Epic v. Apple, Day 1
Jason Snell, quoting Tim Cook:
The App Store and other parts of Apple are not cast in concrete. And so we can move and are flexible with the times.
Nick Statt, Ben Brody, and David Pierce:
On Monday, Apple and Epic Games will meet in court to decide one of the most consequential antitrust arguments in the history of the tech industry. The trial has been nearly a year in the making, following Apple’s removal of Fortnite from the App Store in August 2020. It’s arguably the biggest courtroom showdown Apple has engaged in since its smartphone patent war with Samsung nearly a decade ago.
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Epic v. Apple starts Monday and is estimated to last about three weeks. In total, each side will have 45 hours to present its case. Gonzalez Rogers has been overseeing the case since the beginning and will preside over the trial as well.
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Each witness will wait in a sort of green room before they’re called to the stand. Beyond that, each company also gets a “designated representative” who can be in the courtroom the entire time. That’ll be Tim Sweeney for Epic and Phil Schiller for Apple.
Via John Gruber:
Just in case there was any doubt whether Schiller, in his new role as Apple Fellow, was truly still in charge of the App Store — he is.
John Voorhees (also: MacRumors, AppleInsider):
There’s more to these disputes than Epic’s allegation that Apple violated antitrust laws and Apple’s claims that Epic violated its developer agreement. Underlying it all is the way the dispute was precipitated by Epic. The Fortnite creator’s actions don’t necessarily absolve Apple of antitrust violations, but Epic’s calculated orchestration of events leading to the dispute have not gone unnoticed by the judge presiding over the case and may influence the trial’s outcome. Coupled with Epic’s efforts to get regulators around the world to take up its cause and its very public crusade against the way Apple operates the App Store, it’s not surprising that the claims haven’t settled.
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The App Store itself may be on trial in the court of public opinion, but the issues in dispute before the judge are far narrower. I suspect that will leave many of Apple’s critics dissatisfied regardless of the result, especially since with inevitable appeals, the next few weeks is just the opening round in what promises to be a much longer dispute.
However, while the outcome of Epic’s lawsuit may not satisfy App Store critics, the intense scrutiny will likely be a force for positive change regardless, as we’ve already seen with changes such as modifications to the App Review Guidelines and the Small Business Program. Apple would undoubtedly deny those changes were made in response to the pressure of litigation, but it’s hard to imagine that the lawsuits and interest of regulators around the world haven’t at least influenced some of the positive changes to the App Store, which is a step in the right direction to making it a better option for all developers.
Sahil Iqbal (tweet):
As a startup founder, I would like to share the issues that the app store tax presents for us.
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What bothers me is the special treatment larger companies receive from Apple regarding the 30% cut.
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Users should at least be aware that they can get the same services for cheaper elsewhere.
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I pay a developer fee every year of $100, which is honestly overpaying for what value I receive from the app store.
Apple is a true business innovator: For more than a decade, they have been steadily perfecting an obscure anticompetitive tactic, turning a petty grift invented by console games companies into a global, cross-industry mechanism for extracting rents and centralizing control.
I’m speaking of App Stores, of course, and not just any app store, but one that’s illegal to compete with or switch away from.
An appeals court in California has ruled that Amazon can be held liable for products sold through its marketplace by a third-party seller, the Los Angeles Times reported. It’s the second major case in California where an appeals court has rejected Amazon’s long-held position that it is merely an intermediary between buyers and its third-party sellers.
In its proposed findings of fact and conclusions of law, Epic Games debunks Apple’s claim that it has not been able to increase (or even maintain) its App Store commission rate due to competitive constraints[…]
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But Epic’s list of de facto price increases is not even exhaustive.
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Once one has thought it through, it’s crystal clear: many (if not most or even all) third-party developers end up having to pay digital services taxes (“DST”) only because of Apple’s tying (of the payment system to the App Store as the only access route to iOS users), and wouldn’t owe those taxes otherwise.
Davide Vernizzi (via Hacker News):
[Apple does] a lot of bad stuff, but given the context, for me, they are an acceptable evil. I’ll explain.
Benedict Evans (via Hacker News):
Trust was a huge problem, distribution was a huge problem, and Apple solved both.
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So, regulatory intervention might look at side-loading and third party stores, but the focus has to be on Apple’s default store and Apple’s rules. I think it’s extremely likely that apps will be able to use their own payment systems, that Apple’s 30% will change, if not necessarily disappear, and that Apple will have to give third party apps the same kinds of hardware and integration access as its own services.
That leads to a lot of very fiddly product questions.
Mark Gurman (tweet):
Apple Inc.’s App Store had operating margins of almost 78% in fiscal year 2019, according to testimony from an Epic Games Inc. expert witness based on documents obtained from the iPhone maker.
The figure comes from Ned Barnes, a financial and economics researcher, who said he obtained documents “prepared by Apple’s Corporate Financial Planning and Analysis group and produced from the files of Apple CEO Tim Cook.”
Microsoft had been planning to cut its Xbox store cut to just 12 percent, according to confidential documents filed in the Epic Games vs. Apple case. The software maker details its store fees and changes in a document from January, where it also lists the 12 percent cut to PC games it announced this week.
Zach:
These depositions released from the Epic v. Apple trial are quite good. They give some perspective from the executive level of how they think about the App Store (I don’t think they’re super positive for Apple…)
this is now a live tweet thread
Phil Schiller in 2012, after a rip-off app hit #1: “What the hell is this?????
…. Is no one reviewing these Apps? Is no one minding the store?”
remember when Microsoft was trying to get Office on iOS and avoid the 30% cut? Here’s an email from Apple’s @pschiller stating “we run the store, we collect the revenue.”
The public call line allows anyone to dial in and listen to today’s proceedings, but the court didn’t manage to properly mute all participants for more than 20 minutes. The result was what sounded like a chaotic Discord call.
More than 200 participants were dialed into the public line, with many screaming “free Fortnite” or “bring back Fortnite on mobile please judge.”
1. The slide transitions during Epic’s opening argument using literal bricks stacking up are very funny
2. Apple really, really knows that iMessage keeps people on iOS, and that messages get lost when people switch to Android.
Did I miss anything?
Mostly I just hope after this trial that Epic and Apple can get back to making sure stuff like Unreal works well on the Mac and iOS. It’s been real unsettling how Unreal has not been part of the Apple Silicon campaign, given their market dominance.
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Apple tried to push a narrative today that Metal was something Apple did for Epic, and that Epic should be thankful for. But it doesn’t mention how much legitimacy Epic has given to Metal. Especially on low volume platforms like the Mac.
Previously:
