
Apple countersues Epic, seeks punitive damages - psim1
https://www.wsj.com/articles/apple-countersues-fortnite-maker-epic-games-seeking-to-halt-in-app-payments-11599592017
======
bww
This is a very bad look on Apple. Regardless of the enforceability of their
agreements, the sense of entitlement that underlies Apple’s position is
shocking.

The claim that Epic has “lined [its] pockets at Apple’s expense” implies that
Apple deserves to sit in the middle of every transaction that happens on their
devices and take a margin. This is the world’s most valuable company we’re
talking about here; assertions like this demonstrate an unbelievable lack of
self-awareness.

Let’s also not forget that Apple already extracts huge amounts of money from
developers even if they don’t make a cent on transaction margins.

It’s not possible to develop for iOS without a Mac, and therefore even the
smallest developer making free apps has paid Apple for at least: one computer,
one of each device class they develop for, and the cost of their developer
account subscription. Large companies like Epic buy thousands of computers and
test devices from Apple. The idea that anything is happening “at Apple’s
expense” is preposterous.

Maybe next Toyota will decide that they deserve a percentage of Uber’s revenue
because Toyota's cars help facilitate Uber’s business?

~~~
ecf
> Maybe next Toyota will decide that they deserve a percentage of Uber’s
> revenue because Toyota's cars help facilitate Uber’s business?

There are many car manufacturers that Uber could choose from in just the same
way that there are many platforms that developers can develop for.

Stop trying to spread the idea that the ability to make apps for the iPhone is
an inalienable right.

~~~
paxys
There aren't many platforms there are exactly two. And the costs of switching
between them are significant enough that this argument holds less water by the
day.

~~~
jjcon
> there are exactly two

If we are talking about platforms and not codebases there are waaay more than
two.

iOS (App store)

Android (Google Play)

FireOS (Amazon App Store)

LineageOS (Fdroid)

One UI (Galaxy Store)

To name a few. These all have distinct and thriving marketplaces for apps with
decent market share (some can overlap). The code base they use is irrelevant
for this context.

~~~
asdfasgasdgasdg
How many of those are installed on more than 1% of mobile devices (however
broadly construed)? I think the answer is two. Amazon has like 10% of the
tablet market share, but the tablet market is like 1/20th the size of the
phone market.

Just to demonstrate that this is the variable that matters, consider the case
where there are exactly three devices that have each of the other marketplaces
installed on them, respectively. Would they present a meaningful competitive
alternative to the big two?

~~~
jjcon
> How many of those are installed on more than 1% of mobile devices

4/5 in the examples I gave.

Google, Apple, Samsung and Amazon all have decent market share.

~~~
phaus
Samsung's market is installed on a substantial percentage of phones but almost
no one on any of those devices uses anything besides the regular Google Play
store. So while you technically answered his question in the larger
conversation Samsung's app store isn't a competitive alternative.

I couldn't find robust stats on Amazon's market share overall but I did find
that they sold 5.3% of all tablets in Q3 2019. So if its true that the phone
market is 20 times larger than that it would mean its unlikely that The Amazon
App store is installed on 1% of all mobile devices.

~~~
wruza
So users do use playstore in the presence of the other store. Doesn't that
contradict the argument that they are poor non-tech walled-gardened who cannot
choose? This entire farce is about developers who want to control platforms
they do not own, on devices they do not own, with users who do not even want
to deal with them under rules other than playstore ones.

------
cf_
I really wish there was a third party - the customer - actually represented in
this trial. Apple and Epic arguing over what is best for the customer, while
clearly they are having their own interests in mind, screams for the actual
customers to be represented.

The whole argument about them promoting an app „for free“ is a bit ridiculous.
They clearly knew the amount of commission they were going to earn from
pushing that app through their App Store - so please admit that you clearly
didn‘t do this out of the good of your hearts.

The same goes for the portrayal of „look how much money they made through us“
- yes - and look at how much money they made you along the way. I mean if Epic
made 600 million, than you made about 260 million - from the very same people
that paid you for the hardware.

I think if the App Store is such a tremendous value, why don‘t you ask users
to pay for access to that App Store directly. Let‘s see how valuable everybody
thinks the App Store is when they actually have to pay an access fee directly
to Apple.

~~~
canofbars
The real problem here is that companies are forced to accept apples terms.
Because apple controls every level of the stack, to opt out of the App store
ToS you have to opt out of the store, the OS, and the hardware.

If there was a way to install apps outside of the store this would not be an
issue. Most users and developers would still use the app store since it
provides value but devs who feel that they can supply their own marketing and
payment processing can do it themselves.

~~~
applecrazy
> devs who feel that they can supply their own marketing and payment
> processing can do it themselves.

The issue I have with that is that then a ton of companies think it's a good
idea to ship a crappy "launcher" that needs to run on startup, taking up
resources in the background while providing little to no added functionality.
We can see that with PC games; it used to be just Steam, but now there's the
Epic Games Launcher, Origin, GoG, and a bunch of more obscure launchers that
need to be installed to play particular games.

~~~
simion314
And this is a good thing, competition between this stores is good for the
users, some users got free games, some developers got better deals.

The "needs to launch on startup" is FALSE , you can have this launchers set no
to start at all and you launch the game and the launcher will start if needed
(not all Steam games need Steam in background).

FYI GOG launcher is optional, you can just download the game from the website
with a browser and then install it as in old times.

Competition is good and except the Epic drama I did not see anyone complaining
the GOG, HumbleBundle, itch.io or downloading from Patreon is a bad thing for
PC. I expect though if Apple blocks all launchers on the new OSX for ARM then
an army of people will say that downloading a small game directly from Patron
is too complicated and insecure for the average Apple user mind.

~~~
danielheath
It's not a good thing that I need 6 stores installed to play the games I've
bought, each with their own updater pulling several gigabytes a week off the
net just to keep the store app up-to-date.

I'd be interested to see whether any jurisdiction would hand down a consumer
mandate for unbundling the DRM component from the storefront app; the former
only updates occasionally.

~~~
simion314
Better to have the option of 5 stores that you can launch when and if you want
then only have a Windows/Apple Store that will have more expensive games, will
censor stuff based on "american values", will DRM shit so you can't say swap a
.dll with something that works better(some old games that work bad on Win10
can be fixed by using a different directx.dll), you could not mod the games -
basically you are telling PC people that a console is the best thing because
it has 1 small advantage but it fucks you in 12 different ways(more expensive
stuff and no freedom)

~~~
Gorbzel
Simply put, none of the things you’ve said are better are actually better.

Launcher apps are garbage, but you just move right past that to one single
game that can be downloaded directly out of hundreds that can’t.

~~~
simion314
Fortnite is not the only game rejected by Apple. There are many small games
that have versions for Windows,Mac,Linux and Android but not iOS.

You are ignoring that except the exclusives you can game most of your games on
one store. I do not support exclusivity for one store either and I would
prefer I always had the option to buy the products directly from the
developer. Like my Intellij subscription I don't want that Microsoft or other
big american company gets 30% of the money this hard working developers
deserve because I am forced to use a middle man.

------
jrockway
Apple writes in their court filing: “Epic sought to enjoy all of the benefits
of Apple’s iOS platform and related services while its ‘hotfix’ lined Epic’s
pockets at Apple’s expense.”

It seems that Apple has forgotten that each iPhone user already paid Apple
hundreds (if not thousands) of dollars for the iPhone itself. It is reasonable
to charge developers for development tools, but if that's what you want to do,
just charge them for development tools. Meanwhile, I bought an iPhone so that
I can run the software that I like. If it costs money to develop a platform,
it doesn't seem that strange to just charge that upfront when someone buys an
iPhone.

~~~
Traster
> It is reasonable to charge developers for development tools, but if that's
> what you want to do, just charge them for development tools.

This isn't how the software development eco-system works. There are _tonnes_
of examples of providing free development tools with restrictions on use and
revenue sharing agreements. For example, there's this little known company
called Epic Games which provides the Unreal Engine for free- but with the
following clause:

> This license is free to use and incurs 5% royalties when you monetize your
> game or other interactive off-the-shelf product and your lifetime gross
> revenues from that product exceed $1,000,000 USD.

And Epic doesn't even provide quality control, a discovery mechanism, or
payment processing.

~~~
beaner
They seem not quite the same to me. A game built with Unreal Engine is
essentially powered by it and would not exist otherwise. A game deployed to an
iPhone could theoretically be acquired through an alternative app store or
just direct download. Apple's app store provides no utility to developers
other than being the forced walled monopoly that all developers must list
through.

The proper analogy to Epic charging for its game engine is Apple charging for
its developer licenses - which it already does separately from the app store.

~~~
simonh
So if stores don’t provide any utility over side loading, how come Epic gave
up on relying on side loading on Android, which allows it, and ended up on the
Play Store? It’s literally that exact scenario.

~~~
gamblor956
Epic still allows Fortnite to be sideloaded.

More importantly, Google does not prohibit sideloading. It simply does not
make it convenient to do it.

~~~
chipotle_coyote
I suspect the OP is referring to the fact that Epic is also suing Google,
because they consider the "inconveniences" that Google places on sideloading
to be a form of unfair, illegal restriction. This strongly suggests that if
Apple offered sideloading but still had the same fees and restrictions in the
official App Store, Epic would _still_ be suing them.

------
theflyingelvis
“There is nothing anticompetitive about charging a commission for others to
use one’s service,” Apple said in the filing.

What about forcing someone or some company to use a service (apple's payment
systems)?

~~~
strictnein
Such a weird argument too, as if there was a different service Epic could use
to reach > 50% of the US mobile market.

~~~
valuearb
iPhones market share is less than 20%.

~~~
tempodox
20% of what? That number doesn't mean anything without context. Also,
references?

~~~
strictnein
20% of global market share. ~50% of units sold in the US. > 50% of the app
market share.

For units sold: [https://www.counterpointresearch.com/us-market-smartphone-
sh...](https://www.counterpointresearch.com/us-market-smartphone-share/)

------
loktarogar
> it is a multi-billion dollar enterprise that simply wants to pay nothing for
> the tremendous value it derives from the App Store.

Half true. EPIC doesn't really get any value from the App Store except data
delivery, which they're more than willing to do themselves. Fortnite is
popular enough that the app discovery part of the store is meaningless.

~~~
rektide
Apple on the other hand gets plenty of value from Epic.

For example, 10 years ago, when Epic made the Citadel demo for Apple to show
their smartphones could run games. Ground breaking R&D work, gratis for Apple,
& legitimizing their devices.

[https://www.theverge.com/21405805/epic-
citadel-2010-annivers...](https://www.theverge.com/21405805/epic-
citadel-2010-anniversary-games-apple-app-store-mobile-smartphone-gaming-
platform)

We'll see how much more bad blood Apple can make with developers before people
start noticing & caring about the software they can't get on their i-devices.

~~~
kevingadd
If Unity and Unreal Engine disappeared from iOS you'd probably lose at least
50% of the games on that platform, if not more. Likely almost all of the top
revenue-generating titles. People use middleware like UE and Unity to
compensate for how difficult it is to ship games on Apple's platforms (along
with others) _instead_ of building for Apple's SDK. The citadel demo is the
tip of the iceberg.

~~~
mcphage
> to compensate for how difficult it is to ship games on Apple's platforms
> (along with others) instead of building for Apple's SDK.

Apple's SDK doesn't contain a game engine.

~~~
pjmlp
Right, it actually contains two game engines:

2D =>
[https://developer.apple.com/spritekit/](https://developer.apple.com/spritekit/)

3D =>
[https://developer.apple.com/scenekit/](https://developer.apple.com/scenekit/)

Alongside lots of other game related goodies,
[https://developer.apple.com/games/](https://developer.apple.com/games/)

~~~
rektide
Some seriously willful ignorance to pretend that a scriptable scenegraph is
the same as a game engine. Netcode, entity systems, loading/streaming systems,
matchmaking, achievements, level editors, material/shader editors, model
editors, physics, particle systems, lighting, sounds, voice chat, plugin
libraries/mods,... the game engine of today is a big thing, & well integrated.

Second, who would adopt a platform specific "game engine" like scenekit? Are
you going to rebuild your whole game to port it, is that the plan here? Apple
is categorically unable to compete with actual game engines exactly because
they dig their own hole, invent their own proprietary closed technologies
(metal, scenekit) up & down the stack. They aren't playing keep up with the
real tools, a game of "me too": they can't begin to compete with the real deal
even if they tried.

Surely you must be joking?

~~~
pjmlp
The same kind of people that adopt platform specific game engines like
PhyreEngine, and sign console exclusives.

Apple engines are so bad that Cocos2D-x is basically a copy of their features,
using C++ instead of Objective-C/Swift, one of the engines that Google and
Microsoft give first class on their platform SDKs.

Not every game engine needs to be a bullet point list copy of Unreal
capabilities.

And no I am not joking, contrary to many here, I had a past life in demoscene,
been a former IGDA member, previous GDCE attendee (London and Cologne), have
been inside a couple of known AAA publishers and have kept my contacts from
them.

~~~
rektide
You're right. It seems like a weird way to build to me, but I can confess to
that being a bias. Plenty of people do opt to build to platforms, & adopt
narrower tech. Go everyone, whatever you use.

------
Traster
The thing that really annoys me about this entire argument is that the
principal of the thing isn't really controversial. Apple provides a tonne of
services (SDKs, marketplace, payment processing) that other people also
provide and also charge for. It's not that controversial - in fact, Epic's
Unreal Engine has the exact same revenue share terms as Apple. The only thing
that's really controversial here is that 30% is quite a high share, and Apple
has to pull out all the stops to protect that 30% becuase of how high a share
that is.

