Epic refutes Apple's claim 'Fortnite' lawsuit was marketing exercise
Epic Games has responded to Apple's latest filing in the ongoing "Fortnite" lawsuit, denying a claim that the lawsuit was instigated as a marketing campaign for the iOS version of the game.
On September 16, Apple filed legal documents with the US District Court for the Northern District of California ahead of a hearing for the legal saga scheduled for September 28. In that filing, Apple suggested the lawsuit was an attempt by Epic to revitalize "Fortnite's" popularity via an elaborate marketing campaign.
In the new filing, Epic counters Apple's statement that it had seen a near 70% drop of interest by July 2020 compared to October 2019, on the belief that Apple "cherry-picked" the data. Epic claims Apple used Google Trends data about search volumes, one that started from a "one-week spike" that took place in October that coincided with a popular in-game event.
"Fortnite users increased over that period," a reply by Epic CEO Tim Sweeney claims, with user engagement data from the developer itself said to show the daily active users of the game increased by "more than 39%" over the same period.
The filing continues by point at Apple's claim "it is no monopolist" by asking the court to view smartphones are "interchangeable" with computers and gaming consoles. Apple was effectively comparing iPhones to similar digital stores offered on other gaming platforms, including the similar sales and software ecosystems offered by Sony and Microsoft for their PlayStation and Xbox console families.
Epic responds by declaring "that assertion is contrary to basic antitrust principles and common sense: a Sony PlayStation does not fit in your pocket but a smartphone does." This argument uses an odd measure of comparison, as it could be argued that the Nintendo Switch is a Fortnight gaming platform that, while not easily pocketable, is still a highly mobile device.
Epic also urges the court to ignore Apple's claims that in-app purchasing is an "inseparable aspect of the App Store," due to many apps offering third-party payment processing in specific categories, and that in-app transactions can take place long after the app has been downloaded in the first place. The high demand from developers for third-party in-app purchase processing in the App Store is also touted, by a disclosure from Apple itself advising it has terminated at least 2,000 developer accounts over the matter.
Over the matter of Apple terminating Epic's access to the developer program, Epic claims it is "doing precisely what the Supreme Court has instructed that Epic is entitled to do: refuse to comply with anti-competitive contractual conditions," and that Apple has "no valid response."
Apple's repeated invocations of "privacy" and "security" as justifications for the account termination is also seen dimly by Epic, suggesting "Apple has not pointed to a single security issue relating to Epic's direct payment option, any of Epic's apps, or Unreal Engine."
Epic has a number of other smaller issues with Apple's claims, including correcting Apple on one assertion that Epic removed IAP from "Fortnite," when it actually offered it alongside its own payment system. A claim that Apple asserts Epic's August 13 release had security risks was also declared as false, as "Apple has not presented a shred of evidence that there is any security issue."
A disagreement is also made about an Apple declarant asserting that Epic breached an agreement with Sony to enable cross-platform play without consent in 2018. Epic points out that Sony enabled cross-platform play in September 2018, with "Fortnite" one of the first game to use it.
Apple's attempt to suggest Epic's own marketplace "charges users and developers a commission" similar to its own IAP system is also deflected by Epic. "The Epic Games Store offers developers the choice that Apple does not: they can use Epic's payment processor for in-app purchases, or they can use another payment processor and pay Epic nothing," the filing states.
There is also a mention of a claim by Apple that it placed "Fortnite" billboards in Times Square and LA Live at its expense, which benefited Epic. Epic instead claims the billboards actively promoted the availability" of DJ Marshmello's concert playlist on Apple Music.
On September 16, Apple filed legal documents with the US District Court for the Northern District of California ahead of a hearing for the legal saga scheduled for September 28. In that filing, Apple suggested the lawsuit was an attempt by Epic to revitalize "Fortnite's" popularity via an elaborate marketing campaign.
In the new filing, Epic counters Apple's statement that it had seen a near 70% drop of interest by July 2020 compared to October 2019, on the belief that Apple "cherry-picked" the data. Epic claims Apple used Google Trends data about search volumes, one that started from a "one-week spike" that took place in October that coincided with a popular in-game event.
"Fortnite users increased over that period," a reply by Epic CEO Tim Sweeney claims, with user engagement data from the developer itself said to show the daily active users of the game increased by "more than 39%" over the same period.
The filing continues by point at Apple's claim "it is no monopolist" by asking the court to view smartphones are "interchangeable" with computers and gaming consoles. Apple was effectively comparing iPhones to similar digital stores offered on other gaming platforms, including the similar sales and software ecosystems offered by Sony and Microsoft for their PlayStation and Xbox console families.
