Natalie DeCoste
Apple and Fortnite creator Epic Games have laid out their arguments in separate legal filings for their upcoming court battle.
Epic Games sued Apple in August of 2020, alleging the tech giant engaged in monopolistic behaviors when Apple pulled Epic’s game Fortnite from its App Store. Apple had removed Fortnite from its App Store after Epic added a direct payment option to the game to circumvent the 30% cut that Apple takes from all digital transactions.
Apple’s policies require that all payments go through its App Store and do not allow apps to be installed on Apple products if they do not come from the App Store. Many app developers view these measures as a means to stifle competition under the guise of security.
Now that the lawsuit is underway, both companies have submitted lengthy legal filings near 400 pages, each laying out the arguments the two sides will make.
For Apple, its first argument is that its 30% commission on its App Store is in line with other digital marketplaces, like Google. Apple argued that companies that do not want to use its in-app payment system could sell digital currencies over the web.
Apple is adamant that despite the monopoly claims against it, it has competition both for its iPhones and other platforms to play games. Additionally, the App Store’s policies do not diminish developments in the software market but have led to a boom in the software industry, resulting in greater safety and security for users.
The company’s final argument is that its App Store is a core, integrated feature of the iPhone and that using Apple payments for digital purchases on the phone is a key feature.
Meanwhile, Epic has positioned itself as a champion of fair competition.
Epic argued that Apple forces consumers to bear high switching costs to stop using Apple products, locking them into Apple products.
“Since the introduction of iOS in 2007, Apple has developed myriad services and features that tie together all Apple products to create an Apple “ecosystem”, but that are not compatible with devices running on other operating systems outside of the Apple ecosystem…As a result, consumers—and often their households—become locked in to iOS, with high switching costs and decreased ability and willingness to extract themselves from the iOS ecosystem,” read Epic’s filing.
Epic is also planning to point out that Apple controls the only way to install software on an iPhone through the App Store. Therefore, when Apple uses its App Review process and manually screens the apps going onto the App Store, it can use that process for anti-competitive purposes. The company can remove apps to benefit its business and do so under the pretext of security.
“Apple points to its App Review process and asserts that there are security benefits that flow from funneling all apps through the App Review process, but that is pretextual…the manual portion of Apple’s App Review process screens primarily for non-security issues—including specifically for anti-competitive purposes. For example, Apple has used the App Review process to reject competitive threats even when the apps complied with Apple’s then-prevailing guidelines. And Apple has used App Review to preference its apps over competing third-party apps to the detriment of consumers and developers,” read Epic’s filing.
Finally, Epic is alleging that Apple’s 30% fee in the App Store causes developers to raise prices on its software which causes consumers to have to pay more.
“Apple’s price hikes have closed the door on many developers who wish to enter the iOS ecosystem. Some small businesses cannot afford to absorb Apple’s 30% fee and would lose business if they passed it on to their customers…Of course, some developers have chosen to pass on part of Apple’s 30% fee to consumers. For that reason, Apple’s conduct has caused consumers to pay higher prices for apps and in-app content,” read the filing.
