This is a very bad look on Apple. Regardless of the enforceability of their agreements, the sense of entitlement that underlies Apple’s position is shocking.

The claim that Epic has “lined [its] pockets at Apple’s expense” implies that Apple deserves to sit in the middle of every transaction that happens on their devices and take a margin. This is the world’s most valuable company we’re talking about here; assertions like this demonstrate an unbelievable lack of self-awareness.

Let’s also not forget that Apple already extracts huge amounts of money from developers even if they don’t make a cent on transaction margins.

It’s not possible to develop for iOS without a Mac, and therefore even the smallest developer making free apps has paid Apple for at least: one computer, one of each device class they develop for, and the cost of their developer account subscription. Large companies like Epic buy thousands of computers and test devices from Apple. The idea that anything is happening “at Apple’s expense” is preposterous.

Maybe next Toyota will decide that they deserve a percentage of Uber’s revenue because Toyota's cars help facilitate Uber’s business?

I really wish there was a third party - the customer - actually represented in this trial. Apple and Epic arguing over what is best for the customer, while clearly they are having their own interests in mind, screams for the actual customers to be represented.

The whole argument about them promoting an app „for free“ is a bit ridiculous. They clearly knew the amount of commission they were going to earn from pushing that app through their App Store - so please admit that you clearly didn‘t do this out of the good of your hearts.

The same goes for the portrayal of „look how much money they made through us“ - yes - and look at how much money they made you along the way. I mean if Epic made 600 million, than you made about 260 million - from the very same people that paid you for the hardware.

I think if the App Store is such a tremendous value, why don‘t you ask users to pay for access to that App Store directly. Let‘s see how valuable everybody thinks the App Store is when they actually have to pay an access fee directly to Apple.

Apple writes in their court filing: “Epic sought to enjoy all of the benefits of Apple’s iOS platform and related services while its ‘hotfix’ lined Epic’s pockets at Apple’s expense.”

It seems that Apple has forgotten that each iPhone user already paid Apple hundreds (if not thousands) of dollars for the iPhone itself. It is reasonable to charge developers for development tools, but if that's what you want to do, just charge them for development tools. Meanwhile, I bought an iPhone so that I can run the software that I like. If it costs money to develop a platform, it doesn't seem that strange to just charge that upfront when someone buys an iPhone.

“There is nothing anticompetitive about charging a commission for others to use one’s service,” Apple said in the filing.

What about forcing someone or some company to use a service (apple's payment systems)?

> it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.

Half true. EPIC doesn't really get any value from the App Store except data delivery, which they're more than willing to do themselves. Fortnite is popular enough that the app discovery part of the store is meaningless.

The thing that really annoys me about this entire argument is that the principal of the thing isn't really controversial. Apple provides a tonne of services (SDKs, marketplace, payment processing) that other people also provide and also charge for. It's not that controversial - in fact, Epic's Unreal Engine has the exact same revenue share terms as Apple. The only thing that's really controversial here is that 30% is quite a high share, and Apple has to pull out all the stops to protect that 30% becuase of how high a share that is.

I think it's a very hard push to claim Apple is a monopoly. It's just a damn good platform that's able to claim a disporportionate share of the revenue because it's so damn good. The whole moralistic histrionics from Hey, Epic, and Apple are total rubbish though.

I look forward to Epic's next set of suits against Sony and Microsoft, who offer basically identical terms for inclusion on the app platforms for Playstation and Xbox, respectively.

The perfect outcome according to me will be that you could be required to pay apple tax if you use app store to distribute the app, but the user should have a way to install any app outside the store and apple has to provide user a way to let them install it. This will have far reaching consequence for many devices like consoles, home assistants etc. I believe we are simply giving control of the devices we own for not much reason at all, only reason is that the manufactures want to earn after they sell the device.

It's as if Apple is on a mission to destroy the credibility and respect they had.

No company has pushed me more strongly towards the ideologies RMS (who I still think is a bit crazy) writes about than Apple.

At this point I’m convinced there needs to be a law against closed devices and closed software.

Couldn’t have said it better myself: “Epic’s lawsuit is nothing more than a basic disagreement over money,” Apple said in its filing Tuesday. “Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.”

Apple's aim with this is to make an example out of Epic, as if to say: "This is what happens when you don't toe the line, conform and everything will be fine".

That being said, this is scary and also shows how comfortable Apple feels in their position. I am hoping that someone as strong as Apple will come with a lawsuit and shake them up a bit so to speak.

Brief: https://www.courtlistener.com/recap/gov.uscourts.cand.364265...

What's the actual theory of the case of how Apple are owed damages here?

Obviously they're losing revenue from Fortnite but that would have happened if Epic just decided they don't like the rules and took the app down themselves instead of breaking them. I can't imagine Apple would be entitled to damages then and I can't see how they've lost more money than that.

The other obvious thing is legal expenses, but you don't throw them in as damages during the case right? That'd be settled based on the result and depending on the jurisdiction.

I guess I can see them getting a few hours of someone's wage for re-reviewing Fortnite after the changes and taking it down?

