Epic’s decision to bypass Apple’s App Store policies was dishonest, says judge
theverge.com
theverge.com
As an aside, I've read a number of comments here lamenting that the judge doesn't understand tech, but I think the opposite is true as well: many of the commenters here don't understand the law. The judge needs to work within the framework of existing legal precedent when making her decisions, and unfortunately for Epic, it doesn't really seem like existing precedent is on their side.
As a specific example, many of the comments here point out that smartphones are not like gaming consoles because smartphones are general-purpose computing devices whereas consoles are entertainment devices. Be that as it may, there's nothing in US law that says general-purpose computing devices are supposed to be treated differently than other products for the purposes of antitrust analysis.
Think about it.
The average person has a smart phone where they only have access to 1 store. The arguments about sideloading on Android are somewhat moot IMO because the severity of warnings and effort to discourage users from sideloading are highly effective and, when combined with no one changing the defaults, the vast majority of people stick to the play store.
On the other side there are the developers who MUST deal with both companies. There is no choice. You can't build an app with a mobile component and ignore 1 of the only 2 distribution platforms. Why would I risk major R&D costs to develop anything novel or disruptive when I have no guarantee I can distribute that product and might even be facing a hostile distributor if my product disrupts them?
Does anyone think having 2 massive incumbents controlling distribution for a mode of computing that's become essential to western life is healthy? How is the market not going to devolve (even more) into a bunch of low effort skinner box IAP trash?
And the game console analogies are dumb. I don't need a game console. I don't have one. However, I NEED a mobile phone to participate in modern society. Try getting and keeping a good paying job if you don't have a mobile phone and are "unresponsive".
I am an iOS user. I like that iOS takes a heavy handed approach to the App Store and controls it completely.
I do not want developers to hav the option to have their own payments. Apple Pay is so easy and convenient.
I do not want developers to be able to distribute apps without Apple approval.
Apples policies probably result in developer harm, but anti trust law is to protect me as a user not you as a developer.
To be frank, I don’t really care that Apple is a pain to deal with. That is why I, the user, pay you, the developer to deal with them.
This is fine, even good as you say, but the problem is there are no other options.
Apple can arbitrarily kill an app you rely on as a user, and you have no recourse. It'll stay on your device but you won't get updates or be able to reinstall later.
Any friction and costs applied to devs will flow on to costs for the customer.
So that's the harm to users, which is hard to quantify.
> anti trust law is to protect me as a user not you as a developer.
Are you sure? Standard Oil set good prices for consumers. The issue was they drove other businesses out of business. Restraint of trade was a big part of it.
https://en.wikipedia.org/wiki/The_Antitrust_Paradox
In fact Apple lost the iBooks case between it and Amazon because while it was more fair to publishers, it raised prices for consumers.
This has happened to me with adblockios and several other apps earlier.
Or how about a highly moderated local store for my city where you need to be a resident and provide proof of owning a local business before being allowed on the store? That could be highly moderated and provide a ton of local business discovery with almost no risk of bad actors because being kicked off that store would mean a loss of local patrons.
Why is it automatically assumed competing app stores are going to be trash and why does everyone think Apple / Google are doing such an amazing job right now? Neither seem to be the case IMO.
I think your viewpoint focuses a lot on "what's good for me right now today" rather than "what's good for the long term health of these platforms?" Demand aggregation platforms, especially in industries with only a handful of huge players, are going to be bad for both suppliers and consumers.
You can already see it on every huge platform. The platform (aka distributor / allocator) doesn't care at all about either side. They only care about their share of the market as a distributor. Suppliers become a commodity because losing a supplier is minor churn with no real impact. It doesn't matter which 1 million developers you're dealing with as long as you have 1 million developers, so you might as well optimize for the developers that will accept the smallest profits and the most abuse.
On the consumer side it's the same thing. It doesn't matter which 100 million users you have as long as you have 100 million users. Banning 1 million users isn't a big deal because the platform isn't going to suffer as long as new users are coming in. It might be 1 million users that a specific supplier (aka developer, creator, etc.) relied on for their livelihood, but who cares, right? There's another supplier in line to take their place anyway. And so what if 1000 of those users banned were false positives right? That's only .001% of your user base. Tough luck for them if they lose access to an account they might depend on.
It really worries me to see the number of people that can't see beyond their own convenience to recognize the only winners in the current system are the platform owners. They don't care about you, developers, creators, gig-workers, etc. beyond how many of each they have.
Except that it does only as long as Apple decide to "protect the user", which is why antitrust laws are in place. Monopoly are illegal both for good and bad companies, their standard doesn't change that.
> I do not want developers to hav the option to have their own payments. Apple Pay is so easy and convenient.
> I do not want developers to be able to distribute apps without Apple approval.
I wouldn't be against that the App Store require theses, if there was an alternative for the App Store.
Monopolies are illegal !! Source?
Microsoft was forced to provide options for multibrowsers and limit it's paint application from competing with photo editing software.
