Epic Games argues Apple has app monopoly, should make iOS more like macOS

Posted:
in iPhone edited May 3
In opening arguments in its case against Apple, Epic Games argues that the Cupertino tech giant has unnecessarily monopolized app distribution and in-app payments on the iOS App Store.

Credit: Epic Games
Credit: Epic Games


The Apple v. Epic Games trial kicked off on Monday, May 3 with opening arguments from both sides. The case originated from a lawsuit Epic Games levied against Apple for removing "Fortnite" from the App Store. Apple pulled the battle royale game after Epic implemented a direct payment system in violation of its guidelines.

Epic's opening arguments were that Apple has a monopoly on iOS app distribution and payments via the App Store. It added that its lawsuit is meant to change the ecosystem for all developers, since it says the "market will not self-correct."

As part of its argument, Epic's lawyer compared the iOS ecosystem to Apple's macOS. The company argues that Apple deliberately made iOS a walled garden ecosystem, and argues that it could have easily adopted a more open distribution akin to the Mac operating system.

Epic, for example, brings up times when Apple and its employees offered assurance macOS is a "stable, secure platform for apps." Ron Okamoto, vice president of Developer Relations is quoted as saying he hadn't heard anyone at Apple call macOS a less secure platform than iOS.

Profits, IAP, and 30%

Another key facet of Epic's argument concerns Apple's App Store profits. More specifically, Epic contends that Apple doesn't require such high commissions on app or in-app purchases because Apple's services margins are already massive.

Quizzically, the Epic attorney also likened Apple's App Store to a scenario where if the iPhone was a car, Apple would take 30% of what the driver had to pay for gasoline.

The "Fortnite" maker says that it doesn't need to turn iOS into Android. Instead, it can use the macOS model to provide a stable and secure app distribution platform that is more fair and open.

After framing in-app purchases as being a "must-use" for developers rather than optional because otherwise "no one will ever use it," Epic mentions emails where the 30% fee itself is questioned, and that there was some discussion at one point about reducing it down once the App Store reached and sustained a billion dollars in revenue.

To prove its point on profitability, Epic rolls out its previously-raised claim of the App Store having a near 80% profit margin for Apple.

App Store Review issues

The effectiveness of the App Store Review process is also questioned, with emails pointing out fraudulent and misleading apps are a consistent problem for it, and one that the review process fails to adequately address.

The argument then attacked how Apple is seemingly not completely fair in treating all developers equally. After raising CEO Tim Cook's antitrust hearing testimony stating "we treat every developer the same," an email is brought up advising "Hulu is part of the set of whitelisted developers" with access to a specific API.

Epic followed up with developer surveys and email saying the process is "arbitrary," "unpredictable," and "not consistent" in applying the rules.

Epic also accuses Apple of failing to know how much consumers end up spending on their devices across the device's lifetime.

"Fortnite" and the "Metaverse"

The legal team then contrasts Apple's ecosystem with Epic's own games store, in that it offers a variety of apps, including free content, to its users. While a games store primarily, Epic also distributes non-gaming apps and tools.

"Fortnite" is also raised, not only as a competitive game, but also as a social gathering space and where users can create content.

The "Metaverse" is mentioned as a way for consumers to undertake experiences within the game, such as live concerts or watching movies.

Swicthing, streaming, and closing

Epic then returned to app pricing, with videos of Apple executives being unaware of instances where customers switched from iOS to Android over the cost of an app, or a raised price of an app. The executives also were not aware of any internal study into switchers based on app pricing either.

In an argument targeting streaming gameplay services like Microsoft's Cloud as an alternative to buying games on the App Store, Epic brings up deposition quotes from Eddy Cue about latency. After saying latency is bad for gameplay, Cue confirms there were no internal studies into latency issues for streaming apps or for differences in functionality between streamed and native apps.

Scott Forstall is also referenced as saying native apps provide a better experience than web apps to users, due to using native graphics on a device, using fewer resources, and other advantages.