I feel like I'm probably missing something, does anybody know the actual position Apple would argue for damages from here?

In my experience bullies cry the most when they get hit back. Apple throwing a temper tantrum when somebody fights back fits that pattern.

Well, it certainly seems clear from a facts point of view at least, that Epic was engineering the plan to test Apple.

They prepared a release that contained the ability to bypass the payment mechanism. Then they did that, and told Apple that was what they were doing. And then launched a big marketing campaign to rally support for it.

At least in facts, this wasn't a sudden action by Apple to crush an unsuspecting little player.

For people saying this is just the iPhone and I can always buy from a different OEM, it's not about my individual choice.

Say I am a mobile bank or some other kind of service that needs to reach all my customers on mobile.

There are significant populations across the world on iPhone, so to stay competitive as something like a challenger bank, ignoring iOS is simply not an option.

If the argument is that Apple provides payment processing, this is not a benefit as it's the only option, i.e. does not win on the merits.

As for game consoles, they're not essential. Smartphones are.

Someone is asleep at the wheel here.

Can we please stop using paywalled sources?

Here's one that's not paywalled for me, if someone else has an issue with it I will try to find another decent source that's not paywalled.

https://www.washingtonpost.com/technology/2020/09/08/epic-ap...

Alternatively,

https://www.cnbc.com/2020/09/08/apple-seeks-damages-from-epi...

Does anybody else remember how well they used to get along?

Here's Epic demoing Fortnite at WWDC15: https://www.youtube.com/watch?v=ChIuImrOsaY

Ever since the Citadel and Zen Garden demos, I remember Epic getting a prime spot or mention at almost every WWDC, where they used their tech to showcase Apple's and vice versa, like the power of modern iPads and Metal.

What do you think must have gone down behind closed doors for their relations to have soured to this point?

Unless of course it's all a calculated stunt that ultimately benefits both companies.

If apple is countersuing for lost revenue due to fortnites in app payment system, does this mean apple will need justify the value of their 30% cut, and in turn potentially have a judge declare its too much?

Note: I am not a lawyer but I have been doing a deep dive into the legal background behind this case. Ultimately I believe the outcome of this case will depend on two questions:

1. Can Epic establish that iOS app distribution is in fact a valid antitrust market that Apple has monopoly control over?

Epic argues that Apple is abusing its "monopoly" over the iOS app distribution market. However, in an antitrust case you cannot simply declare an arbitrarily narrow market where the defendant is the only participant and expect the court to accept it. iOS app distribution is an "aftermarket" of the smartphone market, and as a general rule, US courts do not permit antitrust markets to be based on a single brand's product unless specific exceptions are met.

> "In general, a manufacturer's own products do not themselves comprise a relevant product market..... [A] company does not violate the Sherman Act by virtue of the natural monopoly it holds over its own product." Apple Inc. v. Psystar Corp.

The circumstances in which the courts have allowed a single brand's product to be treated as a valid antitrust market have usually involved situations where the customer purchased a product not knowing they would be locked into some aftermarket restriction, for example due to a change in contract or company policy. If, on the other hand, customers knew about the restriction ahead of time, could have purchased an alternative product without restrictions, and went ahead and purchased anyway, the market power deriving from that restriction is generally not considered a valid basis for an antitrust claim.

Of particular note is that courts routinely reject market definitions based on restrictions stipulated in EULAs that customers voluntarily agreed to when purchasing the original product. For example, in Blizzard Entertainment Inc. v. Ceiling Fan Software LLC, the court rejected the defendant's claim that Blizzard held monopoly power in the "WoW add-on software" aftermarket, because WoW customers explicitly agreed to WoW's EULA stipulating they would only used Blizzard authorized WoW add-ons when they purchased the game. Similarly, in Apple Inc. v. Psystar Corp., the court rejected Psystar's claim that Apple held monopoly power in the "hardware that runs Mac OS" aftermarket because customers "knowingly agreed to the challenged restraint" when they purchaed Mac OS.

Interestingly enough, I double checked and surprisingly the iPhone EULA does not appear to have language restricting app installation to the "App Store and other authorized sources only". If it did, I believe Epic would have trouble getting past here. However, even in absence of an explicit contractual restriction, the court permits an analysis of "whether a consumer's selection of a particular brand in the competitive market is the functional equivalent of a contractual commitment". This analysis is explained in Newcal Industries, Inc. v. IKON Office Solution which describes four relevant aspects to consider:

a) The existence of two separate but related markets. Epic alleges these are "smartphone OSes" and "app distribution". It's not clear to me whether these two markets need to be economically distinct (more on the meaning of this below), but it could be problematic for Epic if they do.

b) The allegations of illegal monopolization relate only to the aftermarket. (This is a given.)

c) Whether the source of the company's market power is based on contractual provisions obtained in the initial market or based on the company's relationship with its customers. Epic argues that in the absence of a EULA there is no contractual relationship, while Apple will presumably argue that there is a quasi-contractual agreement in place because they made the app installation policy very clear at the launch of the App Store and it has never changed.

d) Whether market imperfections prevent customers from realizing their choice in the initial market will impact their freedom to shop in the aftermarket. In other words, did customers "make a knowing choice to restrict their aftermarket options" when they decided to buy an iPhone instead of a different phone that allowed side-loading?

