Epic Sues Apple and Google due to Fortnite getting pulled [2020-08-13, 2021-05-03]

A big difference with consoles is unless you have a digital only console, you can still buy a game from a physical shop, with apple the only way is to pay the 30% apple tax
 
A big difference with consoles is unless you have a digital only console, you can still buy a game from a physical shop, with apple the only way is to pay the 30% apple tax

I'm pretty sure no matter how you bought your console games, the game company pays the console vendor roughly the same amount of money. Actually, the game developers probably get less from physical copies because retailers generally take way more than 30%.
 
https://www.cnbc.com/2020/08/21/app...-side-deal-for-fortnite.html?__source=twitter


well_there_it_is_jurassic_park.gif

Here is Sweeny's response with the actual email he wrote:
 
Just force sideloading and third party stores down their throat, simplest solution.

Yes, in principle the situation is similar to consoles. But consoles are a tiny market, with much healthier competition. So in practice it isn't the same situation.

In what way is there more "healthier competition" in console games?

There are far more entities publishing apps. than there are those publishing console games.
 
Here is Sweeny's response with the actual email he wrote:
Here's Apple's response with the actual Opposition/Response to Motion they filled:
https://www.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.36.0_2.pdf

Small bit:

D. Epic’s Decision to Breach Its Agreements On June 30, 2020,
Epic emailed Apple requesting to offer a competing Epic Games Store app through the App Store that would allow iOS device users to install apps from Epic directly, rather than through the App Store and to offer payment processing options within Epic’s apps other than IAP. Schiller Decl. ¶ 8, Ex. D. On July 10, Apple responded that “Apple has never allowed this . . . we strongly believe these rules are vital to the health of the Apple platform and carry enormous benefits for both consumers and developers.” Schiller Decl. ¶ 9, Ex. E at 4. Despite this warning, on August 13, 2020, Epic made a deliberate choice to cheat Apple. See Epic’s Motion for a Temporary Restraining Order, Dkt. 17 (“TRO Br.”) at 8-9. Around 2am on August 13, Mr. Sweeney of Epic wrote to Apple stating its intent to breach Epic’s agreements: “Epic will no longer adhere to Apple’s payment processing restrictions.” Schiller Decl. ¶ 11. Hours later, Epic activated a secretly planted payment mechanism in Fortnite to slide a non-approved change into the app that blatantly evaded App Review. TRO Br. at 9; Schiller Decl. ¶¶ 11-12. In order to deliberately conceal the change from Apple, Epic changed the option on its own servers to enable the approved version of Fortnite to offer a non-compliant in-app purchase option. TRO Br. at 9. Epic’s breach was flagrant. Epic willfully “direct[ed] customers to purchasing mechanisms other than in-app purchase” and created a new “storefront” in contravention of the Guidelines. Schiller Decl., Ex. C ¶¶ 3.1.1, 3.2.1. 12 This is “egregious behavior” prohibited under the agreements that “can lead to removal from the Apple Developer Program.” Schiller Decl., Ex. H. Epic breached the License Agreement, Ex. F, by making changes without resubmission to Apple (¶ 6.1), installing a store or storefront (¶ 3.3.2), enabling purchases without using the In-App Purchase API (¶ 3.3.25), and more. Schiller Decl., Ex. I. Epic knew full well that, in circumventing Apple’s processes and breaching its contracts, it was putting its entire relationship with Apple—including its Unreal Engine and other projects—at serious risk. Epic made the calculated decision to breach anyway, and then run to this Court to argue that its customers were being damaged. All of this was avoidable if Epic had brought its antitrust case without breaching its agreements. It is hard to think of a case less worthy of the extraordinary relief that Epic seeks

9 Brian Barrett, Imposter Fortnite Android Apps Are Already Spreading Malware, Wired (Aug. 16, 2018), https://www.wired.com/story/imposter-fortnite-android-apps-already-spreadingmalware/.
10 Chris Smith, Epic Invented a Crisis So Fortnite Fans Would Support Its Lawsuits Against Apple and Google (Aug. 14, 2020), https://bgr.com/2020/08/14/fortnite-ban-iphone-androidapple-google-right-vs-epic/.
11 Jason Silverstein, Fortnite Security Flaw Exposed Millions of Users to Being Hacked (Jan. 16, 2019), https://www.cbsnews.com/news/fortnite-security-flaw-exposed-millions-of-users-tobeing-hacked/.


