Is Epic Games’ confrontation with Apple turning into a lag? | California News
By MICHAEL LIEDTKE, AP Technology Writer
SAN RAMON, Calif. (AP) – If Epic Games hopes to dismantle the fortress surrounding Apple’s iPhone and its App Store, the video game maker will likely have to deploy heavier artillery before week two of a lawsuit threatening the 2 Apple’s trillion dollars. Empire.
So far, at least, Epic has struggled to prove its claims that the iPhone maker’s 13-year-old app store has become an illegal monopoly.
Epic, the creator of the popular game Fortnite, claims that Apple has chipped away at app makers by charging commissions ranging from 15% to 30% for in-app transactions because it bans other options on its iPhone , iPad and iPod. When Epic tried to evade commissions with an alternative payment system to Fortnite last August, Apple ousted it from the App Store to set up a legal showdown that could force it to lower its fees.
Apple maintains that the commissions are a reasonable toll paid by a minority of its store’s 1.8 million apps to help cover the more than $ 100 billion it has invested in mobile software, the Cupertino-based company, in California, also maintains absolute control over the applications authorized on its mobile devices helping to protect the security and privacy of its customers.
At times it seemed like Epic, based in Cary, North Carolina, was helping to pitch Apple’s case as much as its own during the first week of the trial held in an Oakland courtroom, in California.
For example, at one point during his two days on the witness stand, Epic CEO Tim Sweeney admitted that he personally used an iPhone instead of smartphones running on Google’s Android software because he believed Apple offered better security and privacy controls.
Sweeney also admitted that Apple made changes to the iPhone’s software to allow Fortnite players to compete against each other while one was on a phone and the other was on a video game console. The expansion of the so-called “cross-platform” game has helped propel Fortnite’s growth to over 400 million users.
Other internal documents showed that Epic executives thanked Apple profusely for the support Fortnite was getting in the App Store.
Other evidence has raised the question of whether Epic’s efforts to create a competing app store that charges a commission of just 12% will bear fruit. The store is expected to earn $ 15 million to $ 36 million in profit by 2024, but it will still have racked up cumulative losses of $ 654 million to $ 854 million, according to Epic’s internal projections presented at of the trial.
Apple’s store, on the other hand, quickly became very profitable soon after it opened with just 500 apps in 2008 – a year after the first iPhone launched. Epic has repeatedly pointed out that the late Apple co-founder Steve Jobs initially didn’t expect the App Store to be a profit center, but apparently changed his mind after racking up 2 , $ 1 billion in bills in 2010, according to a slide presentation from Apple. .
The trial has yet to reveal how profitable Apple’s App Store has become. Apple is not disclosing the store’s financial results, but it is an important part of the company’s steadily growing services division, which generated $ 57 billion in revenue last year alone. The success of these services, coupled with the continued popularity of the iPhone, is one of the main reasons Apple currently has a market value of $ 2.2 trillion – more than any other American company. In contrast, Epic, a private company, is valued at nearly $ 30 billion.
More financial details from the Apple App Store are expected to be presented during the second week of the trial. Perhaps the most revealing moments can come when one of Epic’s experts, Ned Barnes of the Berkeley Research Group, steps up to discuss his analysis of App Store earnings.
Apple tried unsuccessfully to convince U.S. District Judge Yvonne Gonzalez Rogers to shut down the courtroom during Barnes’ testimony because her financial analysis “unduly confused” investors and caused her stock to fluctuate sharply.
But even if the App Store’s profits are higher than anyone imagines, that won’t necessarily help Epic prove its claims that Apple runs a monopoly that hurts competition.
“Being successful is not in itself a violation of antitrust laws,” said Daniel Lyons, professor of law at Boston College. “The argument that your prices are much higher than your costs may work well for a lay audience, but it doesn’t hold. Legally.”
Despite all the drama, Lyons and other pundits say the judge’s final decision in this jury-less trial will come down to market definitions. Epic argues that the iPhone has become a market in its own right, while Apple argues that it should include other devices as well, including video game consoles such as Microsoft’s Xbox and Sony’s PlayStation that charge for also 30% commission on game transactions.
“If I were a gambler, I would definitely say Apple has the best argument under existing case law,” said Larry Downes, project director at the Center for Business and Public Policy at Georgetown University. the consumer, and that’s what the judge really has to do. If that doesn’t hurt consumers, this is just a contract dispute between two companies, with one of them trying to resort to litigation to renegotiate the terms. “
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