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What the Epic Vs. Apple Verdict Means for Your App

Technology

Isadora Teich wrote this article

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The Apple vs Epic court case is interesting not just because it will decide things between Apple and Epic, but because it will have far-reaching consequences on the entire app industry.

Epic is only one of many app makers who has problems with the way the Apple Store operates. However, their gripe made headlines when it resulted in their smash-hit game Fortnite being pulled from the Apple Store and their account terminated.

So, how did their day in court go?

Are we close to the end of this epic battle? Let’s take a look.

A Brief Summary of Epic’s (And Everyone’s) Complaints

Many developers claim that the 30% Apple Tax the company charges developers is extortionate and harms small businesses. There are two antitrust cases against them in the EU.

They also claim that Apple’s rules are unevenly applied and that they strategically suppress apps that compete with their services.

In the case of Fortnite, Apple says that they kicked Epic’s popular game out of their store for violating their payment policy. An Apple spokesman told CNBC:

“Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users.”

However, according to the lawsuit filed by Epic in response:

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market.”

So, according to Apple, Epic Games is more or less just throwing a tantrum for refusing to follow the same rules as all of the other developers. However, according to Epic, this is a part of Apple operating an illegal monopoly to maintain an industry stranglehold.

What Happened At The Recent Trial?

Some experts are saying that a split decision by federal Judge Yvonne Gonzalez is likely.

After her remarks at the recent trial, it seems that while she is troubled by some things occurring at Apple, she also firmly believes that Federal courts cannot decide how businesses run.

Experts who spoke with MarketWatch believe that while it is unlikely that Gonzalez will officially declare Apple an illegal monopoly later this year, she may want them to make some changes to how the store operates.

Carl Szabo, vice president of tech lobbying group NetChoice, says that the law is actually on Apple’s side. After all, Apple has it clearly in their terms of service that developers cannot circumvent their pay system, and Epic has done that. If you break the rules, you get banned. Simple as that.

It is important to note that the Google Play Store also removed Fortnite for the same reason.

However, others have some doubts that Apple will leave the case with a clean slate. According to antitrust lawyer Valarie Williams:

“The judge’s questions during the case’s conclusion on Monday showed that she is uncomfortable with the lack of competition that Epic was able to introduce at the trial in terms of pricing and responsiveness to developer concerns. I am not sure how that will translate into her final order. Courts don’t usually like to regulate prices. I think she would be more likely to allow steering to other ways of paying.”

So, What’s Next?

It will be some months before Judge Gonzalez makes her decision.

However, even then, that is unlikely to be the end of it. It is very likely that whoever loses will appeal. This case may drag through appeals courts for years before ending up in the Supreme Court.

Whatever is ultimately decided will have huge impacts on the industry.

Essentially, the real question is whether Apple can continue to go on unchecked or not, or even needs to be checked in the first place. Are their rules fair or unfair?

The Dirty Laundry

In a case like this, both sides want to make the other look like a bad faith actor. This has been a massive part of the digital news cycle. It will likely continue for years.

Apple is one of the biggest companies on earth, so what they do makes headlines regardless. For years, numerous complaints have been swirling about them.

For example, long before this controversy, accusations that Apple makes their products worse intentionally in certain ways to generate sales popped up all the time.

Here are some things that came out about Apple, Epic, and other major companies in the trial.

-Apple refuses to expand iMessenger to their other devices to force people to buy iPhones.

-Sony didn’t want to allow cross-platform-play between different console versions of Fortnite because they considered it a business liability.

-Microsoft testified against Apple and even lowered its Windows Store fees to put pressure on them. In a confusing twist, they tried to paint themselves as the good guys for selling Xboxes at a loss as a part of their business model, unlike Apple who profits off every sale. Apple basically implied that this means that they do business poorly, and tried to pressure them to release their profit-and-loss statements.

The Developer Treatment Controversy

Apple claims that it applies its rules evenly to all developers.

However, even major companies like Match Group (Tinder) and Spotify claim that they prioritize certain businesses and squash others on purpose.

In this case, it appears that Apple does at least give certain developers special treatment. Employee emails shown at the trial reveal that massive players like Amazon and Netflix have been given preferential treatment.

Apple Doesn’t Know How Much The App Store Makes?

This is certainly a strange one. Apple charges developers a 30% fee on all sales made through their app.

However, at the same time, they claim that they don’t consider their app store a business and don’t know how much it earns. In 2020, their App store brought in more than $60 billion.

Despite this, CEO Tim Cook claims no one had ever bothered to run numbers and he has no idea about that.

According to research done by Epic, Apple may be turning a profit margin of nearly 80% on the App Store.

And yet no one in the entire company knows about this? And it’s not a business?

Problems at Epic Games

It turns out Epic Games has some big issues. They lose over $300 million a year trying to acquire customers.

So far, their Epic Games Store, meant to compete with the Apple Store by only taking a 12% cut from developers, has been massively unprofitable. While Epic claims it should turn a profit by 2023, critics don’t expect it to turn a profit until nearly the end of the decade.

Epic Games CEO Tim Sweeney also came under fire recently for comparing the Apple vs Epic court case to the civil rights movement. The company also reportedly hired a lobbyist to push legislation that would further their cause in North Dakota.

Final Thoughts

Ultimately, this is a large complicated mess that will likely go on for years. It really remains to be seen what the results will be. Regardless of who technically wins or loses, the effects on the whole industry will be vast.

It is important to remember that Apple did not invent making offerings or products less favorable for consumers and users over time.

Many businesses do it because they are forced to prioritize profit and endless growth. However, eventually, once businesses cross a line, there is usually pushback. If Epic Games did not push back against them in some way, it was likely only a matter of time before some developer or company did.

Regardless of who is right or wrong, tension and criticism from many different sources have been piling on Apple for years. It was inevitable that eventually, something would give.

Who do you side with, if anyone?

Talk to me.

About ChopDawg.com: Since 2009, we have helped create 350+ next-generation apps for startups, Fortune 500s, growing businesses, and non-profits from around the globe. Think Partner, Not Agency.

 

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