E. Apple’s Response

On August 13, Apple notified Epic that “your app is in violation of the App Store Review Guidelines” and identified the specific guidelines that were violated, including the use of external purchase mechanisms, “egregious” hidden features designed to evade Apple’s review, and other changes in features and functionalities. Schiller Decl., Ex. H. The email notified Epic that “your app has been removed from the App Store until we receive an update that is compliant with the App Store Review Guidelines,” inviting Epic to submit an updated version of Fortnite for review “which addresses all these issues.” Id. Epic does not dispute that this notice is correct and that it was blatantly violating the Guidelines. On August 14, Apple gave Epic notice that it also was in violation of the License Agreement, specifying each breach. Schiller Decl., Ex. I. The breaches included the introduction of new payment functionality with submission for App Review, downloading code to an app to add an unauthorized payment system, and allowing users to purchase items without using IAP. Id. Epic now argues that Apple has somehow stretched a dispute over Fortnite to include the Developer Program, but Epic does not dispute that Apple’s notice was correct and that Epic is blatantly violating the License Agreement, which put its participation in the Developer Program at risk. Apple’s notice is also consistent with how it treats other developers who violate this License Agreement in the same way. Schiller Decl. ¶ 16. 13 Apple then allowed Epic an opportunity to cure its breaches, which Epic has thus far refused. Schiller Decl. ¶¶ 15-16, Ex. I. Apple notified Epic that, if Epic did not cease its violations of Apple’s contractual terms and cure its breaches by August 28, Apple would exercise its right to terminate Epic’s Developer Program membership. Id. Epic has the right to appeal the decision to the App Review Board. Id. The offer to cure remains open. If Epic returns to compliance with Apple’s contracts and policies, Fortnite would be available, within days, on the App Store, and Epic would remain in the Developer Program to continue its work with Unreal Engine. 14 As Apple explained to Epic: “We hope that you are able to cure your breaches of the Apple Program License Agreement and continue to participate in the program. We value our developers and we want to see them all achieve success on the App Store.” Schiller Decl., Ex. I at 3
Epic’s action in forcing its own termination from the App Store has not deprived its customers of Fortnite. Tens of millions of iOS Fortnite players who have previously downloaded the video game “will continue to have access to it on their devices and will have access to any available in-app purchase products.” Schiller Decl. ¶ 17, Ex. H. And Fortnite remains “available on Microsoft Windows, macOS, [Sony’s] PlayStation4, [Microsoft’s] Xbox One and Nintendo Switch.” Sweeney Decl. ¶ 3.17 Despite Epic’s claims of an App Store monopoly, Mr. Sweeney is also tweeting about Fortnite’s availability on Samsung.18

13 Epic’s End User License Agreement contains similar provisions. End User License Agreement for Unreal Engine: https://www.unrealengine.com/en-US/eula/publishing at § 17 (providing for termination by Epic if the licensee “materially breach[es] any provision of this Agreement”).
14 Epic quotes Apple’s willingness to let Epic back in on the terms that applied to it previously and that apply to everyone else. (TRO Br. at 9.) As Apple stated: “We very much want to keep the company as part of the Apple Developer Program and their apps on the Store. The problem Epic has created for itself is one that can easily be remedied if they submit an update of their app that reverts it to comply with the guidelines they agreed to and which apply to all developers.” The Verge, Apple fires back at Epic: ‘We won’t make an exception’ (Aug. 15, 2020), https://www.theverge.com/2020/8/17/21373108/apple-response-epic-app-store-fortnitelawsuit.
15 Epic Games, Join the Battle and Play in the #FreeFortniteCup on August 23, https://www.epicgames.com/fortnite/en-US/news/freefortnite-cup-on-august-23-2020 (emphasis added).
16 Epic Games v. Google LLC, et. Al., 5:20-cv-05671-NC (complaint filed Aug. 13, 2020).
12 Without accepting Epic’s self-serving statements about the regularity of “hotfixes” as true, these arguments are a sideshow; Epic cannot seriously claim that the specific change it made did not constitute a flagrant and intentional violation of Apple’s policies and contracts by directing in-app purchases to be made outside the App Store. TRO Br. at 8-9 (admitting that the Developer Agreement and Guidelines prohibit in-app content from being sold or provided outside of Apple’s in-app purchasing mechanism).