All of your problems are solved with opt-in to secondary app sources. If you want the apple approved walled garden, don't install the alternative and retain all the benefits of percieved security.
What's wrong with letting people install a different app store, and apps? Was firefox worse than internet explorer?
Pre-iPhone, the phone software landscape that most consumers interacted with was absolutely awful. Carriers loaded phones with all sorts of pre-installed, uninstallable junk. Most third-party software was also not very good. iPhone uptake was so large in 2007 because Apple put its foot down on all the carrier cruft.
You would end up with something similar to downloading games on Windows: Every big company will force you to use their own app store to download their software which has absolutely no benefit to the end user. I want to install and use an application, not an app store.
The Macintosh was in no way closed in the 80s. How could it be? There was no memory protection, and you could hack at the system and make it do all sorts of things via extensions.
There were plenty of third party compilers. In the early 90s, developers didn’t even use Apple’s toolchain. For the most part they used MetroWorks.
Under Gassee (founder of Be) they went after margins instead of going after market share. Jobs said that himself when he came back.
Microsoft was also never forced to provide options in the US.
I see this posted sooooo often and every time I just say "nope, it's exactly what I want and I do not want it to change for iOS".
Very pleased to see Epic starting off poorly here. Hopefully this all goes up in flames for them.
They are not analogies. This case is centered around video game distribution. The comparisons are, in that respect, spot on. What job do you have that requires you to make in app purchases in a video game?
If it were just games on iOS I wouldn't care at all about it. They could do whatever they want.
It's business / productivity apps where I think it's a bad deal for everyone but Apple / Google. About 10-15 years ago I used to get a decent number of referrals for small businesses that wanted to turn part of their business process into an app. At the time mobile wasn't huge, so a single desktop app was the only thing on anyone's mind back then.
At that time, I told everyone it wasn't worth spending their money to have a custom app built for some small back office process they wanted to simplify. However, at the time I believed app development was going to evolve to the point where it would be practical to do that type of thing.
Boy was I wrong. Mobile happened and the rest is history. Now it's even more expensive to develop an app because you actually might need to develop 2-4; iOS, Android, Windows, Mac.
Web apps really took off because of that, but I think it was more of a result of being "un-block-able" than being the best technology. Thinks like Adobe Air and JavaFX come to mind as better technologies. JavaFX especially comes to mind because it was (and still is) possible to set up a pretty nice development process with it. However, it never really went anywhere which is a combination of Oracle sucking and Steve Jobs wanting to "kill" Java.
If iOS was an open platform and Oracle could have put JavaFX onto it, we'd have a _significantly_ different app landscape today. IMO we currently have "lesser" app ecosystems as a result of the locked down platform(s) IMO.
Getting back to my boutique app fantasy, I don't think it'll ever be possible without changes to platform policies. With the locked down app stores I can't _guarantee_ a customer I can deliver an app for them and I can't risk the cost on my own. There's also a perception that you _need_ an app even though something like a PWA would be fine for most LoB apps. A lot of apps are just web apps wrapped in an app bundle, but being on the app store is what's needed to be successful. Apple's not really doing anything for the developer in those cases except giving them permission to have their wrapped app appear on the app store.
Fantrax is a good example of a pretty solid PWA where they had to have "apps" as a result of popular demand even though there's not much difference between their PWA and the "app" AFAIK. Even with PWAs though you need to (in effect) rely on Apple's blessing because they control the engine on their platform.
Other products include Macs and PCs, which allow "sideloading" by default, out of the box. Why are game consoles the relevant comparison? There's nothing in US law that says smartphones are supposed to be treated the same as game consoles.
iPhone was not originally a game console. (Apple itself almost never makes games.) Indeed, iPhone was not originally a store either. Apple argued in court that App Store is not a separate product from iPhone, but that's easily historically refuted: iPhone shipped in 2007 without App Store! App Store was added a year later, so it's obviously not essential to the product. And IAP aren't essential to App Store either, because they weren't added until 2009.
It was developers like Epic who showed iPhone could be a gaming platform. Apple itself has a pretty poor history at gaming, and the Mac has always been subpar compared to Windows.
The failure in your reasoning here is your assertion that the iPhone that was launched in 2007 is the same iPhone that's about to be launched in October.
They are different products.
The iPhone 12 DOES launch with the App Store. If Epic wants to make it so any iPhone(s) that didn't originally launch with the App Store must be able to side load apps, I mean, go ahead.
> Why are game consoles the relevant comparison?
Why aren't they? In fact, I'd argue they are even MORE of a relevant comparison and MORE like a general purpose computer. Sure, Microsoft has not written Office for Xbox, but that's not a limitation of Xbox. You can (and this is encouraged) plug a keyboard and mouse right into an Xbox. It has a GPU, processor, hard drive, RAM, motherboard, etc.. It's literally a computer.
> There's nothing in US law that says smartphones are supposed to be treated the same as game consoles.
There's nothing in US law that says smartphones are supposed to be treated like desktop computers either. I have yet to see a convincing and consistent reason that they should be. I guess if you want to say that all computing devices should be open source and modifiable and all that, sure that's fine, but the distinction here is very much an arbitrary one.
For PCs, there is no central developer shouldering all the R&D costs. You can choose Windows as an OS, or some Linux or even (not legally, but technical) macOS. Lots of licensing and cross marketing deals going on. ("Intel inside," anyone?) You can build a single PC or a series of 50 or 50.000 without much R&D cost (but you won't have an ecosystem or a loyal user base you can control and monetize).
But you can't build an iPhone or iPad compatible device, nor can you buy one without an Apple logo. So, iPhones are in that regard far more comparable to game consoles than 08/15 PCs built from standard components. And it seems kind of consequential that Apple wants to be able to get their share from everything that uses their R&D (and platform and user base).
Being subpar has nothing to do with it, that's for the customers to vote with their wallets.
Macs aren't.
> For PCs, there is no central developer shouldering all the R&D costs.
I'm not sure how R&D costs are even relevant, legally. PCs, Macs, iPhones, iPads are all financed by hardware sales. That's how you repay R&D, not skimming money off of 3rd party developers. Somehow PCs and Macs have always paid for their own R&D without taking 3rd party developer revenue.
But if that’s the case, who “finances” the extra four or five years worth of support that iOS devices get over Android devices? Maybe it’s that Apple knows by having more people running the same OS it increases the market for apps. Android OEMs don’t have the same incentives.
Are they legally required to do so?
That's not the question. One of the questions is whether the relevant market is iOS apps, as Epic claims, or video games, as the judge suggested.
The judge presiding over the case disagrees.
This was merely a preliminary hearing, and the judge also suggested the case should go to a jury.
https://www.macrumors.com/2020/09/29/apple-epic-games-no-jur...
But it doesn't change the fact that the judge did suggest during the hearing that the case should go to a jury.
I'm kind of puzzled why Epic doesn't want a jury.
Anything can be a monopoly if you arbitrarily define its market as congruent with its market share.
It is a bit more complicated than that. This was the preliminary injunction stage of the trial.
It is more that Epic did not pass the very high bar that it is so very likely to win the case, such that they should be able to force an injuction to happen right now.
That is a very high bar to pass, and it is more that the judge is not willing to effectively declare epic the winning, right now, all on her own.
Instead, the judge has said that she wants this to go to a jury, and that this is no ordinary case. She said that it is an extrordinary case, that is on the bleeding edge of technology monopoly law, and basically, that such an important case should not be decided by a judgement from the bench.
Or at least this was my impression of what she was trying to say, when I was listening to the trial live.
Which I agree with. I expect this to be a landmark technology monopoly case that is going to make its way all the way to the supreme court. As such, it would be inappropriate for the judge to basically decide the winner so early by enforcing an preliminary injunction, even though I ultimately believe that epic will win.
I wonder how much of this decision was unilaterally made by Tim Sweeney. He is quite vocal about how much he hates the 30% tax (Valve included) because the vast majority is just profit and not for services rendered. It's excellent ammunition for his case to demonstrate that his storefront only charges 12% and is still profitable.
Question, if Apple were to lose the first trial would they be forced to allow Fortnite back on the App Store while the endless series of appeals follow?
Every action in this case has been driven by Epic.
1. Epic spent the first hour of the hearing arguing that the relevant antitrust market was the "iOS app distribution" market. The judge pushed back hard on this because there were alternative distribution channels available to Epic, saying: "I know that's how you want to frame the issue... I'm not convinced that you have."
2. With regards to Epic's tying claim, she said she was not particularly persuaded with their section 1 argument. Referring to IAP, she said: "I just don't see this as a separate and distinct product."
Those points imply she is unlikely to conclude that Epic has met the threshold of likelihood to succeed on the merits to win the preliminary injunction, yes. But they will also be considered during the trial itself.
https://www.macrumors.com/2020/09/29/apple-epic-games-no-jur...
It's baffling to me that we have still have this ridiculous idea that a lawsuit that's legally and technically complicated should be decided by people who haven't the first clue about the law or technology.
Civil suits shouldn't be tried by juries. Yeah, I said it, and I'll say it every time I'm in voir dire when I'm drawn into a jury pool for a civil suit. We should reserve it for times when a person's freedom or life are on the line, legally, but people fighting over money in complex legal arguments should be decided by legal and technical experts.
In the current framework, nothing. They're built right into the system. It's a pretty core principal of government operating only by the consent of those governed.
Yes, the judge Gonzalez Rogers said that she is not convinced enough by Epic's claims to force an injunction onto Apple, which would require Apple to immediately reinstate Fortnite into the app store and leave it there until the legal proceedings are finished.
But did anyone really expect that Epic can use the fast track to force Apple to continue distributing Fortnite while forfeiting the 30% before even going to the main trial? Sure, Epic requested that, but that doesn't mean that they reasonably expected to get it granted, too. Such a large case will almost never be settled pre-trial without an official jury.
So her rejecting the injunction is kind of how this normally works.
According to CNN, she also said "Fortnite players on iOS have a variety of choices to access the game even if it is no longer available on iOS" as the main reasoning as to why Apple's action is not illegal tying of App distribution to In-App payments. And then she said that she wants to hear what the public thinks.
So effectively, the stage is now set for Epic. They need to manufacture a large enough outcry by regular consumers about Fortnite being absent on iOS. And they need to do so before the trial in 2021. And to me, it looks like Epic has been very effective so far at making people speak out that they would have wanted Fortnite on iOS.
The judge also said "It's hard to ignore the economics of the industry, which is what you're asking me to do." when comparing the iOS app store to other walled gardens like Xbox and PS. I'd treat that as a friendly hint that Epic needs to show that game consoles and smartphones are not comparable industries. That should be easy, because smartphones are essential for everyday life. Game consoles are not.
And lastly, the judge also said "There are a lot of people in the public who consider you guys heroes for what you guys did, [..]". To me, that sounds like an acknowledgement that the general population does not support Apple's reaction, meaning that Epic is on a good path towards showing that iOS consumers in general do NOT have alternative ways for accessing Fortnite.
Also, I'm not sure this is a neutral report on the Apple/Epic battle. The writer is called "James Vincent", just like this guy: https://appleinsider.com/articles/20/02/26/ex-apple-ad-chief...
So to the extent that the judge is unconvinced of the validity of a single-brand market now, is not good news for Epic's chances during the trial later.
Are you claiming that all of the articles that quoted the judge are biased?
I mean this is probably a good case of "the law doesn't understand the law" in that the law does not have a particularly useful definition of what constitutes a "market"
Not to mention how laws impact demographics differently.
Without knowing anything about laws specifically, this makes it seem like it isn’t very concrete. At all.
I don't think Apple has ever marketed their iPhones as a general purpose computing device.
However they do advertise iPad as a laptop replacement.
> Judge Rogers questioned Epic on when, exactly Apple became a monopoly given that its App Store rules have remained unchanged since the App Store launched, which Epic had no solid answer for, responding only that it was a monopoly when Fortnite came to iOS in 2018. She also said that walled gardens have existed for four decades and that what Apple's doing isn't too different. "They created a platform," she said
> She also reiterated that Epic Games made a "calculated decision" to defy Apple's App Store rules, and the court doesn't provide injunctions for contractual disputes. Epic was "not forthright," she said. "There are people in the public who consider you guys heroes for what you did, but it's not honest.
> Epic Games continued to argue that Apple has an App Store monopoly and charges excessive fees, but the judge pointed out that the 30 percent rate that Apple collects is the "industry rate" collected by PlayStation, Xbox, Nintendo, Amazon, Walmart, Best Buy, Google, and more. "It's all 30 percent and you just want to gloss over it," the judge said to Epic's lawyers.
I don't remember where I read this but someone mentioned that the judge asked Apple why they charge 30%, which I found to be a bit of a strange thing to ask (and probably a bit of a softball). Why not 30%? Why not 40%? Why do companies have margins that they set that the market will bear at all? Etc.
[1] https://www.macrumors.com/2020/09/28/epic-games-apple-disput...
What's illegal is taking advantage of your monopoly position. Microsoft was a monopoly? That was fine. Microsoft forced people towards Internet Explorer? Trouble.
The only thing Apple has a monopoly on is things Apple sells. If it is deemed that you can have a monopoly of a subset of a market, ask yourself how this will be applied to other businesses in the future. Does a mall have a legal (not colloquial) monopoly on stores in the mall?
Edit: If you make a game that has a store in it, do you have to let others sell thing in your game’s store. You have a monopoly on things sold in your game. Your game is a platform.
If you just search "Apple vs Android market share" you get an incredibly false picture of reality.
Android isn't just Android. It's everything from a flagship like a Galaxy S20 to a "Galaxy A2 Core" destined for low-income markets that was never meant to compete with an iPhone, and for which most app's target markets might as well not exist.
I remember a conversation with Jake Wharton where he insisted it was fine for apps to adopt the iOS strategy of dropping older OS versions extremely quickly. His reasoning the devices that have owners who spend the vast majority of money on the platform have newer devices that get updates.
To some degree he was right (not enough to excuse the absymal Android update ecosystem but I digress)
We've reached the point where even things that are comparatively used as "semi-dumb phones" show up under Android figures because of how ubiquitous of an OS it is. There are a ton of Android devices out there that are 3 or 4 major versions behind, leading a lot of developers to support them.
But if you actually look at top app revenues' (of which I've seen a few now), they consistently might as well not exist.
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For that reason, if we actually shave that down to people who are paying into the app ecosytem (ie. look at the customers of the app developers, not the customers of the phone manufacturers) , suddenly you realize why so many apps and games go iOS-first for development:
https://appleinsider.com/articles/19/07/03/apples-app-store-...
It's no contest, Apple dominates the market for actually making money off apps. Because it's not just that Apple is making more gross revenue, it's the fact they're doing it with a third of the installs(!!!)
It's a one-two punch against Android devs since, as installs scale, support and review problems scale, while revenue is not scaling at all with it vs iOS.
It's a reflection of what I mentioned above, just how many Android devices are really not iPhone competitors, and not catering to a demographic that spends money on apps.
The average developer is making many times what their Android equivalent is making per app. You can make money on Android, but if you're blocked off from iOS, you're hurting in a huge way.
And an extra compared to what exactly? The fee is identical on the Play Store.
Not just that, to be honest Apple App do not spill over even. You do not need to run in Apple store unlike in 1990 you basically have to run windows.
She also glossed over the fact that software can be distributed free with its own payment systems in laptop/desktop OSs like Windows, OS X, Ubuntu etc. When I paid for Sublime I didn't go into an App Store to pay for it.
Smartphone/tablet OSs are logical successors to the laptop/desktop OSs we have not game consoles. They are general purpose computing platforms.
Game consoles are general computing platforms as much as anything. Like Apple's devices they are artificially restricted with a walled garden model.
"I own this device, therefore I should be able to run anything I want" is an argument I can understand. "Company X invented this platform and therefore can choose what to allow to run on it" is also an argument I can understand (though I disagree). What I can't understand is this argument that Apple specifically shouldn't be allowed to restrict software but game consoles should.
If it was upto me, I would even argue for fairer rules there. Right now, it is Apple and they are sitting on a much more important computing platform for developers in terms of value, so I am fine if companies concentrate their efforts on iOS. If a precedent comes from this that can be applied in other places, I am all for it.
Well, I didn't see anyone here saying that game consoles should restrict software they run. They are in the monopoly wagon as much as Apple.
Users should be allowed to run any software on their machine.
This is true that game consoles are walled gardens. But the question is, what is the market like for game consoles, when you compare common substitutes, as compared to what the market is like for smartphones.
I would argue that the game console market is much less concentrated than the smart phone market.
Anti-competitive practices are only illegal if a company has significant market power. And, IMO, Apple has much more market power than playstation, given that Apple controls about 50% of the smartphone market, in the USA.
> What I can't understand is this argument that Apple specifically shouldn't be allowed to restrict software but game consoles should.
The reason is because Apple controls half the smartphone market, in the USA, whereas game consoles don't have that much market power, especially, if one were to claim that the PC market competes with game consoles. (Which I say that it would. And I would also not say that smartphones compete with game consoles)
Apple's actions only become illegal, because of the combination of both their actions, and the fact that they have significant market power.
By their technical base, yes, but not by their usecase. Consoles have games and apps for media-consumption, but no apps for working, managing your life or other stuff. They are limited in the category of apps they allow, while smartphones and tablets are free for everything (even though they have some restrictions on the type of content they allow in their own app stores).
The judge’s point is that this - “walled gardens” - is an economically sound and widely-used practice that has not previously been found to be unlawful, and therefore (likely) no basis exists to find in favor of Epic’s claims at this stage of the proceedings.
(Usual disclaimer applies: I am not your lawyer, I will not prepare additional citations, please seek legal counsel before taking action based on anything written above.)
Not unlawful maybe, but unfair? I think the answer is yes.
It's already happened.
Being politically influential, vertically integrated, well organized, and able to negotiate cohesively as a cartel, the Seven Sisters were initially able to exert considerable power
https://en.wikipedia.org/wiki/Seven_Sisters_(oil_companies)
Apple is more powerful, more influential, more vertically integrated and more capitalized than any of those companies.
I think that's a case a person could make in a court of law, but there are also compelling cases for "It's more like a console than not" and for "It's its own thing, a separate category of computing device, which should be beholden to a separate set of rules."
The App Store was one of the value-adds Apple brought to the smartphone ecosystem. In a system of heterogeneous methods to put apps on phones (if the app suite was configurable at all and not pre-loaded onto the device), Apple provided a system where they would do quality curation of the apps that were loaded on the device they made and a clean, obvious method to track the apps a person wanted on their device and install them. No complex configuration, no different-installers-for-different-apps, none of that PC-ecosystem nonsense. Along with the iPhone API (that erred on the side of performance over flexibility), it brought a strong product to market.
It's possible what is offered now isn't the same thing, but I think a case could be made by a competent lawyer that the store is part of the entire product offering and makes for a better consumer product, which is what US antitrust law often hinges on (consumer harm).
The argument that there is some other platform where software is distributed for free relies on that platform being comparable iOS.
If it is comparable to iOS, then consumers can just choose it instead.
Superior for developers because their margins improve. For low margin ones like Spotify that is make or break, especially when you take into account that they are fighting with preinstalled and OS promoted incumbents in both the platforms like Apple Music which are not subjected to the same.
Yes, let's ignore the actual predecessors of smartPHONES, you know, cellPHONES. It makes our argument much easier, much.
I mean, it isn't a big deal there because you can just go purchase these stuff on other stores.
If so, I would argue that it's high time to revisit the 30% charge. Whatever happened, competition among platforms did not reduce the 30% fee. I'm not sure why, but even if we cannot prove that there was price fixing, the Apple app store and other platforms have become so powerful that individuals and small companies cannot negotiate with any of the stores for a fair price.
Steam, at least, has it beat, in 2005: https://en.wikipedia.org/wiki/Rag_Doll_Kung_Fu
I'm fairly certain there were apps available for purchase on Nokia and other phones well before that, as well.
App Store didn't come until 2008.
Like in many other issues involving Apple, what looked like a positive change in immediately-pragmatic terms ended up being a faustian bargain in the long run. Maybe we should just discuss this in terms of “10+ years have passed, things have changed, what was good before might be bad today”. Stuff like the single non-negotiable browser engine was a curiosity and a small impediment 13 years ago, but now it’s a real threat to the health of the web ecosystem. Same for the single-appstore model, which effectively enables a rent-seeking cartel (Apple and Google) which any serious antitrust scholar should find abhorrent.
Include many (hint - the first 3) that were taking huge chunks of game publishers' money long before the iOS App Store ever existed. There were also many app stores for palmOS, WinCE, etc. some of which collected far more than 30%.
Steam probably had first "app store", but it has to be installed separately and usually you don't have to use it for the most part - you often could buy it online directly from the publisher or on CD/DVD.
PS Store launched in 2006. That's closest to what Apple did. Actually, exactly the same for most part until Apple added in-app, subscriptions etc. Difference was that to get listed on App Store you just had to pay $100 and make application that follows guidelines.
Here is where there are lot differences:
- Legally you can't sell any software for PlayStation without Sony getting a cut. - That includes physical media - Steam can only get it cut from sales on its store - Publishers/developers can either sell directly to you without anyone getting a cut - Or they can sell you a steam code and then steam doesn't get a cut
This is why I'm saying that Apple is closer to Sony than Steam.
I don't know where 30% cut came from, but I know steam has the same cut.
I vaguely remember that when Steam launched and started charging 30%, it was way less than what retail charges.
Presumably, if they’d said “because that’s what Google is/was charging”, it could be pursued as price fixing.
That's not price fixing if they make the decision to match Google on their own, rather than in concert with Google.
So Apple effectively only gets revenue from apps $2+, which then subsidizes the costs of reviewing and distributing the plethora of apps that are free.
In a way, it's a similar principle to progressive taxation. If your paid app is a hit on the App Store, then it's helping support the existence of all the free ones too.
Apple isn’t paying 30c + 2.9% i.e. 33c that someone with no experience ever can get on opening a Shopify store.
Justifying lax antitrust with the fact that other, similar market-power abuses, have also been permitted in the current lax antitrust atmosphere... as close to circular logic as it gets.
I think legally it makes a pretty big difference: abusing a monopoly is considered a social bad because and to the extent that it results in higher prices for consumers.
By not allowing anyone to charge differently on iDevices.
"Everyone else" being other middle-men with enormous market power?
> higher prices for consumers.
Monopoly and market power can also kill companies that "should have" prospered, depriving consumers of choice. Like the supermarket that gives preferential treatment to products owned by the same conglomerate, or the search giant that prioritizes its own services [1]. I would consider that a social bad as well.
I think there are completely valid cases for having a locked down phone, but it should be up to the user, not the device/OS maker. In this case, I don't think a phone developer can negotiate fair terms until the users have choice.
Single purpose locked-down devices are all around us from ereaders to TV streaming boxes to game consoles, and here I think it's important to distinguish by purpose from the more general purpose of a phone.
Also, I'm not sure why you think Apple v. Pepper is relevant here?
How ridiculous.
A) It's not the margins, it's the lock-in.
B) Why didn't the Judge ask what kind of 'margin' Apple or MS gets for desktop versions of their apps? Because it's not 30%.
C) Asking 'when did Apple become a monopoly because they were not 15 years ago' is irrelevant: when did Standard Oil become a monopoly? AT&T? Certainly not the day they started out. These issues are shades of grey.
I'm tired of judges ruling on issues they don't understand, we need more expertise, just as they have in medicine.
Perhaps the most fundamental issue here with respect to 'Nintendo' comparisons - is that Gaming Consoles are purchased for Playing Games. That's it. All market participants know the stakes.
A mobile phone is an entry point to every line of business imaginable - it's a very broad platform and Apple has tried to take cuts of incidental businesses for all sorts of things.
The analogue would be AT&T charging you for 'every kind of business you did over your phone'.
Or Verizon charing you 30% for 'any kind of business you do over the internet'.
Or the electricity company for 'anything you use electricity for'.