I think it's a very hard push to claim Apple is a monopoly. It's just a damn
good platform that's able to claim a disporportionate share of the revenue
because it's so damn good. The whole moralistic histrionics from Hey, Epic,
and Apple are total rubbish though.

~~~
inopinatus
Sorry to flatly contradict you, but the size of Apple’s cut is not at all
controversial. It has never been a crime to be expensive.

The legal controversy is that Apple prohibit apps from advertising, linking
to, or even mentioning that external account management/payment/service sign-
up options are available.

This forces vendors to become complicit in misleading the consumer about their
options, an anti-competitive position that distorts a market.

Some journalists may choose to focus on the 30% out of sheer crassness. Don’t
be misled by sub-par reporting.

~~~
Traster
Do you think that I can put "Cheaper on www.mysite.com" in my amazon
description? Why would it be controversial to prohibit someone from
advertising a competing service on your platform?

~~~
inopinatus
You’re mistaking the platform for the product.

I bought an item through Amazon recently and it _did_ come with a bunch of
materials inviting me to visit the manufacturer’s website.

I bought an app through the App Store and it is _prohibited_ from inviting me
to visit the vendor’s website.

In contrast, I bought a MMORPG through the PlayStation store and the first
thing it did was direct me to the maker's account sign-up.

~~~
Traster
It's only prohibited to invite you to visit the website whilst you're still on
the Apple platform. If you bought a physical item via an in-app purchase that
item could include advertising for the external site -the exact same as
Amazon.

~~~
inopinatus
_I 'm_ not on the Apple platform. The product is _sold through_ the Apple
platform.

Do you think Apple own the apps that are installed on your phone? Do you think
they own your phone? Your ongoing relationship with a software developer? Do
you think _you_ are the product here?

The answer for me: no, no, no, and no, respectively.

------
samatman
I look forward to Epic's next set of suits against Sony and Microsoft, who
offer basically identical terms for inclusion on the app platforms for
Playstation and Xbox, respectively.

~~~
bhouston
Yeah, I saw this counter argument before, and I wonder the same thing, but
does intellectual consistency matter much in the court of law?

~~~
gpm
In this case it doesn't really, in general it does.

You aren't obligated to sue everyone breaking the law just because you sued
one person that did, which seems to be the sum of the "but Xbox and
playstation" argument. In that sense, literally not at all.

Intellectual consistency does matter in the sense that courts will... heavily
frown upon... you arguing X in one case and not X in another. But that hasn't
happened here.

~~~
nmfisher
I fully expect the court to ask the question though.

"Is there any difference between Apple and Sony/Microsoft/Nintendo?" is a
logical sequitur to "what's your market?" and "who holds the power?".

Epic might say yes, they might say no. Either way, I'm interested to hear the
reasoning.

------
YetAnotherNick
The perfect outcome according to me will be that you could be required to pay
apple tax if you use app store to distribute the app, but the user should have
a way to install any app outside the store and apple has to provide user a way
to let them install it. This will have far reaching consequence for many
devices like consoles, home assistants etc. I believe we are simply giving
control of the devices we own for not much reason at all, only reason is that
the manufactures want to earn after they sell the device.

~~~
mcphage
> The perfect outcome according to me will be that you could be required to
> pay apple tax if you use app store to distribute the app, but the user
> should have a way to install any app outside the store and apple has to
> provide user a way to let them install it.

Isn't that the current situation on Android, and Epic still sued them?

~~~
jjcon
You can also sideload on iOS (without jailbreak), I do it all the time but for
some reason no one is talking about that either.

~~~
YetAnotherNick
But you can need to do it every 7 days and it requires connecting to PC,
right?

~~~
jjcon
Nah you can use AltStore (or others) and it will auto renew your certs. I’ve
had an alternate YouTube app and an emulator sideloaded for months and haven’t
even thought twice about it.

------
anm89
It's as if Apple is on a mission to destroy the credibility and respect they
had.

~~~
adsjhdashkj
I felt like every poor quality controlled release they've had on OSX for the
last 10 years has been trying to do that.

I feel lost. Wanting to have a simple OS that lets me develop with unix tools
but also "just works". The expense i pay for Apple products no longer follows
this, for me.

~~~
mhh__
I agree. Apple are pretty much the only company in the world with the money,
engineering knowledge, and clout to do a privacy first _open_ ecosystem. On an
Apple product you are free only to what Apple says is Kosher, why? Their
customers will buy anything apple does, why not just go for it and be more
open?

~~~
valuearb
Because customers love the walled garden. An open version of iPhone would be a
disaster for Apple and its developers.

------
swiley
No company has pushed me more strongly towards the ideologies RMS (who I still
think is a bit crazy) writes about than Apple.

At this point I’m convinced there needs to be a law against closed devices and
closed software.

