Apple says Epic Games demands threaten iOS app security, privacy, quality
As part of its opening arguments, Apple says that its policies protect the privacy, security, and quality of the App Store, and claims that Epic sued only because it no longer wanted to pay Apple's commissions.
Credit: Apple
The Apple v. Epic Games trial kicked off on Monday, May 3 with opening arguments from both sides. The case stems from a lawsuit that Epic Games lodged against Apple after it baited the company into removing "Fortnite" from the App Store.
In her opening statements for Apple, Karen Dunn offered a counter-narrative to Epic Games' argument. She says that "Fortnite" revenue had begun to stall, but instead of innovating, Epic turned to litigation. Instead of hiring engineers, Dunn said, "Epic invested in lawyers."
"Epic, a $28 billion company, has decided it doesn't want to pay for Apple's innovations anymore," Dunn said. "So Epic is here demanding that this court force Apple to let into its App Store untested and untrusted apps and app stores."
The in-app payment system that Epic is contesting, for example, was asked for specifically by developers as tool. Apple says that Epic Games wanted a "side deal" for itself. And, failing to get it, decided to bring a legal case against Apple.
Apple currently charges 30% on app and in-app purchases, which Dunn says is an industry standard. Since the majority of apps on the App Store are free, most developers don't pay Apple anything. Dunn also brought up the different ways developers can monetize, including in-app advertising.
"The proposed market is too narrow because there are many, many, many platforms where consumers and developers engage in transactions: The Mac, iPhone or Android console to the PlayStation and the Nintendo Switch, which, by the way, does fit in your pocket."
The majority of "Fortnite" players are on other platforms, Dunn said. Apple's iOS ranks in either third or fourth place in most studies. She says that's a mark of a competitive market.
By allowing alternative app stores and side-loading, Dunn says Epic Games is asking Apple to turn iOS into Android -- removing its competitive advantage. She said that's something neither Apple nor its customers want.
More than that, Dunn also argued that Apple's effective commissions have actually dropped on the App Store. In 2019, the effective commissions for game apps was 8.1%, she said. For all apps, it was 4.7%.
Dunn mentioned the Qualcomm precedent, in which the Ninth Circuit rejected a lower court's opinion and concluded that it had erroneously imposed an antitrust duty to deal on Qualcomm.
In other words, the court ruled that Qualcomm has no general duty to deal with competitors. If Epic Games loses the case against Apple, the precedent could prove to be a major challenge to an appeal.
Those margin calculations, Apple says, only examine one part of the iOS ecosystem. For example, they don't include the software costs that Apple has to pay to make the App Store function. Some of those costs including developing APIs and other developer tools.
Apple also made it clear that its business model is shared by many other companies, including some that have previously allied with the Epic-adjacent Coalition for App Fairness. That includes Sony, Microsoft, and Nintendo.
"IF Epic prevails, other ecosystems will fall too," Dunn said.
Credit: Apple
The Apple v. Epic Games trial kicked off on Monday, May 3 with opening arguments from both sides. The case stems from a lawsuit that Epic Games lodged against Apple after it baited the company into removing "Fortnite" from the App Store.
In her opening statements for Apple, Karen Dunn offered a counter-narrative to Epic Games' argument. She says that "Fortnite" revenue had begun to stall, but instead of innovating, Epic turned to litigation. Instead of hiring engineers, Dunn said, "Epic invested in lawyers."
"Epic, a $28 billion company, has decided it doesn't want to pay for Apple's innovations anymore," Dunn said. "So Epic is here demanding that this court force Apple to let into its App Store untested and untrusted apps and app stores."
Privacy, security, and quality
Apple's lawyer argued that privacy and security on its platform dramatically outpaces it competitors. She also touted the opportunity that the App Store has created for developers while maintaining quality, trust-worthy apps for consumersThe in-app payment system that Epic is contesting, for example, was asked for specifically by developers as tool. Apple says that Epic Games wanted a "side deal" for itself. And, failing to get it, decided to bring a legal case against Apple.
Apple currently charges 30% on app and in-app purchases, which Dunn says is an industry standard. Since the majority of apps on the App Store are free, most developers don't pay Apple anything. Dunn also brought up the different ways developers can monetize, including in-app advertising.
