not just for itself, but for all developers.”
Apple pushed back, saying its App Store has helped fuel new multi billion dollar companies. “Epic speculates about a world where Apple is a different company,” Apple argued. “It’s asking the court to make a big bet that world is a better world than the one we live in. It’s not.”
The fiery speeches from both companies kicked off what may be one of the most important antitrust lawsuits in years. Apple’s iPhone is one of the most popular consumer products ever made, with more than 1 billion of them being used today. That success has helped grow Apple’s business to more than $274.5 billion last year, with Wall Street valuing it at more than $2 trillion. But Epic argues Apple’s success has come in part because of how it treats competitors on its devices, handicapping them while giving itself preferential treatment.
On its surface, the lawsuit looks like a quarrel between a multibillion dollar company and a two-trillion dollar company about who gets how much money when we all buy stuff in apps. But the outcome of this case could change everything we know about Apple’s App Store, and about how mobile transactions work on other platforms like the Google Play store as well. It could also invite further scrutiny from lawmakers, who are already debating whether tech giants like Apple and Google wield too much power.
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The companies are arguing before a California judge in what’s called a bench trial, meaning there is no jury. This allows the companies to plead their cases without having to educate and then sway a jury, setting up an easier appeals process when a decision is handed down.
The nature of a bench trial also means both companies will likely dig into the weeds of their arguments, tussling over theories that could inform antitrust debates for years to come.
“Epic’s antitrust lawsuit threatens the billions of dollars in revenue the App Store generates,” Jennifer Rie, a litigation analyst at Bloomberg Intelligence, wrote in recent research report. But Apple’s argument that its approach protects the security and privacy of users will weigh heavily on the proceedings, she added. “We’re skeptical that Epic will prevail in the long term.”
Although Epic says allowing competing App Stores and payment processing on iPhones would lower prices and foster competition, Apple said it would need to find new ways to recoup the development and operation costs for its App Store.
“Apple would still be entitled to collect a commission and developers would have to pay extra for services Apple now covers,” Apple argued. “The cost could be passed down to consumers, which will also create more friction from a transaction, which in turn will be bad for developers.”