~~~
bzb5
“I like my newfound ideology so much, I think it should be written into law”

~~~
swiley
His argument is that the law should prevent this kind of abuse. That’s the
ideology itself.

~~~
bzb5
Is that what rms says? That his ideology should not be an option, but
mandatory? Honest question.

~~~
fsflover
[https://www.gnu.org/philosophy/free-software-even-more-
impor...](https://www.gnu.org/philosophy/free-software-even-more-
important.html)

------
m3kw9
Couldn’t have said it better myself: “Epic’s lawsuit is nothing more than a
basic disagreement over money,” Apple said in its filing Tuesday. “Although
Epic portrays itself as a modern corporate Robin Hood, in reality it is a
multi-billion dollar enterprise that simply wants to pay nothing for the
tremendous value it derives from the App Store.”

~~~
swiley
I said a few weeks ago this is _exactly_ the way apple would want the
conversation to go. That apple is asking for 30% is uninteresting (even
reasonable!) That they’ve sold the world a PC many people can’t leave which
they can control (to the point of deleting apps and data!) is what’s
absolutely insane about the situation.

------
jbirer
Apple's aim with this is to make an example out of Epic, as if to say: "This
is what happens when you don't toe the line, conform and everything will be
fine".

That being said, this is scary and also shows how comfortable Apple feels in
their position. I am hoping that someone as strong as Apple will come with a
lawsuit and shake them up a bit so to speak.

------
gpm
Brief:
[https://www.courtlistener.com/recap/gov.uscourts.cand.364265...](https://www.courtlistener.com/recap/gov.uscourts.cand.364265/gov.uscourts.cand.364265.66.0_1.pdf)

~~~
pier25
> _Left unchecked, Epic’s conduct threatens the very existence of the iOS
> ecosystem and its tremendous value to consumers._

~~~
projektfu
By that they mean if developers force Apple’s hand to pull the apps that
consumers want, those consumers might choose another device next time?

~~~
pier25
How would an Epic iOS app store make consumers not buy an iPhone?

~~~
projektfu
Let’s say Amazon joined in and started selling Kindle and Audible books
without using Apple’s 30% digital cut. Apple would have to pull the Amazon
app, possibly the Kindle app. Actually, they’d have to do that if Amazon
simply said, Apple won’t let this be sold here on reasonable terms, buy from
the website. Amazon would lose some, but Apple would also be crippling iOS.
Then Spotify joins in, and Tinder, and Duolingo. All of a sudden, Apple’s
platform looks pretty lame.

~~~
pier25
So what you're saying is that Apple wants to set up an example to maintain the
status quo?

~~~
projektfu
I’m saying Apple is inadvertently admitting that they won’t have an ecosystem
if they remove the apps that create it. Allowing digital goods to be sold at
market prices puts Apple’s digital goods in a bad competitive position, but
wouldn’t kill iOS or iPhone sales. However, Apple removing the apps will.

~~~
pier25
"We can't allow Epic to behave like this, otherwise we'll be forced to remove
apps from the AppStore and we really don't want to kill iOS with our own
draconian policies"

:)

------
mcintyre1994
What's the actual theory of the case of how Apple are owed damages here?

Obviously they're losing revenue from Fortnite but that would have happened if
Epic just decided they don't like the rules and took the app down themselves
instead of breaking them. I can't imagine Apple would be entitled to damages
then and I can't see how they've lost more money than that.

The other obvious thing is legal expenses, but you don't throw them in as
damages during the case right? That'd be settled based on the result and
depending on the jurisdiction.

I guess I can see them getting a few hours of someone's wage for re-reviewing
Fortnite after the changes and taking it down?

I feel like I'm probably missing something, does anybody know the actual
position Apple would argue for damages from here?

~~~
Traster
There is a material difference between costing Apple revenue by doing
something they're allowed to do and costing Apple revenue by breaching their
agreement. They cost Apple revenue by circumventing the in-app purchase system
and Apple will naturally want the lost revenue. My guess is they'll produce
figures saying "We made 30% of X revenue from in-app purchases over Y time
frame, this dropped to 30% of Z revenue after Epic breached our terms, so they
owe us 30% of X-Z + punitive damages because they did this deliberately".

~~~
invalidusernam3
But surely that position would only apply if Apple hadn't removed the game
from the app store? If myself as an indie dev breaches the TOS and my app
store account is suspended, surely Apple can't sue me for lost revenue because
they opted to suspend my account? Imagine the precedent that would set: Apple
could sue you for lost income if you break the store TOS causing your app to
be removed.

I think Apple would have had much more of an argument for lost revenue if they
had kept the game on the store. It would be directly quantifiable, they could
say "look, the game made x million and we received $0, we should have received
$y".

