Home News How ‘Fortnite’ maker Epic Games will try to prove Apple is operating...

How ‘Fortnite’ maker Epic Games will try to prove Apple is operating App Store as an illegal monopoly

18
0

Epic Games Inc., the maker of “Fortnite,” has drawn a clear battle line as it prepares for a monumental court battle against Apple Inc.: It claims the iPhone maker abuses its control of the App Store for anticompetitive purposes.

Apple
AAPL,
-1.51%

controls the only means of installing software on an iPhone through its app-review process. As such, the iPhone maker has collected more customers and locked them into its ecosystem, and removes apps for business reasons under the pretext of security, Epic said in a legal filing April 7.

“Apple’s core business model is to ‘hook’ its users on this integrated Apple ecosystem, so they ‘wouldn’t want to leave it,’ ” Epic says in its 365-page filing. “In an agenda for a 2010 executive team meeting, Apple founder and late CEO Steve Jobs wrote that he wanted to ‘tie all of our products together, so [Apple] further lock[s] customers into [its] ecosystem.’”

Apple’s onerous 30% cut, in turn, has forced developers like Epic Games to raise prices, increases that are then passed on to consumers, Epic claims.

Despite repeated claims by Apple Chief Executive Tim Cook that Apple is not dominant in any market, Epic highlighted iOS’s 40% share of the smartphone operating-system market by revenue as of 2019, and Apple’s 56% of revenue for smartphones priced at $300 or more as of 2019.

Don’t miss: Apple v. Epic: What to expect from a trial that could change antitrust law and the mobile-app ecosystem

See also: Will videogames be the Achilles heel for Apple, Google in antitrust investigations?

Apple’s aggressive defense of its App Store cash cow, Epic argues, is part of a PR machine designed to protect lucrative turf and continue to squeeze would-be rival apps with steep fees and arbitrary rules. It even jokingly refers to Apple’s stance as that of a “sleepy monopolist” rather than as an innovator.

Epic Games CEO Tim Sweeney does not dispute the effectiveness and value of Apple’s mobile operating system, the company says, but does take issue with Apple’s effort to foreclose competition via app distribution.

Those sentiments were echoed in a Senate hearing on app stores on April 21. “They’ve [Apple] taken the internet and moved it into the App Store,” Jared Sine, chief legal officer at the online-dating-services company Match Group Inc.
MTCH,
-0.59%
,
testified. He and other developers have called for a federal legislation on application stores, which is supported by Sen. Amy Klobuchar of Minnesota, the top antitrust voice among Democrats.

The Senate hearing underscores what Epic strategists claim is a general feeling in the developer community that Apple may have created a sterling mobile operating system but has wielded unfettered power over developers through commission fees, whom it admits to its store, intimidation and recriminations.

For more: ‘Fortnite’ dispute might open floodgates to serious scrutiny of Apple

Another Epic legal attack line centers on iMessage and Apple’s flirtation with making it available on Alphabet Inc.’s Android operating system — which is also a target of an Epic antitrust suit — as early as 2013.

A new deposition cites an email exchange between Eddy Cue, now Apple’s senior vice president of software and services, and Federighi, Apple’s senior vice president of software engineering, in April 2013. “Do we want to lose one of the most important apps in a mobile environment to Google?” Cue asks.

That exchange came amid reports that Google
GOOGL,
-1.64%

GOOG,
-0.81%

had attempted to purchase WhatsApp for $1 billion. Facebook Inc.
FB,
-1.34%

ultimately acquired WhatsApp, for $19 billion, in 2014.

In another dig at its legal adversary, Epic cites a senior Apple engineer who compared the App Store’s defenses against sophisticated digital attackers to “bringing a plastic butter knife to a gunfight.”

The anecdote is based on internal documents quoting Eric Friedman, head of Apple’s Fraud Engineering Algorithms and Risk unit. In it, Friedman said Apple’s review process of new apps for the App Store was “more like the pretty lady who greets you … at the Hawaiian airport than the drug-sniffing dog.”