17 Epic Games, FAQs: Where Can I Download Battle Royale? (last visited Aug. 20, 2020), https://www.epicgames.com/fortnite/en-US/faq. 18 Tim Sweeney (@TimSweeneyEpic), Twitter (Aug. 14, 2020, 7:44PM), 1294419706389045248[/MEDIA] (retweeting @SamsungMobileUS statement that “You know what’s epic? You can still download @FortniteGame Mobile”).
 
In what way is there more "healthier competition" in console games?

3 consoles and PC gaming with a healthy balance between them all. Not one company controlling access to most high income customers for software like Apple does for mobile phones (and tablets and to a lesser extent laptops).
 
3 consoles and PC gaming with a healthy balance between them all. Not one company controlling access to most high income customers for software like Apple does for mobile phones (and tablets and to a lesser extent laptops).

Apple probably has smaller marketshare in mobile devices compared to any console maker. Maybe bigger than PCs for gaming if you combine PC and console gaming markets.
 
Apple has risen around 20% marketshare in the US to hit 52.4%, which is around 105 million phone users, if I read the following correctly. From the graph it looks Apple iOS to be 52.4% of US market, with Google Android at 47% using May 2020 data.

https://www.statista.com/statistics...by-smartphone-platforms-in-the-united-states/

U.S. smartphone subscriber share by operating platform 2012-2020, by month
Published by S. O'Dea, Aug 17, 2020

Apple iOS continues to hold its large share of the smartphone operating systems’ market within the United States, claiming more than half of the market in May 2020. Apple’s share of smartphone users has risen around 20 percent since early 2012; however, their sustained growth in the United States goes against a global trend that has seen their market share of smartphone shipments drop to around 10 percent.

Apple growing at home
Apple, an American company with its headquarters in California, has developed the most valuable brand in the United States with more than 105 million iPhone users in the country. This figure is forecast to increase over the next few years and can in part be attributed to Apple smartphones ranking highly in customer satisfaction. Seven different models make up the total sales share of iPhones in 2019 – the biggest seller is the iPhone XR.

Android still the one to catch
Android, however, still holds the largest share of the United States smartphone operating systems’ market and has done for many years. Vendors Samsung, Motorola, and LG have all adopted Android as their mobile OS and sales of their devices make up around 50 percent of all smartphones sold in the United States. Sales of Samsung smartphones alone account for 28 percent of the sales market and this could rise in the future with studies showing their Galaxy series of devices rank highly for customer satisfaction among Americans.
 
Apple probably has smaller marketshare in mobile devices compared to any console maker. Maybe bigger than PCs for gaming if you combine PC and console gaming markets.
Apple makes about 2x what google makes from apps.
 
Apple makes about 2x what google makes from apps.

Because they make products which appeal more to more affluent buyers, who also are willing to spend more on apps. and services.

The average selling price of an iPhone sale is higher. So it attracts people who have more money to spend.


As for marketshare, Apple is like in the single-digits in a lot of European countries. Only one where they have a decent share is the UK.

The 50-55% that iPhone may have in the US, which I think fluctuates depending on the time of the year -- that is how new is an iPhone relative to the competition like Galaxy or Pixel or whatever -- still does not make the iPhone a monopoly in the US.

In any event, it appears Epic makes more money from Fortnite on consoles. Or at any rate, they don't make 50% or more of their revenues and profits from iOS.

Not that Epic can credibly claim their livelihood is at stake.
 
Apple probably has smaller marketshare in mobile devices compared to any console maker. Maybe bigger than PCs for gaming if you combine PC and console gaming markets.
But Apple is the more dangerous trust, because it holds all the margin. The console market is competitive, the mobile phone and tablet market are hopelessly broken at the moment.
 
But Apple is the more dangerous trust, because it holds all the margin. The console market is competitive, the mobile phone and tablet market are hopelessly broken at the moment.


Mobile phone market is broken?

It's matured and a lot of people are willing to go longer between upgrades but broken?

Tablet market isn't that big. iPad sales peaked in terms of volume a long time ago. Some people are trying them as laptop substitutes but that's about it. I personally use an iPad every day and have bought several over the years but I think most people are fine with a phone and a laptop.


I don't understand how margin makes Apple "more dangerous." That margin isn't guaranteed by any means. Sure they can squeeze suppliers maybe. But they leave a lot of price bands underneath them. They're not going to get great growth of iPhones priced over $1000.

So there's a lot of opportunity for decent phones in the $400-500 or even lower price range.

Apple is chasing maybe 5-10% of the market willing to spend over $1000 on a device every couple of years. Bulk of their sales are the $700 base iPhone 11 or the $400 iPhone SE. So far Apple hasn't tried to make their equivalent of the Internet Explorer and tried to kill Netscape. Or their version of Windows Media Player to kill RealPlayer or Quicktime for Windows.

Fortnite isn't some killer app. like Mario or Halo. Or the browser from 20 years ago or the video codecs from 10-15 years ago.
 
Because they make products which appeal more to more affluent buyers, who also are willing to spend more on apps. and services.

The average selling price of an iPhone sale is higher. So it attracts people who have more money to spend.


As for marketshare, Apple is like in the single-digits in a lot of European countries. Only one where they have a decent share is the UK.

The 50-55% that iPhone may have in the US, which I think fluctuates depending on the time of the year -- that is how new is an iPhone relative to the competition like Galaxy or Pixel or whatever -- still does not make the iPhone a monopoly in the US.

In any event, it appears Epic makes more money from Fortnite on consoles. Or at any rate, they don't make 50% or more of their revenues and profits from iOS.

Not that Epic can credibly claim their livelihood is at stake.

None of that is convincing evidence that Apple does not engage in anti competitive behavior in a market in which they are dominant.
 
And what's the evidence for the so-called anti competitive behavior?

And which market are you referring to that they dominate?

There is no law against being "dominant" in a market. Only if you're a monopoly in that market.

For instance, Amazon is dominant in the cloud services market but are they a monopoly?

Or Sony has a "dominant" market share in the current console market but are they a monopoly? If they were, they probably wouldn't be able to sign games exclusives to keep them off Xbox. But MS isn't complaining that Sony is engaging in "anti competitive behavior" are they?
 
Because only monopolists are regulated or prosecuted for being dominant and supposed anti competitive behavior.

Can you cite a non monopolist which was prosecuted for supposed anti competitive practices?
 
So Apple doesn't only want a 30% cut of sales though an app, they'll also block your app if nothing can be purchased through the app (either in app or through a browser) but you sell something on your own platform.

Apple blocked WordPress updates because it didn't have a in-app purchase option. Even removing access to the paid pages wasn't enough. Apple would only allow the app if WordPress would offer in app purchases and thus giving Apple their 30% cut.


Now it isn't a question about fair or not anymore. This is downright criminal.

Unfortunately I doubt Tim Crook will ever see the inside of a jail though.
https://www.bloomberg.com/news/arti...ove-to-force-wordpress-to-add-in-app-payments

"Since the developer removed the display of their service payment options from the app, it is now a free stand-alone app and does not have to offer in-app purchases," states Apple. "We have informed the developer and apologize for any confusion that we have caused."
 
Back
Top