Posted on

Epic’s latest argument in its fight against Apple keeps antitrust issues front and center

Epic Games, the game engine developer and creator of the wildly popular Fortnite game, is keeping the focus squarely on antitrust issues in its lawsuit against Apple as pressures mount to rein in anti-competitive practices of the world’s largest tech companies.

Antitrust arguments are gaining ground on both sides of the political spectrum, which could present a more favorable environment for Epic to make its case.

Earlier this month the Trump Justice Department filed its antitrust case against Google even as Congress laid out its roadmap for how to limit the monopoly power of a quartet of trillion-dollar companies: Facebook, Amazon, Apple and Alphabet (the parent company behind Google).

Epic’s lawyers acknowledged in the filing that the company breached its contract with Apple, but said that it only took that step because Apple’s contract restrictions are illegal, according to the company.

“When Epic took steps to allow consumers on iOS devices to make those payments directly, it breached some of the contractual restrictions that Apple imposes on iOS developers,” the lawyers wrote. “Epic did so because those contractual restrictions are unlawful. Epic chose to take a stand against Apple’s monopoly to illustrate that competition could exist on iOS, and that consumers would welcome and benefit from it. Epic did so without advance notice to Apple because Apple would otherwise have used its monopoly control to prevent that competition from happening.”

Ultimately, the argument comes down to whether Apple can claim ownership of commerce occurring on the phones they make and through the marketplace that companies are forced to use to access the users of those phones.

“It’s a crazy, misguided view,” according to a tweet from Epic Games founder and chief executive, Tim Sweeney.

The argument that Epic is making to the court is that Apple’s contractual restrictions are anticompetitive and deny choice to developers and consumers.

From Epic’s perspective, it took the steps it did in creating an in-game marketplace that its players could access directly, to prove that the App Store is not a necessary part of the iOS ecosystem; “they are just the tools Apple uses to maintain its monopoly,” the company’s lawyers wrote.

“Apple has no right to the fruits of Epic’s labor, other than the rights arising under a contract. Consumers who choose to make in-app purchases in Fortnite pay for Epic’s creativity, innovation and effort—to enjoy an experience that Epic has designed,” the company claimed in its filing.

The legal confrontation between one of the world’s most valuable tech company and one of the tech industry’s rising (and incredibly popular) stars began in August when Epic Games introduced a new payment mechanism to its Fortnite app allowing gamers to purchase its in-game currency directly and bypass Apple’s in-app purchase framework.

The company pushed the same update to its Android game, as well. Both Apple and Alphabet responded by taking down the company’s Fortnite game from its app stores.

Earlier this month, Judge Yvonne Gonzales Rogers, kept a temporary restraining order issued in September in place which simultaneously protected Epic’s Unreal Engine from retaliation by Apple, while allowing Apple to keep Epic’s Fortnite game off of its App Store.

Read More

Posted on

Apple Does Not Need to Return Fortnite to App Store, Judge Rules

SAN FRANCISCO — A federal judge ruled on Friday that Apple did not need to reinstate the popular video game Fortnite in its App Store, in a blow to Fortnite’s parent company, Epic Games, which is locked in an antitrust battle with the tech giant over its app store fees and rules.

Judge Yvonne Gonzalez Rogers of the Northern District of California said in her ruling that Apple’s ban of the game could continue because Epic had violated its contract with Apple. There is “significant public interest” in requiring companies to adhere to contracts or resolve disputes through the normal course, she wrote.

But Judge Gonzales Rogers also said that Apple could not ban Unreal Engine, Epic’s developer tools, from its platforms because of the “potential significant damage to both developers and gamers” who rely on the software.

The mixed ruling showed the high cost of taking on a tech behemoth like Apple, even for an established company like Epic. The 116 million people who have accessed Fortnite through Apple’s systems will continue to be kept away while Epic and Apple prepare for a trial in the case, which is scheduled for May.

An Epic spokeswoman said the company “is grateful that Apple will continue to be barred from retaliating against Unreal Engine and our game development customers.” Epic will continue developing for Apple’s platforms and “pursue all avenues to end Apple’s anti-competitive behavior,” she said.

An Apple spokesman said the company was grateful that the court “recognized that Epic’s actions were not in the best interests of its own customers and that any problems they may have encountered were of their own making when they breached their agreement.” The spokesman added that Apple’s app store has been “an economic miracle” that has created “transformative business opportunities” for developers.

