In America, the future of the app store is at issue in court. At the beginning of the negotiations, both sides made it clear how much they contradict each other.
Apple and the “Fortnite” developer Epic Games have been arguing since Monday in a lawsuit in California that could change the app business on the iPhone. The computer game provider wants to operate its own “App Store” on the iPhone and Apple does not want to pay a fee for income from the sale of digital items. Apple, on the other hand, is defending the current system in which applications can only be downloaded from Apple’s app store. Among other things, this is necessary to protect users from fraud and software errors.
The dispute broke out in August. Epic no longer adhered to the requirement, which had been in force for more than a decade, that virtual items in its popular game “Fortnite” on iPhones can only be offered via Apple’s in-app purchases system. Apple keeps 30 percent of the purchase price.
Epic attorney Katherine Forrest compared Apple to an automaker that wants 30 percent of the price every time you refuel. Apple replied that the conditions are customary in the industry and that the investments in building the platform justified the levy. In addition, “Fortnite” players could buy digital content or the game currency “V-Bucks” elsewhere and use it on the iPhone – without losing anything to Apple.
What about X-Box & Co?
The first day of the trial was filled with the opening speeches and the questioning of Epic boss Tim Sweeney. He said, among other things, Apple’s rules harm “every facet” of the Epic business. He supports Apple’s right to offer a system for in-app purchases – but there must also be room for alternatives.
In the cross-examination, Apple’s attorneys Sweeney pointed out that Epic had no problem with being active on game consoles such as Sony’s Playstation or Microsoft’s Xbox on identical terms. He argued with different starting positions: Console hardware is considered a losing business, in which money must be earned through games. The iPhone, on the other hand, is highly profitable.
“Fortnite” currently has a total of 400 million players, said Sweeney. The Apple lawyers also emphasized that the consoles for Epic are a much more important source of money than the iPhone. For example, “Fortnite” had brought in six billion dollars on the Playstation by the end of 2020 and 3.5 billion dollars on the X-Box. On the other hand, Epic earned $ 750 million on the iPhone.
Meanwhile, Epic’s own app store is hundreds of millions of dollars away from being profitable, Sweeney said. He doesn’t expect black numbers there for three or four years.
Last summer, Epic smuggled its own buying mechanism in the iPhone app past Apple’s auditors and activated it in August. Apple then threw the app from the store. Anyone who has already installed it can continue to use it – and buy digital items directly from Epic without having to sell it to the App Store. He was not sure whether Apple would ban “Fortnite” from the app store after the action or give in, Sweeney said.
In its lawsuit, Epic accuses Apple of unfair competition on the grounds that Apple has a monopoly on app sales on the iPhone. Apple replies that the iPhone cannot be defined as an independent market, but that the games business must be viewed on different platforms.
Whose reasoning judge Yvonne Gonzalez Rogers follows on this question, could be a decisive factor for the outcome of the proceedings. At the same time, it can be assumed that the losing party will appeal.
Another key question is whether to consider the App Store as part of iPhone usage, as Apple argues. The iPhone group points out, among other things, that a centralized app store has the option of checking all applications.
Epic argues the app platform should be seen as a separate product. After all, Apple has always allowed software to be downloaded from sources other than its own app store on its Mac computers. Apple points out that the security requirements for smartphones are higher.
At the start of the trial, Epic lawyer Forrest accused Apple that the group had built a closed system around the iPhone to prevent users from switching to Android phones. Apple lawyer Karen Dunn countered that Epic demanded that the iPhone company let unsafe and unchecked apps on the platform. She also resorted to a graphic comparison: When asked about the market limitation, Epic behaved like a wine producer who files a competition lawsuit, but excludes the wine trade.
Spotify sues in Europe
The procedure shows parallels to the investigations of the EU Commission, which Apple accused of unfair competition in the app store last week. Apple is discriminating against other providers of music streaming apps, said competition commissioner Margrethe Vestager.
The Brussels authority sees, among other things, a problem that the sales of subscriptions in the apps must be processed via Apple’s payment platform. The group retains 30 or 15 percent of the income. Spotify finds it unfair that Apple, as a platform operator, has more money left over for its own music service because of this levy for the same subscription price.
In the Brussels case, too, Apple argued that users could purchase subscriptions without paying them on Spotify’s website and use them on their iPhone. Like Epic, the Commission regards the iPhone as a separate market for app distribution.