The Epic Games vs. Apple lawsuit court case over Fortnite and third-party payment processors on the App Store has concluded; though it is unknown when a verdict will be reached.
GamesIndustry.biz reports the final testimonies and closing remarks were given on May 21st, including from Apple CEO Tim Cook. Epic Games’ counsel Gary Bornstein (of Cravath, Swaine & Moore) closed on how he recognized the court’s decision could impact the mobile gaming industry.
“Epic acknowledges that this is an important case, that there’s an important set of conduct, and that a remedy… Of the sort that Epic has requested would be important and significant. But that is because the issue affects such a large number of consumers, such a large number of developers, and has persisted for such a long period of time.”
“Remedying that conduct is of necessity a more robust endeavor and exercise than your typical injunctive relief, because the conduct and the harm is more robust than the court would typically face.”
Apple’s counsel Richard Doren (of Gibson, Dunn & Crutcher) explained in his closing argument that Apple’s goal was to “make the court of aware of what Epic is asking”. Doren stated that Epic Games’ requested changes to the commission fee and direct payment structure of the App store and third-party app stores is “scary for Apple’s iOS customers, for Apple’s developer community, for Apple, and for this court.”
Doren homed-in on the security concerns ruling in favor of Epic Games could allegedly bring.
“Epic is talking out of both sides of its mouth on this [case], when the impact, the results and the way this will play out, the impracticalities, are plain and are simple.”
“The only thing Epic is willing for Apple to do to any app that are not submitted to the App Store is to do some sort — they don’t describe what — of malware review. That does nothing for the social engineering issues… And that is the iceberg under the water, not the tip of it, which in Apple’s case, because of its excellence, is malware.”
“The law protects technological incompatibility as pro-competitive. That is how consumers are given a choice… Apple’s business model was developed long before it had anything that anyone planned as market power, it served its customers and developers well, and Epic is now attempting to [change this] without any… guidances as to what the impact of that attack would be.”
Bornstein struck back in his permitted final remarks, mocking Apple’s defense as “We’re doing a really good job, your honor. Please let us continue to do a really good job;” and the undertone of “We’re the good guy. We’re the benevolent overlord of this ecosystem. Let us continue to do it without competition because it’s worked out okay so far.”
“That is not a defense under the antitrust laws,” Bornstein stated. “Competition is what’s supposed to guide excellence, not our just trusting that Apple will be excellent on its own.” Judge Yvonne Gonzales Rogers further challenged Bornstein on this point.
“You have them pretending to be a benevolent overlord and saying ‘We don’t think anybody should compete, we’re trying to do a good job.’ But the point is you have to compare, you have to decide whether what they’re doing is what it would be in the face of competition.”
Judge Gonzales Rogers thanked both counsels for their work, adding her own comments and addressed how she had interjected with difficult questions for witnesses on both sides. “I think I have a reputation for being a little tough but it’s all with the best intent to get to the right answer for folks.” She also stated she had “a lot of material” to work through.
Judge Gonzales Rogers also addressed reports made on her recent comments that the final decision may not happen until August 13th; when the inciting incident began one year prior.
“Not everybody got the joke. I’m not promising to have this by August 13th, but I want to get to this while the memory of the testimonies [and] the arguments are fresh, but we do have thousands and thousands of cases to review. We have 4,500 pages of testimony, so there’s quite a bit of work still to do.”
As reviewing everything in the case “will take a while,” the final verdict will be announced at a later date. GamesIndustry.biz stated that their legal experts observed that whichever party was ruled against would bound to appeal the decision.
As previously reported in August 2020, Epic Games announced that the price of V-Bucks, Fornite‘s in-game currency that can be bought with real money, would permanently reduced by 20% on all platforms. However, on Android and iOS, a new payment method was introduced.
Rather than buying the V-Bucks through Google Play and the App Store respectively, Epic Games launched the “Epic direct payment.” “When you choose to use Epic direct payments,” the announcement explained, “you save up to 20% as Epic passes along payment processing savings to you.”
This is due to Apple and Google collecting a 30% fee through all V-Bucks bought on their respective platforms. As such, the 20% drop has not been applied to purchases made through them. Epic Games state that “If Apple or Google lower their fees on payments in the future, Epic will pass along the savings to you.”
Shortly after this announcement, Apple and Google both removed Fortnite from the App Store and Google Play Stores respectively due to Epic Games violating their respective terms of service.
Epic Games issued legal action against both, citing that they had a monopoly over their stores on iOS and Android. Apple had allegedly threatened to terminate all of Epic Games’ App Store developer accounts and cut off tools for development on iOS and Mac.
Epic Games may have been expecting action from Apple however, having made a parody of Apple’s own 1984 commercial; appealing to their fans to support them. Further, the #FreeFortnite Cup was announced.
Apple later accused Sweeney of asking for exception from the App Store terms and conditions. Sweeney tweeted that Apple’s statement was misleading, and presented screenshots of the alleged emails.
In late August 2020, Apple terminated Epic Games’ App Store developer account, but Epic Games would successfully win a restraining order; denying Apple removing Unreal Engine-based games from the App Store. Epic Games later filed an injunction asking that Apple be prohibited from “taking any adverse action against Epic.”
In early September 2020, Apple issued a counter-suit against Epic Games, asking for compensation and damages. They claimed Epic Games’ actions were “little more than theft.” Both parties would later agree to a trial by judge rather than a jury, beginning May 3rd, 2021.
Judge Yvonne Gonzales Rogers gave a preliminary injunction in October 2020; with a restraining order against Apple preventing them from revoking developer tools from “Epic Affiliates;” such as those using the Unreal Engine for their game. The Judge dismissed two of Apple’s claims at a hearing on November 10th, including their claim of Epic Games committing theft. She told Apple lawyer Anna Casey “You can’t just say it’s independently wrongful. You actually have to have facts.”
Things were not smooth sailing for Epic Games either; as Sweeney drew ire for comparing the Epic Games vs. Apple lawsuit to the civil rights movement on social media. Epic Games also reportedly hired a lobbyist to propose a bill in North Dakota that would allow alternate payment methods on the App Store and Google Play.
Apple had previously asked Valve for six years of their sale’s data, any discounts, and when they became available on Steam. They claim this information was crucial for calculating the size of the mobile gaming market. Valve rejected this request, as they did not keep such records, and 99% of the over 30,000 games on Steam from third parties (including confidential data).
Despite the already extensive manhours (and Valve stating they did not compete in the mobile gaming space), Apple reduced their request to 436 games- those available on both Steam and the Epic Games Store. Valve rejected this as well, stating Apple had failed to produce evidence they needed it for their case. Nonetheless, Valve were ordered to surrender four years of sales data from the 436 games (rather than six years) for the case.
As the case played out, information about Apple, Epic Games, and other companies was revealed. Epic Games made the surprising comment that they believed the Epic Games Store would not be profitable until 2023, while Apple predicted it would not be until 2027.
Microsoft recently announced they were reducing their take from PC games on the Microsoft Store to 12%; but court documents revealed Microsoft had considered reducing their take from console games on the Microsoft Store as well. The court case was also not short on entertainment, with the court conference call accidentally being made public; and Fortnite fans raiding the call [1, 2, 3].