After using an analogy involving car ownership and paying at gas stations to explain what the case is about, Epic ends its argument by circling back to quotes from Steve Jobs mentioned earlier in the speech, that the App Store's purpose to "add value to the iPhone," and that "We love free apps." This is followed up by another message from Jobs about limiting developer access.
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Comments

  • Reply 1 of 47
    andrewj5790andrewj5790 Posts: 287member
    Guess what. Many many many many users will also not use an alternate App Store or non apple in app payments. I wouldn’t. The cache of trust apple has built with users has real value. 
    FizzyPandadedgeckocornchipgregoriusmBeatscrossladInspiredCodeMisterKitlolliverbaconstang
  • Reply 2 of 47
    rotateleftbyterotateleftbyte Posts: 1,510member
    Quote
    Quizzically, the Epic attorney also likened Apple's App Store to a scenario where if the iPhone was a car, Apple would take 30% of what the driver had to pay for gasoline.

    This is a load of baloney. I don't pay Apple a bent penny when I use one of the Apps on my phone to pay for the charging of my car.  The charging company had my card details. They don't take 30% when I use Apple Pay on my iPhone even for Gas/Petrol.

    I really hope that the Apple legal team objected to that statement. If they didn't then why not?


    dedgeckocornchipBeatslolliver
  • Reply 3 of 47
    Quote
    Quizzically, the Epic attorney also likened Apple's App Store to a scenario where if the iPhone was a car, Apple would take 30% of what the driver had to pay for gasoline.

    This is a load of baloney. I don't pay Apple a bent penny when I use one of the Apps on my phone to pay for the charging of my car.  The charging company had my card details. They don't take 30% when I use Apple Pay on my iPhone even for Gas/Petrol.

    I really hope that the Apple legal team objected to that statement. If they didn't then why not?


    I'm pretty sure you can't object to anything in an opening statement (or at least the rules are very different).  The opening statement is just a way for both parties to provide context for the evidence and witnesses they will introduce. You can't object to stupid analogies unless it's used as part of questioning witnesses.
    cornchipgregoriusmlolliver
  • Reply 4 of 47
    techconctechconc Posts: 149member
    Guess what. Many many many many users will also not use an alternate App Store or non apple in app payments. I wouldn’t. The cache of trust apple has built with users has real value. 
    I agree with you regarding the payment system.  I'm not interested in using a different payment system.  However, I wouldn't be opposed to a competing App Store.  I wouldn't use it for most things, but Apple has at times over stepped their bounds with regard to pulling apps, etc.   Pulling apps due to security concerns is perfectly fine.  Pulling apps effectively due to political bias is another.  Restricting what type of content these apps can have is also a bit much.  
    Japheyd_2h2pPeza
  • Reply 5 of 47
    Trey_LanceTrey_Lance Posts: 98member
    ‪If I was Apple, I would not mind spending a few billion to make an example out of greedy Epic @EpicGames .I would just ask Epic in court:”So you want to use our brand & services for essentially free? Do you think we are in communist China?Since Epic is owned by Tencent of China.”‬
    cornchipBeatslolliver
  • Reply 6 of 47
    Trey_LanceTrey_Lance Posts: 98member
    techconc said:
    Guess what. Many many many many users will also not use an alternate App Store or non apple in app payments. I wouldn’t. The cache of trust apple has built with users has real value. 
    I agree with you regarding the payment system.  I'm not interested in using a different payment system.  However, I wouldn't be opposed to a competing App Store.  I wouldn't use it for most things, but Apple has at times over stepped their bounds with regard to pulling apps, etc.   Pulling apps due to security concerns is perfectly fine.  Pulling apps effectively due to political bias is another.  Restricting what type of content these apps can have is also a bit much.  
    Again, EPIC does not have to use the Apple Store. They have their own or they can make their own or just use Google. 