~~~
Traster
Oh, I see where you're coming from. No, the way that Epic have been suspended
is such that they can't put out any more updates, but people who already have
the game installed still have it, the game doesn't get deleted from your
phone, so people are still using it and still buying stuff direct from Epic.

~~~
invalidusernam3
Ah yeah that makes sense. In that case, Apple does have a pretty strong case
here, will be interesting to see the result

------
liability
In my experience bullies cry the most when they get hit back. Apple throwing a
temper tantrum when somebody fights back fits that pattern.

~~~
m3kw9
In my view Epic is the full grown capable adult wanting to live in his parents
basement for free.

~~~
kllrnohj
Except no, because Epic wants to move out entirely. They don't want to use
Apple's house (read: payments & app store) at all.

But Apple has everyone chained up in the basement.

~~~
nmfisher
> Except no, because Epic wants to move out entirely. They don't want to use
> Apple's house (read: payments & app store) at all.

Epic may want you to think that, but it's just not true.

My reasoning? They already tried it on Android, and it failed miserably. They
moved out the house entirely, taking their listing off the Play Store and
allowing side-loading via their website. I'm assuming they also handled
payments themselves, too.

A year or so, they came crawling back to Google, presumably due to a massive
drop in users.

It's pretty clear that side-loading is not a commercially effective means of
distribution, and publishers _need_ the App/Play Stores to get to users.

------
supernova87a
Well, it certainly seems clear from a facts point of view at least, that Epic
was engineering the plan to test Apple.

They prepared a release that contained the ability to bypass the payment
mechanism. Then they did that, and told Apple that was what they were doing.
And then launched a big marketing campaign to rally support for it.

At least in facts, this wasn't a sudden action by Apple to crush an
unsuspecting little player.

~~~
drivingmenuts
Epic’s big mistake was assuming that enough consumers care. Certainly Fortnite
is popular, but it’s not popular with a large enough percentage of the entire
iOS market to support that kind of action.

~~~
gpm
This was never going to be won through public opinion, Epic's pretty clear
goal from the start was to win this in court.

I can't imagine how big a backlash there would have to be for Apple to give up
on it's 30% cut voluntarily, and I don't imagine that Epic thought there was
any chance of this happening.

------
AsyncAwait
For people saying this is just the iPhone and I can always buy from a
different OEM, it's not about my individual choice.

Say I am a mobile bank or some other kind of service that needs to reach all
my customers on mobile.

There are significant populations across the world on iPhone, so to stay
competitive as something like a challenger bank, ignoring iOS is simply not an
option.

If the argument is that Apple provides payment processing, this is not a
benefit as it's the only option, i.e. does not win on the merits.

As for game consoles, they're not essential. Smartphones are.

------
GiorgioG
Someone is asleep at the wheel here.

------
arijun
Can we _please_ stop using paywalled sources?

Here's one that's not paywalled for me, if someone else has an issue with it I
will try to find another decent source that's not paywalled.

[https://www.washingtonpost.com/technology/2020/09/08/epic-
ap...](https://www.washingtonpost.com/technology/2020/09/08/epic-apple-
countersuit/)

Alternatively,

[https://www.cnbc.com/2020/09/08/apple-seeks-damages-from-
epi...](https://www.cnbc.com/2020/09/08/apple-seeks-damages-from-epic-for-
breach-of-contract.html)

~~~
digismack
WaPo is paywalled as well.

~~~
jayd16
You can read wapo in incognito mode but not the wsj.

------
Razengan
Does anybody else remember how well they used to get along?

Here's Epic demoing Fortnite at WWDC15:
[https://www.youtube.com/watch?v=ChIuImrOsaY](https://www.youtube.com/watch?v=ChIuImrOsaY)

Ever since the Citadel and Zen Garden demos, I remember Epic getting a prime
spot or mention at almost every WWDC, where they used their tech to showcase
Apple's and vice versa, like the power of modern iPads and Metal.

What do you think must have gone down behind closed doors for their relations
to have soured to this point?

Unless of course it's all a calculated stunt that ultimately benefits both
companies.