Epic’s battle with Apple comes as the largest tech companies face scrutiny of their power. On Tuesday, House lawmakers said Apple, Amazon, Facebook and Google had exercised and abused their monopoly power to stifle competition and harm consumers and recommended that the companies be restructured. European regulators have also opened an investigation into whether Apple’s app store rules are anticompetitive. And in the coming days, the Justice Department is expected to sue Google over anticompetitive search practices.

At the heart of Epic’s case is Apple’s and Google’s tight grip over smartphone apps in their app stores. Both companies require that developers use their payment systems and pay a 30 percent cut of any money they make in their apps.

“They think they can just decide arbitrarily what apps can exist, and what fees can be charged, and tax all commerce,” Tim Sweeney, Epic’s chief executive, said in an interview last month. “We came gradually to the realization that we had to fight this, not just by words, but also by really broad actions.”

Epic has said it wants Apple to change its requirements that apps use its payment system and shell out a 30 percent fee. It also wants to operate its own app store within Apple’s.

The companies began fighting in August, when Epic violated Apple’s and Google’s rules by directing Fortnite users to its own payments service. Apple and Google responded by pulling Fortnite from their app stores. Epic then sued both companies, arguing they were breaking antitrust laws.

Apple later also cut off its support for Unreal Engine, Epic’s software development tool that is used by thousands of game makers. Judge Gonzalez Rogers said on Friday that Apple must continue supporting Unreal Engine and could not retaliate against any of Epic’s other affiliated apps or products.

The fight has escalated over the past few weeks. Apple has accused Epic of seeking a special deal for itself, while Epic has accused Apple of cherry-picking out-of-context emails in its legal response.

Other companies have used the battle to criticize Apple. Microsoft filed a declaration in support of Epic and has announced a set of developer-friendly principles for its own app store. Facebook has also recently called out Apple’s 30 percent app fees.

Smaller app makers, normally wary of angering the tech giants, have found strength in numbers. In September, more than a dozen of them, including the music streaming service Spotify, the dating service Match Group and the Bluetooth tracking device maker Tile, formed a nonprofit group called Coalition for App Fairness to push for changes to the app stores.

In a hearing last month, Apple said it was willing to reinstate Fortnite to its app store before a trial if Epic would return to complying with its rules. Judge Gonzalez Rogers proposed an arrangement that would put Apple’s fees from Fortnite in an escrow account until after the trial. But Epic refused, arguing that doing so would be complying with a contract it views as unlawful.

“I didn’t buy that argument before,” Judge Gonzalez Rogers said in the hearing. “I’m not particularly impressed with it now.”

Posted on

Judge denies Epic’s request to force Apple to bring Fortnite back to App Store

The California judge in the legal skirmish between Epic Games and Apple has denied Epic’s request that Apple be forced to reinstate Fortnite in the App Store, but did affirm that Apple cannot take action against the Epic Games developer accounts used to bring Unreal Engine developers access to Apple devices.

The court’s decision re-affirmed its proclamation from late August in a court hearing where Epic Games’ lawyers sought to obtain a temporary restraining order after Apple informed the Fortnite developer that they would be kicking the company off the App Store and terminating all of their company accounts.

The judge noted that “[p]reliminary injunctive relief is an extraordinary measure rarely granted,” and detailed that they were granting in part and denying in part Epic’s request, noting that “Epic Games bears the burden in asking for such extraordinary relief.”

From the filing:

Epic Games has strong arguments regarding Apple’s exclusive distribution through the iOS App Store, and the in-app purchase (“IAP”) system through which Apple takes 30% of certain IAP payments. However, given the limited record, Epic Games has not sufficiently addressed Apple’s counter arguments. The equities, addressed in the temporary restraining order, remain the same.

This confirms that Fortnite will not return to the App Store before the trial begins; a court filing this week signaled that the two companies will go to trial on May 3, 2021.

Both sides aimed to take their win and ignore their loss in the mixed decision.

“Epic Games is grateful that Apple will continue to be barred from retaliating against Unreal Engine and our game development customers as the litigation continues. We will continue to develop for iOS and Mac under the court’s protection, and we will pursue all avenues to end Apple’s anti-competitive behavior,” an Epic Games spokesperson said in a statement.

“Our customers depend on the App Store being a safe and trusted place where all developers follow the same set of rules,” an Apple spokesperson told TechCrunch in an emailed statement. “We’re grateful the court recognized that Epic’s actions were not in the best interests of its own customers and that any problems they may have encountered were of their own making when they breached their agreement. For twelve years, the App Store has been an economic miracle, creating transformative business opportunities for developers large and small. We look forward to sharing this legacy of innovation and dynamism with the court next year.”

Read More