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”).