    Why does Epic want to use the Apple store? To get access to the billion Apple users, which Apple has spent years and billions of resources building, and Epic wants it for free?
    Epic is acting like communist China and frankly, since they are owned by Tencent China, which is close ties to Chinese communist government, I would not be surprised if this is coming from the top to hit Americas biggest company 
    cornchipBeatslolliverbaconstangh2p
  • Reply 7 of 47
    Trey_LanceTrey_Lance Posts: 98member
    Let me make this simple.

    if Epic can refuse what Apple is charging to use their store, then I can go into Costco , Walmart,  Safeway and sell my products regardless of what they say either.

    if you are buying what Epic is selling here, you have communist tendencies in you I am sorry 
    genovelleBeatsaderutterlolliver
  • Reply 8 of 47
    genovellegenovelle Posts: 1,174member
    I have aTrey_Lance said:
    techconc said:
    Guess what. Many many many many users will also not use an alternate App Store or non apple in app payments. I wouldn’t. The cache of trust apple has built with users has real value. 
    I agree with you regarding the payment system.  I'm not interested in using a different payment system.  However, I wouldn't be opposed to a competing App Store.  I wouldn't use it for most things, but Apple has at times over stepped their bounds with regard to pulling apps, etc.   Pulling apps due to security concerns is perfectly fine.  Pulling apps effectively due to political bias is another.  Restricting what type of content these apps can have is also a bit much.  
    Again, EPIC does not have to use the Apple Store. They have their own or they can make their own or just use Google. 

    Why does Epic want to use the Apple store? To get access to the billion Apple users, which Apple has spent years and billions of resources building, and Epic wants it for free?
    Epic is acting like communist China and frankly, since they are owned by Tencent China, which is close ties to Chinese communist government, I would not be surprised if this is coming from the top to hit Americas biggest company 
    Well that’s interesting. Maybe they should ban this idea as a threat to national security 
    Beatslolliver
  • Reply 9 of 47
    mcdavemcdave Posts: 1,632member
    What are the retail margins on petrol/gasoline? More than 30% I’m thinking.

    The macOS app distribution model is the past, the iOS one is the future.
    cornchipBeatscrossladlolliverurahara
  • Reply 10 of 47
    dedgeckodedgecko Posts: 169member
    The gas analogy is dumb. Electronic devices run on electricity.

    Apple doesn’t get a cut of our electric bill, unless paying with Apple Card, in which case they take the industry standard for processing the payment.  For credit card payment processing, it’s been a couple percent if I recall correctly. 

    For digital distribution, the industry standard has been 30%.  And it’s slowly been coming down in the typical race to find bottom… and subsequently a quest to subsidize the revenue to cover costs / lost profits.
    Trey_LanceBeatslolliver
  • Reply 11 of 47
    Trey_LanceTrey_Lance Posts: 98member
    mcdave said:
    What are the retail margins on petrol/gasoline? More than 30% I’m thinking.

    The macOS app distribution model is the past, the iOS one is the future.
    The Gasoline Analogy is purely idiotic by Epic, which car companies sell gasoline too? The proper analogy is a merchant wants shelf space at Costco, they need to pay what Costco wants because the merchant wants access to Costco members , same here, Epic wants access to Apple Users and ecosystem .

    this is so stupid to be even having a law suit 





    Beatslolliverbaconstang
  • Reply 12 of 47
    cornchipcornchip Posts: 1,848member
    If Epic wins this in the end (after appeals etc), it will be very, very bad news for a lot of businesses. 

    Hope these clowns get the smackdown they deserve. 
    Trey_LanceBeatscrossladlolliverbaconstang
  • Reply 13 of 47
    InspiredCodeInspiredCode Posts: 205member
    Quote
    Quizzically, the Epic attorney also likened Apple's App Store to a scenario where if the iPhone was a car, Apple would take 30% of what the driver had to pay for gasoline.

    This is a load of baloney. I don't pay Apple a bent penny when I use one of the Apps on my phone to pay for the charging of my car.  The charging company had my card details. They don't take 30% when I use Apple Pay on my iPhone even for Gas/Petrol.

    I really hope that the Apple legal team objected to that statement. If they didn't then why not?

    Wasn’t the actual quote. It makes sense in context. It falls short only in that the situation applies to apps, not games.
    This isn’t the actual quote and they certainly are not talking about literal gas. It makes sense in context. However it falls short in that the presented situation applies to apps, not games.
    edited May 3
  • Reply 14 of 47
    Trey_LanceTrey_Lance Posts: 98member
    cornchip said:
    If Epic wins this in the end (after appeals etc), it will be very, very bad news for a lot of businesses. 

    Hope these clowns get the smackdown they deserve. 
    Epic is owned by a Chinese company with huge Chinese Government ties. Now they are going after America’s biggest company. 

    Is that really hard for some of you to see?
    BeatsMisterKit
  • Reply 15 of 47
    applguyapplguy Posts: 134member
    mcdave said:
    What are the retail margins on petrol/gasoline? More than 30% I’m thinking.

    The macOS app distribution model is the past, the iOS one is the future.
    The average gross margins for retail gasoline in the USA is roughly 8 to 9%. Once the station pays overhead and processing fees the net margin can be pennies per gallon. It’s not always a great business to be in. 
    InspiredCodedewme
  • Reply 16 of 47
    InspiredCodeInspiredCode Posts: 205member
    ‪If I was Apple, I would not mind spending a few billion to make an example out of greedy Epic @EpicGames .I would just ask Epic in court:”So you want to use our brand & services for essentially free? Do you think we are in communist China?Since Epic is owned by Tencent of China.”‬
    The Chinese government has no stake in this. This is just conspiracy theory. Correlation is not causation. If anything the current AppStore model gives the Chinese government more leverage since they can demand Apple block apps.
    edited May 3 tenthousandthingsPeza
  • Reply 17 of 47
    applguyapplguy Posts: 134member
    Customers switched from iOS to Android because an app cost to much… I’d like to see that study too. 
    BeatslolliverPeza
  • Reply 18 of 47
    dewmedewme Posts: 3,611member
    Always love it when one business, business E, tries to tell another business, business A, how to run business A. I would so love to hear how Steve Jobs would have reacted to this kind of "lost in a parallel universe of demented reasoning" spew from Epic and its cabal of losers. I bet the full response would have taken all of two words, one of which starts with an "f" and the other being the word "off."  

    Hey, I think Epic should set me up with a $1000 per month spending allowance - just because I would kind of like having some extra spending money. They have lots of cash, or maybe just send me a $1000 prepaid gas card each month to fill up my iPhone Car, which kind of resembles a Honda with an iPhone plugged into it.

    But, this is not just about me, so all AI readers should get a $1000 per month stipend too. Maybe we can get Oprah to hand out the prizes from Epic. Look under your chairs.



    Beats
  • Reply 19 of 47
    BeatsBeats Posts: 2,299member
    Epic thinks they’re entitled to run Apple? What a weird company.

    Some quick facts just to add fuel to the fire:

    Sweeney Turdd is richer than Tim Cook.
    Fortnite sells character animations. Animations that already exist but are behind a paywall.
    Fortnite sells dance animations stolen from black artists without paying them a penny.
    Epic also pays a 30% cut to other companies but somehow only call Apple “greedy”.
    Trey_Lancelolliverbaconstang
  • Reply 20 of 47
    hammeroftruthhammeroftruth Posts: 1,038member
    If Sweeney did his homework, he would have discovered why Steve Jobs made a closed App Store. It was his distrust of Microsoft and Google that led him to this decision.  

    I can see if Epic has been losing money with their agreement with Apple, then they have a case, but they’re arguing they’re not making a ridiculous profit when they should be and they don’t want to use or pay for the services Apple provides when you sign up with them and feels they shouldn’t have to pay after agreeing to it in writing. 

    I would use an analogy describing Epic as a shoplifter who doesn’t want to pay the amount listed on the item they stole. Sure they would pay something, just not what is on the price tag and since the retailer wouldn’t sell it for that price, they’ll go ahead and steal it and in court prove they were going to pay something, just not the price of the item. 

    edited May 3 Beatslolliver
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