Epic Games v. Apple: Trial preview
Epic Games v. Apple: Trial preview
6:47

Epic Games v. Apple: Trial preview

Video Games
Epic Games versus Apple, the trial starts on May 3rd. So here's a quick recap to bring you up to speed and give you a lay of the land, if you will, as we roll into one of the biggest cases in tech antitrust history. [MUSIC] So back in summer of 2020 Epic pushed an update to its game fortnight with a surprise feature, if you will, the ability to buy its in game currency vbox directly from Epic, and the company offered a discount for buying directly through that, although an alternative payment method conveniently circumvented Apple's 30% App Store commission. Obviously, Apple did not like that, said epic was, in violation of App Store rules, and pulled fortnight, from that digital marketplace. Now epic knew that would happen so shortly after fortnight was yanked. Epic slapped Apple with a huge lawsuit and launched a massive PR campaign, that included. Parody on Apple's classic 1984 commercial and the hashtag free fortnight, saying it was a quote behemoth seeking to control markets block competition and stifle innovation. Quick side note, a very similar situation is happening right now on the Google side of things as well. So Epic sued Google on the same day it sued Apple last year, that lawsuit is also working its way to the courts. But I'm focusing on the apple lawsuit for the purposes of this particular video, since you can still sideload Epic Games on Android devices. There is a decent amount of overlap between arguments though, so Back to the lawsuit. Epic is not asking for monetary damages. It wants the court to completely change how app stores on Apple and Google devices work. If Epic CEO Tim Sweeney had his way, the courts would let companies like Epic operate their own individual app stores. On the iPhone, cutting out Apple from transactions and commissions entirely if a company could of course offer its own direct payment processing. When all this began, there was a 30% commission in place for both app stores but under increased scrutiny from regulators, developers and the public. Late last year, Apple announced it was cutting that commission in half to 15% for any developer making less than $1 million a year in annual net sales. In the past, it has also allowed 15% commissions on subscription services. Maybe that was fully in good faith. Maybe it was a little gimme in the hopes the court would take notice. Either way, it's a good thing for smaller app developers who get to keep a larger cut of sales. On the other hand, Apple says that its commission helps offset the cost of running the App Store and keeps users safer by requiring them to use it for all of their transactions. If a court forces apple in particular to change Industry watchers say it could fundamentally alter Apple's business disrupting not just its finances, of course, but also the security and reliability the company's built around. Its very tight control of iOS. There were emergency hearings last year to try to For sampling Google into letting Epic Games back into their respective stores, Apple said, fortnight was welcome back into the App store if epic just removed its new payment processing feature, epic refused to do that. And so the court sided with Apple putting the case on the road toward a trial in mid 2021 Which brings us to today. both Apple and epic have filed their discovery documents recently which gives us a little bit of insight into the evidence and arguments each side will present to try to convince Federal District Judge Yvonne Gonzalez Rogers To rule in their favor. Epic is aiming to argue Apple's control over its app store and refusal to allow competing app stores onto its devices amounts to running a monopoly. They'll say it's kind of like how Microsoft could have a monopoly on windows in the nineties But there are subsequent monopoly on browsers. Internet Explorer in particular was ruled illegal because Internet Explorer was bundled for free with Windows. Choke the life out of any competing Third Party browsers looking to gain market share. But that's a little bit different because there aren't competing app stores out there on the iPhone in the same way there are multiple browsers trying to gain market share on Windows. There is one key thing EPIC needs to figure out in order to make that type of argument, and that's consoles. Currently, PlayStation, Xbox, and Nintendo, all have their own console app stores and operate very similarly to how Apple's App Store works. Content can be purchased for hardware via digital store, and they also don't allow third party app stores, on their hardware. Epic will likely argue that console manufacturers have to act this way because they sell hardware at a loss and make their money from game sales. Since Apple makes a profit both on the hardware and the software side from the App Store epic believes it should be treated differently. On the other side of the courtroom, Apple will be arguing its App Store isn't just bundled software, its lawyers and executives will say the App Store is fundamentally part of IOS, and that's what makes an iPhone valuable. They'll reopen the App Store and all the rest of the walled garden approach the company takes when it comes to the iPhone and se It's all interwoven together to create a safe, protected environment that makes the iPhone appealing to consumers. Basically they're gonna say you can't just unbundle the app store from iOS, it would be chaos, they'll have to figure out how to explain one key thing on their side of things too though. Android, and even its own macOS. Android doesn't have a lot of the restrictions iOS puts on its users and as I mentioned earlier, it allows side loading of apps. MacOS allows this to you aren't restricted to the App Store on a Mac if you want to install a piece of software. Apple will probably swing back around to that whole iOS is intrinsic to the iPhone success as a device argument but, it's not exactly a slam dunk airtight case on their side either. The trial is expected to last for a few weeks and the rulings of this case could reshape Apple's business model and how much control it can exert over iPhone users through iOS. Or maybe apple and epic settle before any of that happens. Either way it's a landmark case in antitrust law and you can keep up with it right here on cnet.com.

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