Apple argues that Epic's market definition is too narrow
Additionally, Apple argues that Epic Games' definition of the market is too narrow because of multi-homing. She said that 95% of iOS users regularly use another device other than an iPhone, such as a Mac or a game console."The proposed market is too narrow because there are many, many, many platforms where consumers and developers engage in transactions: The Mac, iPhone or Android console to the PlayStation and the Nintendo Switch, which, by the way, does fit in your pocket."
The majority of "Fortnite" players are on other platforms, Dunn said. Apple's iOS ranks in either third or fourth place in most studies. She says that's a mark of a competitive market.
By allowing alternative app stores and side-loading, Dunn says Epic Games is asking Apple to turn iOS into Android -- removing its competitive advantage. She said that's something neither Apple nor its customers want.
More than that, Dunn also argued that Apple's effective commissions have actually dropped on the App Store. In 2019, the effective commissions for game apps was 8.1%, she said. For all apps, it was 4.7%.
Qualcomm precedent
During the opening statement, Dunn also argued that the Apple v. Epic Games battle is a "duty to deal" case. In other words, she says Epic Games is urging the court to force Apple to license its own intellectual property in a specific way.Dunn mentioned the Qualcomm precedent, in which the Ninth Circuit rejected a lower court's opinion and concluded that it had erroneously imposed an antitrust duty to deal on Qualcomm.
In other words, the court ruled that Qualcomm has no general duty to deal with competitors. If Epic Games loses the case against Apple, the precedent could prove to be a major challenge to an appeal.
Software costs
Apple also addressed the margin argument brought forth by Epic Games. The "Fortnite" maker, for its part, argued that Apple's commissions are unnecessary because its App Store margins are huge.Those margin calculations, Apple says, only examine one part of the iOS ecosystem. For example, they don't include the software costs that Apple has to pay to make the App Store function. Some of those costs including developing APIs and other developer tools.
Apple also made it clear that its business model is shared by many other companies, including some that have previously allied with the Epic-adjacent Coalition for App Fairness. That includes Sony, Microsoft, and Nintendo.
"IF Epic prevails, other ecosystems will fall too," Dunn said.
Comments
Epic is owned by Tencent, you know that company that also makes these movies that says how great the Chinese government is? And half of the board of Tencent have ties to the current Chinese government?
Hello people?
The largest Android app store in China is not from Google but... Tencent.
But we all know that Epic would still gripe, because they don't really want users to be able to install third party app stores, what they want is for iOS to be rewritten to suit their personal business model.
Contrast that to a PS5 game running on Switch. It can’t because both are unique enough to be incompatible.
The 2% loss for Apple isn't in terms of selling hardware, only in terms of selling software, which is a smaller part of Apple's business. In fact some people might actually buy more Apple hardware if it could run Android, so that's a financial win for Apple.
If Ford created and maintained the fuel distribution, helping station owners set up businesses, then yes. They should take a cut.
If Ford was liable from engine problems from bad gas, specially when the car is still under warranty, then they would make sure quality control was assured, end to end.
None of the above is voluntary work. Everything is a hassle, and you still get litigation.
Now drop the charade! iOS, iPadOS and tvOS are virtually the only platforms that are free of piracy. Answer me this one: how much is the commission of a pirated app?
If there ever was a instance of “penny wise, buck fool” for developers, it sure is this dismantling of the AppStore.
In reality most developers who are complaining most do not realize how things were done in the past and the cost to distribute software. Do they really think another store can do what Apple does at a lower costs and only charge 10%, think again, there are lots of costs to facilitate a transaction between the developer and consumer. It is not as easy as of setting up an FTP server and direct consumers to download something. As it was also pointed out Apple gives developers lots of free tool to manage all of this. I know developers pay yearly fee to be developers, but it small compared to what it would cost if you have to make all your own tools.
Also, the government can not force Apple to provide the technology they use to run their store which maintain all the security. Keeping with the car analogies, it would be like some knockoff part company going to the courts or government demanding Ford or any car company provide trade secrets so they can make an knockoff part. It there is no precedence for something like this. Epic does not want to create a store they just want a lower commission for themselves.