Fortnite maker Epic Games takes on Apple aiming to break the grip of the iPhone maker on its online marketplace
San Francisco (AFP) - Fortnite maker Epic Games accused Apple of turning its online marketplace into a monopoly “walled garden” that lures in developers and users then squeezes money out of them, its opening salvo in a blockbuster trial that got underway Monday.
Epic attorney Katherine Forrest began the case, which revolves around control of the increasingly important mobile app marketplace and could have enormous repercussions for the world of mobile tech.
Apple essentially planted a “flower in the walled garden (that) was turned into a Venus fly trap,” the lawyer said in opening statements in California federal court, claiming the iPhone maker gets profits as much as 78 percent from apps.
“The evidence will show unambiguously that Apple is a monopoly,” she claimed.
Epic, maker of the popular “battle royal” game Fortnite, is aiming to break the grip of the iPhone maker on its App Store, in the latest assault on Apple’s tightly controlled empire.
The case opening in federal court comes with Apple feeling pressure from a wide range of app makers over its control of the App Store, which critics say represents monopolistic behavior.
The two firms will be debating whether Apple has the right to set ground rules, control payment systems and kick out apps from its marketplace that fail to comply. Also at stake is Apple’s slice of revenue from iPhone apps of as much as 30 percent.
Apple, set to present its case later in the day, has staunchly defended its App Store, contending that its fee structure is the industry norm, and is fair compensation for giving developers a global storefront and keeping it secure.
“Our senior executives look forward to sharing with the court the very positive impact the App Store has had on innovation, economies across the world and the customer experience over the last 12 years,” Apple said in a statement before the trial opened.
“We feel confident the case will prove that Epic purposefully breached its agreement solely to increase its revenues, which is what resulted in their removal from the App Store.”
- Business model at risk -
A key element of Apple’s business model is at stake in the case, said Tejas Narechania, a University of California law professor.
“It’s going to tell us a lot about how we structure industries and the technology industry going forward,” he said.
“Which is how tightly can companies like Apple and Amazon and Google, how tightly can they vertically integrate their products?”
Analyst Dan Ives at Wedbush Securities called the case a “Game of Thrones court battle” with Epic looking to bypass the app platforms of both Apple and Google “while trying to gain support from other developers/app makers in a ‘groundswell movement’” against Apple.
Apple, whose CEO Tim Cook is seen in 2019, argues that its commission for its App Store is fair compensation for providing a secure storefront, as critics say the marketplace is "monopolistic"
But Ives said Apple has a strong defense case.
“Apple has successfully defended its App Store moat again and again with this time being no different in our opinion,” Ives said in a research note.
Epic, which is seeking to return to the App Store without being forced to use Apple’s payment scheme, is not alone in its criticism.
The European Union on Friday formally accused Apple of unfairly squeezing out music streaming rivals based on a complaint brought by Sweden-based Spotify and others which claim the California group sets rules that favor its own Apple Music.
A recently formed Coalition for App Fairness, which includes both Spotify and Epic, have called for Apple to open up its marketplace, claiming its commission is a “tax” on rivals
- Off the platform -
Apple booted Fortnite from its online mobile marketplace last year after Epic released an update that dodged revenue sharing with the iPhone maker.
Apple does not allow users of its popular devices to download apps from anywhere but its App Store, and developers have to use Apple’s payment system which takes its cut of up to 30 percent – a percentage which goes down after the first year and is waived for those with limited revenues.
Fortnite was kicked of the App Store after its maker Epic Games released an update that dodges revenue sharing with iPhone maker Apple
Due to the legal row, Fortnite fans using iPhones or other Apple devices no longer have access to the latest game updates.
After months of dueling legal filings, the trial opened before District Court Judge Yvonne Gonzalez Rogers.
The trial is being held in a courtroom across the bay from San Francisco, and witnesses are to include the chief executives of Apple and Epic.
Rogers has tightly restricted access to the courtroom due to Covid-19 risks, allowing the public to listen to proceedings via a phone line or Zoom.