Epic responds by declaring "that assertion is contrary to basic antitrust principles and common sense: a Sony PlayStation does not fit in your pocket but a smartphone does." This argument uses an odd measure of comparison, as it could be argued that the Nintendo Switch is a Fortnight gaming platform that, while not easily pocketable, is still a highly mobile device.
Epic also urges the court to ignore Apple's claims that in-app purchasing is an "inseparable aspect of the App Store," due to many apps offering third-party payment processing in specific categories, and that in-app transactions can take place long after the app has been downloaded in the first place. The high demand from developers for third-party in-app purchase processing in the App Store is also touted, by a disclosure from Apple itself advising it has terminated at least 2,000 developer accounts over the matter.
Over the matter of Apple terminating Epic's access to the developer program, Epic claims it is "doing precisely what the Supreme Court has instructed that Epic is entitled to do: refuse to comply with anti-competitive contractual conditions," and that Apple has "no valid response."
Apple's repeated invocations of "privacy" and "security" as justifications for the account termination is also seen dimly by Epic, suggesting "Apple has not pointed to a single security issue relating to Epic's direct payment option, any of Epic's apps, or Unreal Engine."
Epic has a number of other smaller issues with Apple's claims, including correcting Apple on one assertion that Epic removed IAP from "Fortnite," when it actually offered it alongside its own payment system. A claim that Apple asserts Epic's August 13 release had security risks was also declared as false, as "Apple has not presented a shred of evidence that there is any security issue."
A disagreement is also made about an Apple declarant asserting that Epic breached an agreement with Sony to enable cross-platform play without consent in 2018. Epic points out that Sony enabled cross-platform play in September 2018, with "Fortnite" one of the first game to use it.
Apple's attempt to suggest Epic's own marketplace "charges users and developers a commission" similar to its own IAP system is also deflected by Epic. "The Epic Games Store offers developers the choice that Apple does not: they can use Epic's payment processor for in-app purchases, or they can use another payment processor and pay Epic nothing," the filing states.
There is also a mention of a claim by Apple that it placed "Fortnite" billboards in Times Square and LA Live at its expense, which benefited Epic. Epic instead claims the billboards actively promoted the availability" of DJ Marshmello's concert playlist on Apple Music.
Epic vs Apple -- Epic's Reply by Mike Wuerthele on Scribd
Comments
But still an intentional and self-inflicted mess, nonetheless.
- Width: 173 mm (6.8 in)
- Height: 102 mm (4.0 in)
- Depth: 14 mm (0.55 in)
- Volume: ~247,000 cubic mm or 15.0 cubic inches
With the Joy-Con attached the dimensions are:- Width: 238 mm (9.4 in)
- Height: 102 mm (4.0 in)
- Depth: 14 mm (0.55 in)
- Volume: ~340,000 cubic mm or 20.68 cubic inches
The iPhone 11's dimensions are: (Height and Width are reversed because it's normally held in a different orientation)- Width: 75.7 mm (2.98 in)
- Height: 150.9 mm (5.94 in)
- Depth: 8.3 mm (0.33 in)
- Volume: ~95,000 cubic mm or 5.84 cubic inches
Yes, there is a difference but I would say that the Switch is "easily pocketable." Since it has 2.5x or 3.5x more volume, you will need larger pockets.When the legality of something is questionable I welcome the role of the courts in resolving the question permanently. Although the courts can only interpret current laws, while the role of government is to create new laws. It's entirely possible that resolving this issue in a clear way may require new laws. I think the crux of the matter is that Epic wants Apple to be forced to change its operating system and services to suit their purposes. It's a fight over control. Apple is likely to win, but courts often come up with compromise solutions.
But Apple has one ace up its sleeve if Epic "wins." Apple can just shut down the App Store and revert to only Apple-branded software like it used to have when the iPhone first came out. That wouldn't stop developers from submitting apps to Apple to have them rebranded as Apple apps, but it would actually put MORE control into Apple's hands, not less. I don't think Epic really wants that, do they? If that happened, the only way Epic could get Fortnite onto iOS devices would be to let Apple brand Fortnite as "Apple Fortnite."
Frankly, I think this is a win-win for Apple. That is, Apple could be forced to shut down its App Store (saying that they won't permit the courts to micromanage the operating system) and then blame either Epic or the Courts for forcing the removal of the App Store resulting in allowing only Apple branded software onto iOS. Apple will look like the victim of an unjust government while winning all the control they ever wanted. I think Tim Cook and the shareholders should be drooling over this possibility.
In fact, Tim might even be asking his lawyers, "How do we lose this case, so I can regain complete control over the app store?"
The headline claims that Epic has refuted Apple's claims, but the article gave no evidence of that. Epic did file counter claims but they are just that, counter claims. Those counter claims have not been proven to be true / factual, which is necessary for an actual refutation to have taken place. Please refer to the definition of "refute": 1. to prove to be false or erroneous. 2. To prove (a person) to be in error. (Dictionary.com). In both cases thir needs to be proof, not just claims.
The gaming industry is watched like a hawk by many analysts because it is so economically and culturally important. Gaming is actually bigger than Hollywood now. By a mile. And this was before coronavirus shut down the movie industry. And gaming has a bigger economic reach because it drives both hardware and software. (Hollywood benefits from technological changes as opposed to driving or creating them.) So had there been a 70% drop in Fortnite - the biggest game in the world - then we would have heard about it long ago and from someone else other than Apple. Goodness, you had pop stars holding concerts in Fortnite because they can't tour right now. You also had trailers for major motion pictures to debut in Fortnite because - again - people can't watch trailers in movies. Now I do agree that while Fortnite was the frenzy in 2018 and 2019, the gaming story of this year has definitely been Animal Crossing. Problem is you need a Nintendo Switch to play Animal Crossing (and not all Switch owners bought it or even close). As far as free to play multiplatform games Fortnite is still #1 with nothing else coming close by a mile. Plus - thanks to the aforementioned COVID - gaming in general has gotten a massive boost, increasing the participation for even niche and declining franchises. So a 70% drop during the worst of COVID, as opposed to now when lots of places are reopening and kids are back in school?
So Fortnite being able to cite their own data plus nothing anywhere similar or close coming from any of the many other industry watchers and metrics following video game industry trends indicates that the ball is in Apple's court to prove their assertion, not Fortnite. Especially when Fortnite was on record
Granted, the Nintendo Switch uses a mobile hardware platform: it is the same hardware, drivers and Vulkan graphics stack as the Nvidia Shield K1 Android tablet. Even the dock providing connectivity for USB controllers and HDMI has been common on Android devices since at least 2011. But the software for Nintendo Switch is the same as is used for the Nintendo 3DS (with APIs added for compatibility with the Nvidia SOC drivers and Vulkan). As the Nintendo 3DS has absolutely nothing to do with mobile phones beyond several very good 3DS emulators being available for Android then no, the Nintendo Switch is not a mobile ecosystem. It is a console ecosystem that was implemented using hardware and API standards created for the Android mobile ecosystem, true, but the software ecosystem is from their already in existence 3DS console.
The Switch being portable, having Wi-Fi access and an app store is no big deal. Any number of handheld consoles - including the PlayStation Portable - have the same. Moreover, Windows 10, ChromeOS and even Linux tablets are very much a thing. They all have app stores supplied by their various operating systems and it is possible to add third party app stores to them all as well. Yet no one calls Windows 10, ChromeOS or Linux "mobile ecosystems" because they were all designed for and are primarily desktop, PC (and in the case of Linux ... workstation, server and cloud) operating systems.
Bottom line: no judge is going to accept Apple's argument that tries to draw an equivalence between a platform that is on nearly 1.5 billion mobile phones and tablets and runs - for example - video production, banking, engineering and diagnostic medical applications (iOS) and a platform that is on less than 70 million "Android tablets" for whom the only non-video game apps available are Hulu and YouTube .
The real case is this: Apple has an operating system and it wants to require developers who want to sell things on this operating system to obey certain rules (many of the rules follow industry standards like the 30% usage fee.) License agreements that enforce rules have been a common business practice for 50 years. Does Apple have the legal right to enforce any rules? Epic wants the court to force Apple to change its license agreement. Under what federal law should Apple be forced to change its license agreement? Epic keeps mentioning anti-trust laws. But haha, the US Supreme Court has said very clearly that monopolies in the entertainment business are 100.000% legal. That's the final court of the land. I'm sure you can look that one up on wikipedia. The only way to force the Supreme Court to act differently is to create a new constitutional amendment. What would you like that amendment to say? I will listen to anything you have to say.
I'm actually hoping that Apple utterly loses this case completely with an insane ruling like, "Apple cannot enforce any rules in any app store license agreement." If so, Apple will likely shut down its app store completely and switch to the model it had with the first iPhone: (1) no app store; (2) all apps come from Apple only. But I'm afraid Apple will easily win this case completely.
Which of the 500 App Store rules do you want revoked by the courts? All of them? Be specific.
Yeah Epic followed the rules for a decade(2010) and suddenly wants to play victim to the rules. It's obvious it was all pre-planned for about a year to gain access to Apple's 1 billlion+ user base they've acquired over 4 decades and into Apple's invention.