Apple is leveraging the broader terms of mobile access: voice, browser, basic apps, which gives them a duopoly over mobile devices with Apple - into a crazy monopoly over their own platform.
Many markets are not rational in the way we would like them to be and have to be regulated, this is very common with single points of access: phone, water, electricity, energy, drugs, hospitals.
This looks like a prime opportunity for some creative and thoughtful regulatory response.
On Epic's own terms, that's not what Apple did. There never was a market for iOS apps that Apple took over.
That means the best argument actually is that they became a monopoly on day one, but you dismiss that for some reason.
You shouldn't be considered to be an infringing monopoly on day one with a single customer.
What lock in? Nobody is forcing Epic to develop for iOS and Fortnight is available on pretty much every other platform. It's literally the antithesis of lock in, no matter how much you dislike Apple or its perceived unjust influence.
Incidentally, the 30% came from the iTunes Music Store, on which the App Store was based 100%.
The most popular game consoles have 2-3 thousands games total. They are truly "curated". The Apple App Store and Google Play store each have 2-3 million apps each. They're orders of magnitude larger than game consoles. This is the crucial difference in platforms.
https://www.msn.com/en-us/news/technology/the-30percent-fee-...
> In December 2014, Rogers presided over a jury trial against Apple, in which plaintiffs claimed DRM on Apple iTunes violated antitrust laws. On December 16, 2014, the jury reached a verdict in favor of Apple.[10]
Source: https://en.m.wikipedia.org/wiki/Yvonne_Gonzalez_Rogers
This is a somewhat shocking conclusion to come to since the independent developers neither set the fee, nor process the payments. I can see why it was overturned.
Are the current-day costs of those "myriad things" in any way comparable in magnitude to the 80s cost of cartridge production? I highly doubt it. Bandwidth is cheap enough that single webpages are several megabytes each, if you load everything. Card processing fees are 3-4%. My bet the breakdown of Apple's 30% is >25% "licensing" and <5% cost of provided services.
Very true. Worth noting here also is that (US) antitrust law isn't designed to break up 100% of all monopolies.
Microsoft of the 90s was much-lamented, but in reality they extracted far less value than they could have. They could have easily asked for 30% of all revenue of all Windows software, and developers would have had to pay it.
I'm hesitant to advocate breaking up of platform monopolies or duopolies, but a lesser-version of antitrust law would substantially benefit consumers in both app stores and ISPs. In both cases, the monopoly stems from monopolized access to the end customer, which is what would be beneficial to attack.
IMHO, a sliding scale of mandates for increasingly-open third party access based on market share (broken down into each user market!) would be appropriate.
If you want 90% market share, go for it. But you'd better believe you're going to have to provide (1) customer access to third parties & (2) any work required to enable them, at cost.
Which is really dangerous, IMHO, because a lot of the most vile bits of monopoly power can happen without directly causing immediate consumer harm.
You shouldn't need to prove consumer harm to win antitrust litigation. That should be just one of a few different harms, any one of which should be able to win antitrust litigation.
As the judge pointed out yesterday, Epic has "created a failsafe definition". Because they have defined a single product market, Apple by definition has a monopoly over their own product.
But assuming Epic's theory is true, it would have been true from the very start of the App Store, back when Apple had barely any market share. Of course, it would have been absurd to complain in 2008 that Apple was unlawfully maintaining its monopoly over "iOS app distribution", which is why Epic's lawyer largely dodged the question during the hearing yesterday.
The history is interesting and informative, and explains a lot about why the US government started to care about issues of corporate governance in the first place. When people talk today about the dangers of "monopoly," they often misunderstand the point entirely.
Size alone is not the issue. It never has been.
They have over 50% market share though. They're by far the largest smartphone manufacturer in the US. And they also get the vast majority of app developer revenue, much more than the Google Play Store.
> Android has 86% worldwide.
Worldwide market share is not necessarily relevant to US law.
> They are no where near a monopoly like Standard Oil or Bell.
This isn't actually required by antitrust law.
Apple also has a lock over it's own platform for which switching costs are very high.
If people switched phones every few weeks, this would be less of an issue.
Windows Mobile, Symbian OS, BlackBerry OS (and to some extent Maemo) all had the opportunity to compete with iOS and Android but were either too slow to transition to market demands or did not get a lot of traction to start with.
While not officially a monopoly in my book, I think it's safe to state that we're now down to iOS and Android for 99% of the market with KaiOS Ubuntu Touch (Tizen?) picking up some of the more niche or cheap devices.
The person you are responding to basically quoted the definition of a monopoly, as according to the opinions of the US government.
If changing prices does not change demand for your product, then by definition, according to the US government, you have significant market power (IE, you have a monopoly. The definition of a monopoly is merely having significant market power, according to anti-trust law)
That is the definition that judges and the government use for market power.
It's not clear to me that the timing was essential. Apparently Kodak had a policy since 1975 to only sell parts to direct purchasers of equipment, but the initial case wasn't filed until 1988. So the official terms, which were between Kodak and customers, not Kodak and ISOs, hadn't changed recently.
