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Three questions that will decide the Epic Games case against Apple

May 3rd Fortnite Publisher Epic Games finally celebrates its day in court and forces Apple to defend Kick Fortnite From the iOS App Store last year. Epic’s antitrust proceedings are bigger than a single game. This is a direct challenge to the App Store model and the most important legal challenge Apple has faced since the days of Xerox.

last night, Both side He submitted a document called “Proposed Findings of Facts” and laid out essentially all the factual claims they would trust in their discussion. The documentation totals over 650 pages and provides a detailed roadmap of how each side looks at the case, from the early days of the iPhone to the Epic case. Specific preparations for choosing this battle with Apple.. However, the filings also focus on the case and raise three questions that will be central to the trial in the coming months.

At the heart of the case is the so-called App Store tax. This is a 30% surcharge that Apple charges for purchases made through the App Store. Fortnite The App Store was launched by avoiding that tax by installing its own payment system, which is prohibited by the App Store rules. Currently, Epic argues in court that the rules should not have been enforced.

This case often asks if the App Store is monopolistic, but Epic’s claim is more subtle, taking advantage of antitrust ideas regarding legal monopoly and abuse of market power. As Epic sees, Apple’s monopoly on iOS is legal, but it uses the market power from that monopoly to dominate the secondary market for app distribution. Epic compares this situation to Microsoft’s antitrust proceedings in the 90’s. In short, it is a legitimate monopoly on Windows and has been illegally extended to the secondary market for web browsers.

This is a good theory, but it only works if you consider the App Store model to be fundamentally separate from iOS. In a statement of facts, Apple describes the exclusive App Store as a fundamental part of the iPhone, part of a wide range of products that make devices valuable. “Apple wanted to ensure that iOS devices were better protected from the malware, instability and quality issues used in the PC world,” Apple claimed in its filings. I have. App Store exclusivity is part of it, but security measures such as code signing and hardware trust root systems are also part of it. On the software side, there are various private APIs and OS-level qualifications that are only valid after a review of the App Store, making the system more tightly coupled.

Of course, this argument that Google offers these unrestricted competing mobile operating systems is inconvenient. Not to mention Apple’s own macOS, which allows sideloading. Obviously, it’s technically possible to allow competing app stores on iOS. The question is whether the court sees it as a change in Apple’s business model or iOS itself.

One of Epic’s biggest challenges is that the App Store model is quite popular. Consoles like the Xbox and PlayStation basically run on the same playbook, digitally deliver games through a hardware-locked, manufacturer-controlled, open yet handpicked digital store. That’s not legal on its own, but it adds credibility to Apple’s claim that App Store lockdowns aren’t trapping consumers.If you don’t want to play Fortnite On iPhone, you can play it on the console or PC. Some devices are locked to specific distribution channels and some are unlocked, allowing users to vote on their own feet.

As explained in Filing, Epic’s counter-argument to this argument is that “video game consoles run in a business model that is radically different from smartphones.” Console game development is time consuming and costly, and console makers are under great pressure to attract developers because consoles are useless without a stable supply of games. This means that the hardware itself is often sold at a cost, and App Store fees are the main source of profit.

Epic argues that Apple is different because most of Apple’s profits are still from the sale of the iPhone. “Developers don’t participate in these benefits, even if app availability contributes significantly to the sale of the device,” Filing claims.

At some level, this is summarized in the argument that console companies are better for developers, so their platform power is less of an issue. The constant competition between Xbox and PlayStation allows game developers to extract more lucrative terms. However, iOS and Android do not compete for app developers in the same way, and the low cost of mobile development means that the competition is very different. Apple has given people many reasons to buy an iPhone. This means less pressure on a particular business area. But that’s well below the monopoly standard, and Apple ultimately looks pretty good from console comparisons.

Best of all, Apple faces the serious question of how much control it has over its devices. For critics, this is Apple’s original sin, using industrial and graphic design to lure customers into a walled yard and lock the gate. For fans, it’s Apple’s genius, integrating hardware and software to provide a more purposeful and powerful user experience. But it all depends on Apple’s ability to maintain a closed stack, using hardware integration to control what happens in the software.

This trial is irreversible to the stack, but it may limit what Apple can do with it. The Epic Games battle began over payment processing, but the same legal standards could allow alternative app stores and limit the restrictions Apple can impose on malicious apps such as Parler. There is. This is the first step in setting regulatory limits on how technology companies operate, as well as regulations for wireless operators and banks. At the most basic level, Epic claims that Apple’s ecosystem has grown too large and too powerful to completely exhaust Cupertino, and it’s time to take direct responsibility for antitrust law. I did.

Hundreds of Apple filing pages are dedicated to the benefits of the system for developers and iPhone owners, many of which are undoubtedly true. Even with Apple’s software control, malware on iOS devices is actually reduced. Scam apps sometimes slip through.. This system makes a lot of money for iOS developers. Many of them couldn’t compete outside Apple’s walled yard. The move to digital distribution has actually saved costs for developers who no longer need to distribute their products through retail in-store.

But in a sense, it’s not all important. Abuse of market power was not tolerated just because it was sometimes useful, and classic monopolies like Standard Oil and Bell Phone also had many side benefits. The bigger question is whether courts are ready to dive into the mobile software stack and begin deciding how tech companies can set the market. It is a difficult question and cannot be resolved by a single judgment or a single proceeding. But for some reason, it’s a matter that this court has to undertake.

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