I still don't get why you want Apple to shut down their own invention. This will just hurt them too much in the short term.
Apple is better off using their cash horde to take gaming more seriously and take Epic out of the market completely, Steve Jobs style.
Apple's App Store helped make the iOS ecosystem the success that it is today. But Apple would have succeeded without the App Store - just look at the first version of the iPhone as proof of that. And now Apple can play the victim card if the courts declare its App Store rules to be illegal. It could say, "We tried, but the App Store is being pushed into a direction we refuse to take it, so we are shutting down the 3rd Party App Store now." And then Apple would have complete control over its own rules. They could charge anything they want to their software subcontractors: 30%, 35%, 40%. Money, money, money.
As a wannabe software developer myself (who has never sold anything yet) I don't really want the App Store shut down, but as a supporter of Apple as a profitable company it's an understandable idea. But the key for Apple is finding a way to do it without riling the public, and the only way to do that is to get the courts or the government to outlaw what Apple is doing. It's the only way.
Judges are supposed to follow the existing laws on the books. Are there existing laws that say a console maker can legally allow a single app store with a single payment system and a mobile phone maker cannot? Where is the legal basis for Epic's claim that a hardware maker for a phone or tablet is subject to different antitrust standards than a console maker?
Apple is not claiming that 70% gamers on all devices, has lost interest in Fortnite, so your points are moot. But Apple knows a trend when they see it. If interest is down on iOS devices, then Apple knows from past data, that there's a good chance that the trend is happening on all gaming platforms. Apple knows whether they are a leading or trailing indicator of a trend or maybe that what's happening is isolated to just iOS.
Epic revenue from Fortnite dropped 25% in 2019. It still $1.8B but less than the $2.4B, as it was in 2018. And all indication is that revenue is still declining even before their removal from the Apple App and Google play, stores. Epic was the number 3 game on computers and number 1 on game consoles in 2018. It is now in 2020, they are the number 6 game on game consoles and not even in the top 10 on computers. With over 70% of Fortnite players being on game consoles, only about maybe 15% of Fortnite players were on a mobile platform to begin with and my guess is because Fortnite does not have the same user experience on a small mobile device screen, as it does a large computer monitor and even larger flat screen TV. Even though it's free, die hard Fortnite players just can't fully appreciate a $20 (in real money) cool virtual outfit and $6 (in real money) cool looking pick axe that they paid for, while playing on a small screen. But even then, iOS Fortnite players still generated a good percentage of the revenue Epic got from players paying for virtual items in the Fortnite store.
But for Apple, Fortnite was the number 1 game in terms of revenue generated in their App Store. And I think it was still number 1 or maybe number 2, when Apple kicked Fortnite out for violation of their developers license. And for Epic, iOS players have generated close to $1B in revenue, since being included the Apple App store in 2018. Epic has no claim or proof, that the 30% commission Apple charges for access to their platform, has harmed their ability to make money from being on the iOS platform or harmed their ability to complete. Epic is just being greedy and think they should be able to make more money, at Apple's expense.
There are plenty of articles like this one if you do the search, where even if Fortnite players are not on the decline, how much they are spending in the Fortnite store for virtual items, definitely is.
https://www.cnet.com/news/fortnite-made-1-8-billion-last-year-but-its-still-a-game-in-decline/ ;
https://www.androidauthority.com/apple-fortnite-ios-revenue-1148204/
And none of the other gaming platforms are barrier free for game developers to develop for. Not even the PC or Mac. Licenses must be obtained from the platform owners, before they can develop for any of the gaming platforms. And if the license contains a 30% commission on sales, it's Epic choice as to whether it's worth it to be on that platform. So long as none of the platforms have monopoly control in the gaming device market, no judge or jury will rule that the 30% commission violates any anti-trust laws.
Now if Epic was into banking payments, video production or health monitoring software, then a judge or jury will exclude any of the gaming consoles as platforms that Epic can make money from with their software. Otherwise you are just bringing up a bunch of useless points trying to defend Epic's position. Epic claim that the Apple App Store might be a monopoly and subject to anti-trust violations, in no way proves that Apple has a monopoly in the gaming device market and thus hurt competition. In the gaming device market, which should be the only concern for Epic, none of the gaming platforms are monopolies and mobile devices are just another choice that game developers have to choose from, when deciding which platform to make money from. It is Epic's choice, if they no longer want to make money from iDevices. The judge or jury will have no problem with Epic making that choice. So long as Epic can still choose to make money by developing for the Switch, along with the X-box, PlayStation, Pc's and Android mobile devices.