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Epic-Apple Courtroom Battle

You may not particularly care whether David (Fortnite) or Goliath (Apple) wins this slug-fest but, if Fortnite's owner (Epic - aka David) does, we all may get better prices for stuff we might want to download. Surely, that would be good news. Afterall, who likes - if proven - monopolistic abuse of power. (Apologies for all the brackets - but not the sling-shots.)

On Tuesday, a judge in California heard the opening arguments in what promises to be a drawn-out and consequential dispute. Appropriately, the legal confrontation is taking place online. On 28 September a court in California heard arguments, via video call, in a case that pits Apple against Epic Games, the maker of Fortnite, a mega-hit video game.

At issue is whether the tight control Apple exerts over the software that can run on its smartphones amounts to a monopolistic abuse of power. The verdict, when it comes, may determine what other digital marketplaces can and cannot do. It promises to be an epic battle, and likely to end up in the Supreme Court and OGN wonders what Trump's latest nominee, Amy Coney Barrett, might think of it.

However, Epic is not the first to challenge Apple’s software regime. But it's the most serious yet. It started in August, when Epic offered “Fortnite” players who use iPhones 20 per cent off in-game purchases if they paid Epic directly rather than through Apple’s App Store, which takes a 30% cut on most transactions made in iPhone apps. This violated Apple's App Store terms; “Fortnite” was duly unceremoniously ejected from the platform. Expecting this, Epic responded with the lawsuit.

Mark Patterson, an antitrust expert at Fordham University, sees parallels with Microsoft’s run-in with trust-busters twenty years ago. The software giant’s bundling of its web browser with its Windows operating system was eventually found to be anti-competitive. Apple exerts more power over iPhones than Microsoft did over Windows PCs, Mr Patterson says. But its share of the market for mobile operating systems is smaller than Microsoft’s was in desktops. That's likely to be at the heart of Apple's defence.

The epic Epic case (apologies!) may hinge on how the court defines the relevant market, says David Hoppe of Gamma Law, a firm of technology lawyers in San Francisco. In Apple’s view the App Store is part of a broader universe of digital platforms in which it can reasonably claim not to be a monopolist. Epic takes a narrower view, arguing iPhones are a market unto themselves.

When Steve Jobs launched the App Store in 2008, he didn’t think it would ever make much money. He was wrong. Although the company does not break out the platform’s financial results, it probably makes up the bulk of its services business, which account for nearly 20% of revenues. Seeing what a promising profit engine it has turned into, Apple’s late boss would doubtless have fought tooth and nail to hang on to it. Tim Cook, the current boss, is likely to do the same.

Source: Economist


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