------
seanalltogether
If apple is countersuing for lost revenue due to fortnites in app payment
system, does this mean apple will need justify the value of their 30% cut, and
in turn potentially have a judge declare its too much?

~~~
gpm
No?

I mean, Epic will be able to argue that it was illegal, they were able to
argue that anyways. The exact value for the cut isn't really a legal issue
though, _if the cut is legal in the first place_ then the existing contract
will almost certainly hold and it will be 30%.

------
neonate
[https://archive.is/v93T1](https://archive.is/v93T1)

------
nodamage
Note: I am not a lawyer but I have been doing a deep dive into the legal
background behind this case. Ultimately I believe the outcome of this case
will depend on two questions:

1\. Can Epic establish that iOS app distribution is in fact a valid antitrust
market that Apple has monopoly control over?

Epic argues that Apple is abusing its "monopoly" over the iOS app distribution
market. However, in an antitrust case you cannot simply declare an arbitrarily
narrow market where the defendant is the only participant and expect the court
to accept it. iOS app distribution is an "aftermarket" of the smartphone
market, and as a general rule, US courts do not permit antitrust markets to be
based on a single brand's product unless specific exceptions are met.

 _> "In general, a manufacturer's own products do not themselves comprise a
relevant product market..... [A] company does not violate the Sherman Act by
virtue of the natural monopoly it holds over its own product." Apple Inc. v.
Psystar Corp._

The circumstances in which the courts have allowed a single brand's product to
be treated as a valid antitrust market have usually involved situations where
the customer purchased a product _not knowing_ they would be locked into some
aftermarket restriction, for example due to a change in contract or company
policy. If, on the other hand, customers knew about the restriction ahead of
time, could have purchased an alternative product without restrictions, and
went ahead and purchased anyway, the market power deriving from that
restriction is generally not considered a valid basis for an antitrust claim.

Of particular note is that courts routinely reject market definitions based on
restrictions stipulated in EULAs that customers voluntarily agreed to when
purchasing the original product. For example, in _Blizzard Entertainment Inc.
v. Ceiling Fan Software LLC_ , the court rejected the defendant's claim that
Blizzard held monopoly power in the "WoW add-on software" aftermarket, because
WoW customers explicitly agreed to WoW's EULA stipulating they would only used
Blizzard authorized WoW add-ons when they purchased the game. Similarly, in
_Apple Inc. v. Psystar Corp._ , the court rejected Psystar's claim that Apple
held monopoly power in the "hardware that runs Mac OS" aftermarket because
customers _" knowingly agreed to the challenged restraint"_ when they purchaed
Mac OS.

Interestingly enough, I double checked and surprisingly the iPhone EULA does
not appear to have language restricting app installation to the "App Store and
other authorized sources only". If it did, I believe Epic would have trouble
getting past here. However, even in absence of an explicit contractual
restriction, the court permits an analysis of _" whether a consumer's
selection of a particular brand in the competitive market is the functional
equivalent of a contractual commitment"_. This analysis is explained in
_Newcal Industries, Inc. v. IKON Office Solution_ which describes four
relevant aspects to consider:

a) The existence of two separate but related markets. Epic alleges these are
"smartphone OSes" and "app distribution". It's not clear to me whether these
two markets need to be economically distinct (more on the meaning of this
below), but it could be problematic for Epic if they do.

b) The allegations of illegal monopolization relate only to the aftermarket.
(This is a given.)

c) Whether the source of the company's market power is based on contractual
provisions obtained in the initial market or based on the company's
relationship with its customers. Epic argues that in the absence of a EULA
there is no contractual relationship, while Apple will presumably argue that
there is a quasi-contractual agreement in place because they made the app
installation policy very clear at the launch of the App Store and it has never
changed.

d) Whether market imperfections prevent customers from realizing their choice
in the initial market will impact their freedom to shop in the aftermarket. In
other words, did customers _" make a knowing choice to restrict their
aftermarket options"_ when they decided to buy an iPhone instead of a
different phone that allowed side-loading?

I think Epic is going to have a particularly tough time establishing (c) and
(d). If the court concludes that customers purchased iPhones knowing that they
would be restricted to installing apps from the App Store, then Apple's
"monopoly" over iOS app distribution is based on the customer's knowing
consent, and therefore will not be a valid basis for an antitrust claim.

We'll see what the court decides. But in any event, even if Epic succeeds in
proving that Apple has a monopoly over iOS app distribution, the job is not
done. They then need to prove that Apple used that monopoly to illegally
restrain competition in another market, which brings us to question 2.

2\. Can Epic establish that iOS app payment processing is a separate and
distinct product from iOS app distribution?

In order to prove Apple illegally tied app distribution and payment processing
together, Epic will need to show that the two are actually economically
distinct products.

 _> "[T]here must be a coherent economic basis for treating the tying and tied
products as distinct. All but the simplest products can be broken down into
two or more components that are "tied together" in the final sale. Unless it
is to be illegal to sell cars with engines or cameras with lenses, this
analysis must be guided by some limiting principle. For products to be treated
as distinct, the tied product must, at a minimum, be one that some consumers
might wish to purchase separately without also purchasing the tying product.
When the tied product has no use other than in conjunction with the tying
product, a seller of the tying product can acquire no additional market power
by selling the two products together." Jefferson Parish Hospital Dist. No. 2
v. Hyde_

In _Jefferson Parish_ , the Supreme Court ruled anesthesiological services
were _not_ economically distinct from hospital services because
anesthesiological services were always sold in conjunction with other hospital
services, and therefore tying the two together was not illegal. In _Rick-Mik
Enterprises, Inc. v. Equilon Enterprises, LLC_ , credit card processing was
considered an essential component of a gas station franchise and therefore was
not economically distinct from the sale of the franchise itself. The legal
test for whether two tied products are economically distinct has historically
depended on whether consumer demand exists for the tied product separate from
the tying product, but it's not clear whether that test is appropriate here.

For the case of paid apps, there clearly _aren 't_ economically distinct
products. If Apple distributes a paid app on behalf of a developer and
collects a fee in exchange, the fee is the cost of using Apple's distribution
service. Distribution and payment happen simultaneously, they are not separate
services, therefore there is no tie between them.

Now, what happens if Apple initially distributes the app without a fee and
(later) takes a fee when an in-app purchase is made? Does the act of deferring
the payment from the download create two economically distinct products when
before there was only one? Apple argues that it does not, and similar to
_Rick-Mik_ , in-app payment processing is simply a component of its app
distribution service.

I don't know if this argument will hold up in court but it's certainly very
interesting and probably venturing into uncharted territory as far as existing
precedent is concerned. But if the court does decide that in-app payment
processing services are not economically distinct from app distribution
services, then Epic is going to have difficulties with their tying claim.

Overall these are very tough questions and as the judge said, it's not a slam
dunk for either side. I tend to think Epic is fighting the uphill battle here,
as existing US antitrust law seems like it favors the defendant in cases like
this. If Epic does win, it's certainly going to open up a lot of similar
questions for other companies that sell tightly controlled hardware and
software. (Particularly on the console side, but also stuff like smart TVs and
even cars.)

------
theshrike79
Just remember, everything that applies here also applies to Xbox, PSN and
Nintendo stores.

If Apple loses and is forced to allow Tim Sweeney Store on its platform, then
Microsoft, Sony and Nintendo must allow the same on their consoles.

------
bad_user
Epic is a company that reserves the right to sell your data for marketing
purposes, says so in their privacy policy.

Remember that on Android they first tried to workaround Google Play's
limitations by distributing Fortnite outside the store. They caved later. So
this isn't about having no ability to distribute Fortnite, rather it's about
them wanting easy distribution without paying the tax that everyone else is
paying.

I dislike Apple's walled garden approach very much, but on the other hand it's
their app store and this is still capitalism. If you don't like it, as a
consumer, buy another brand, and as a developer, avoid developing for Apple.
Develop for Android, develop for the open web. Voting with your wallet still
works, the problem being, of course, that Apple fans are happy with the
current arrangement.

And seriously, I can't side with a company willing to sell people's data for
marketing purposes. Sorry.

~~~
nmfisher
This is less about Fortnite and more about a mobile Epic Games Store. That
being said, caving to Google and putting Fortnite back on the Play Store
dramatically undermines their case, because it shows that how important the
Play/App Stores are for distribution & eyeballs. Apple and Google can both
claim they invested heavily in that ecosystem for the benefit of publishers
and users alike.

I'm the first to criticize Apple for its attitude towards users and
developers, but I'm struggling to see how it falls afoul of the law. It's
their walled garden - don't like it? Don't play in it.

------
brentis
play.fortnite.com cannot come soon enough. React and Flutter are doing 120fps
right? At least 60fps I know.

------
baconandeggs
Are we gonna start arguing about Planet Fitness having their classes on
Peloton bikes next?

------
rbarnes01
Why are people demonizing Apple over this? Sure, they have made questionable
decisions in the past but Epic clearly went into this in bad faith and
absolutely deserves a slap in the face with a countersuit.

------
acomjean
I think one big thing is that Fortnite is no longer available on iOS devices.
I didn't think it was a big deal, how many people game on iOS?

But the little people in my life are missing the corporate synergy of Marvel
and Fortnite for the new season. This makes just having iOS devices in your
world less palatable and teaches a valuable lesson on walled gardens.

Saddly Fortnite is one of the rare games that is cross platform online
playable. It took their weight to make that happen.

Wish Epic would work to make linux a more viable native gaming platform now
(steam does a lot of work with Proton, but I think native might be better...).