I think Epic is going to have a particularly tough time establishing (c) and (d). If the court concludes that customers purchased iPhones knowing that they would be restricted to installing apps from the App Store, then Apple's "monopoly" over iOS app distribution is based on the customer's knowing consent, and therefore will not be a valid basis for an antitrust claim.

We'll see what the court decides. But in any event, even if Epic succeeds in proving that Apple has a monopoly over iOS app distribution, the job is not done. They then need to prove that Apple used that monopoly to illegally restrain competition in another market, which brings us to question 2.

2. Can Epic establish that iOS app payment processing is a separate and distinct product from iOS app distribution?

In order to prove Apple illegally tied app distribution and payment processing together, Epic will need to show that the two are actually economically distinct products.

> "[T]here must be a coherent economic basis for treating the tying and tied products as distinct. All but the simplest products can be broken down into two or more components that are "tied together" in the final sale. Unless it is to be illegal to sell cars with engines or cameras with lenses, this analysis must be guided by some limiting principle. For products to be treated as distinct, the tied product must, at a minimum, be one that some consumers might wish to purchase separately without also purchasing the tying product. When the tied product has no use other than in conjunction with the tying product, a seller of the tying product can acquire no additional market power by selling the two products together." Jefferson Parish Hospital Dist. No. 2 v. Hyde

In Jefferson Parish, the Supreme Court ruled anesthesiological services were not economically distinct from hospital services because anesthesiological services were always sold in conjunction with other hospital services, and therefore tying the two together was not illegal. In Rick-Mik Enterprises, Inc. v. Equilon Enterprises, LLC, credit card processing was considered an essential component of a gas station franchise and therefore was not economically distinct from the sale of the franchise itself. The legal test for whether two tied products are economically distinct has historically depended on whether consumer demand exists for the tied product separate from the tying product, but it's not clear whether that test is appropriate here.

For the case of paid apps, there clearly aren't economically distinct products. If Apple distributes a paid app on behalf of a developer and collects a fee in exchange, the fee is the cost of using Apple's distribution service. Distribution and payment happen simultaneously, they are not separate services, therefore there is no tie between them.

Now, what happens if Apple initially distributes the app without a fee and (later) takes a fee when an in-app purchase is made? Does the act of deferring the payment from the download create two economically distinct products when before there was only one? Apple argues that it does not, and similar to Rick-Mik, in-app payment processing is simply a component of its app distribution service.

I don't know if this argument will hold up in court but it's certainly very interesting and probably venturing into uncharted territory as far as existing precedent is concerned. But if the court does decide that in-app payment processing services are not economically distinct from app distribution services, then Epic is going to have difficulties with their tying claim.

Overall these are very tough questions and as the judge said, it's not a slam dunk for either side. I tend to think Epic is fighting the uphill battle here, as existing US antitrust law seems like it favors the defendant in cases like this. If Epic does win, it's certainly going to open up a lot of similar questions for other companies that sell tightly controlled hardware and software. (Particularly on the console side, but also stuff like smart TVs and even cars.)

Just remember, everything that applies here also applies to Xbox, PSN and Nintendo stores.

If Apple loses and is forced to allow Tim Sweeney Store on its platform, then Microsoft, Sony and Nintendo must allow the same on their consoles.

Epic is a company that reserves the right to sell your data for marketing purposes, says so in their privacy policy.

Remember that on Android they first tried to workaround Google Play's limitations by distributing Fortnite outside the store. They caved later. So this isn't about having no ability to distribute Fortnite, rather it's about them wanting easy distribution without paying the tax that everyone else is paying.

I dislike Apple's walled garden approach very much, but on the other hand it's their app store and this is still capitalism. If you don't like it, as a consumer, buy another brand, and as a developer, avoid developing for Apple. Develop for Android, develop for the open web. Voting with your wallet still works, the problem being, of course, that Apple fans are happy with the current arrangement.

And seriously, I can't side with a company willing to sell people's data for marketing purposes. Sorry.

play.fortnite.com cannot come soon enough. React and Flutter are doing 120fps right? At least 60fps I know.

Are we gonna start arguing about Planet Fitness having their classes on Peloton bikes next?

Why are people demonizing Apple over this? Sure, they have made questionable decisions in the past but Epic clearly went into this in bad faith and absolutely deserves a slap in the face with a countersuit.

I think one big thing is that Fortnite is no longer available on iOS devices. I didn't think it was a big deal, how many people game on iOS?

But the little people in my life are missing the corporate synergy of Marvel and Fortnite for the new season. This makes just having iOS devices in your world less palatable and teaches a valuable lesson on walled gardens.

Saddly Fortnite is one of the rare games that is cross platform online playable. It took their weight to make that happen.

Wish Epic would work to make linux a more viable native gaming platform now (steam does a lot of work with Proton, but I think native might be better...).