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Apple and Epic Games enter high-stakes court battle that could change iPhone and App Store forever

Video game publisher Epic Games is fighting with Apple today over the iPhone maker’s decision to remove Fortnite from its App Store. If Epic wins, Apple could be forced to change its iOS software and business practices that some developers say have made the App Store a de facto monopoly.

The court battle, overseen by U.S. District Judge Yvonne Gonzalez Rogers, is expected to unfold over three weeks and feature testimony from Apple CEO Tim Cook, Epic Director Tim Sweeney and other senior executives from both companies. This is Apple’s first significant legal challenge since 1989, when Xerox sued the company for copyright infringement related to Apple Lisa and Macintosh computers. Apple largely won this fight, but the stakes today are even greater. Its App Store, which works seamlessly with iPhone and Apple’s iOS hardware, represents a $ 100 billion market. Depending on the outcome, the case could damage the Apple brand and give competing app stores access to the iPhone market.

The conflict now in play in court began last summer when Epic, the makers of the popular game Fortnite, implemented a direct payment mechanism in the iPhone version of the game that bypassed Apple’s 30% commission fee. charges for in-app purchases made in apps. bought on its App Store.

Apple responded to the alternative payment option by start Fortnite from the App Store for breaking store rules. Epic responded instantly with a lawsuit in which he asserted that “Apple’s withdrawal from Fortnite is another example of Apple wielding its enormous power” to maintain a monopoly.

Epic says the deal isn’t about profit – the hit game grossed around $ 700 million in the two years it was sold on the iOS store before being snatched by Apple.

Apple’s “walled garden”

The video game publisher argues that the iPhone platform is a single market that Apple unfairly controls because it owns the App Store, iOS software, and the iPhone. This platform structure gives Apple an advantage, according to Epic, as consumers are required to use the iPhone’s payment processing system, which prevents developers from collecting payments directly. Developers, meanwhile, have no choice but to use Apple’s integrated payment system and accept the App Store pricing structure, the company argues. Epic claims that this fee structure costs consumers more in the long run.

Epic pits the closed ecosystem of the Apple iPhone against the fully open ecosystems of the PC platforms, as well as the Apple Mac computer, both of which allow software to be installed from a variety of sources. and none of which restricts the way consumers pay developers and ecommerce businesses. .

In addition to the lawsuit, Epic launched a massive public relations campaign, including a #FreeFortnite hashtag and a video mocking Apple’s famous “1984” commercial depicting a revolt against PC tyranny. Epic also helped create the Coalition for App Fairness, an industry advocacy organization with nearly 50 members – including Spotify, Tile, ProtonMail and Basecamp – who make similar arguments about the App Store and the power of Apple.

“When you become a monopolist, the normal rules no longer apply,” Basecamp’s David Heinemeier Hansson said in an interview with CBS News. “Apple has such control and dominance that it is no longer [a free market]. No one can go to Apple and try to negotiate different terms with them, because Apple just has all the power. ”

Can developers go elsewhere?

Apple’s counter-argument is that developers are not required to publish products through the App Store and can distribute software and games on a variety of competing platforms, including Android’s operating system. Google, Nintendo’s eShop, Sony’s PlayStation Market, and Epic’s Game Store, which runs on macOS. and Windows.

Apple also claims that its 30% commission for in-app purchases is the same rate charged by the company’s competitors, and small developers who make less than $ 1 million a year pay only a 15% commission. Apple says all developers can also run web apps on iOS and charge customers at no cost using browsers running on the iPhone.

Cook recently told the Toronto Star that allowing third-party app stores on the iPhone would threaten iOS security and undermine consumer confidence in Apple by turning the App Store into a “flea market.”

“At the heart of Epic’s complaint is that they would like the developers to each enter their own payment information. But that would make the App Store a flea market and you know how much confidence you have in the market. flea, ”Cook said.


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