Clearly Kodak was taking some non-official anticompetitive actions, but that's not the same as changing the official terms.
In Kodak, customers originally purchased Kodak copiers without any aftermarket restrictions, and then several years later Kodak changed their policy and stopped selling repair parts to the ISOs, which left customers locked into buying repair services from Kodak instead.
The key factor in Kodak was that there was change to the conditions under which customers could obtain repair parts that customers could not have reasonably anticipated or planned for when they originally purchased Kodak copiers. The fact that a change in policy occurred is very important to that case, and indeed some subsequent courts have found that absent that change in policy, Kodak does not apply.
Epic's lawyer spent the first part of yesterday's hearing attempting to argue that Kodak applied to this case, but judge seemed very skeptical of this line of argument. As Apple's lawyer correctly pointed out, single-brand markets are a unicorn in anti-trust law and this case does not fit the narrow exceptions created by Kodak (and a related case, Newcal).
As in, to continue with the game console analogy, you must have at least one license to a powerful engine (like Unreal Engine with a 5% fee) to develop efficiently.
Do you actually save 5% (assuming PS is 30%) by developing for the Apple ecosystem? (Assuming Metal is comparable to Unreal)
Probably not - assuming you're being smart and targeting multiple platforms, you're still going to be using Unreal/Unity. And even if you're only targeting the Mac, Unreal/Unity bring a lot more than rendering to the table, so you're probably still using either of them, all with a commercial license.
And unless you're doing distribution yourself, anywhere you put your game will take a percentage, pretty much all around 30%. Some places like itch.io let you define how much they take, but no one really uses itch.io for anything bigger than an indie game.
Depends, plenty of indies are doing alright with Apple's own gaming frameworks.
Anti-trust laws have specific conditions to meet such as predatory pricing, product tying, exclusive dealing, etc. It's not just a matter of market share and market power, they have to have obtained or maintained that market position unfairly. This sets a pretty high bar in a market with 2.5 major app platforms (Apple, Google and Amazon).
Shouldn't a judge look at what is allowed by the law, instead of being the devil's advocate and say "those guys have done it for years, so it's fine"?
Something might be a long standing practice and still be against the law. Something might have not been against the law in the past and be against it now. I'm not saying that it is, but that's what the judge should base his argument on.
The first step to finding legal precedent is exploring practical precedent. This being an injunction hearing, part of the judge’s job is determining whether Epic is likely to prevail in its argument. The fact that it seeks to challenge practical precedent makes the outcome less predictable and an injunction less reasonable.
I haven't been able to find the actual details yet, but from what I can gather, this is not the actual hearing.
Right now, the judge's job isn't to determine whether Apple's terms were illegal, or whether Epic breached those terms with Apple.
The judge is deciding whether or not Apple should be injuncted from booting Fortnite from the App Store, and whether or not the matter should proceed to trial.
It's less about black-letter law, and more about judicial discretion (albeit exercised very conservatively). So this type of looser language is to be expected.
Source: http://www.austlii.edu.au/cgi-bin/sinosrch.cgi?method=auto&q...
I assume "enjoined" is preferred in the USA (and in all fairness, I guess it would be better to use the American term for an American case).
That's extremely unlikely -- it would have been prosecuted previously otherwise.
A better term for "long standing practice" is precedent. Laws often don't account for certain edge cases or unseen developments, so judges in common law countries do very much look at what other judges have permitted or not in the past, in order to maintain continuity.
Otherwise you'd be at the whim of each and every judge interpreting law totally differently, which would be a nightmare for anyone trying to figure out what is permitted or not.
This sounds like the legal equivalent of the joke about the two economists who find a $20 bill on the ground. One asks "Is that a $20 bill?" The other says, "Couldn't be. If it was, someone would have picked it up by now", and they move on.
But the far more common scenario is that it's been litigated and the counter-argument found wanting.
When you get to balance of powers and prosecuting presidents, you're not really operating primarily in the legislative game anymore, but rather in the power politics game, no matter how much they dress it up in legal language.
In general, if something is common for decades and a plaintiff comes to claim it's illegal, the burden of proof is on the plaintiff. The defendant will be able to bring up previous court cases where the status quo was challenged and unmodified.
This has been done in the past regarding firearms law - “the law has stood for decades, so it must be constitutional.”
I find that reasoning specious, but it’s happened multiple times so it’s apparently accepted by at least a plurality of our judiciary.
That said, I think most people are going to be disappointed regardless the outcome.
Markets aren’t created by god, they’re created by customers.
If you want to force the creation of an App Store market, one that customers aren’t actually asking for, it will need to be government-mandated.
If you think the EU or US knows how to create a utility market of app stores without completely fucking up competition, security, consumer experience, and enshrining Android and IOS as the “government sanctioned platforms” for 50 years, you are placing far too much faith in the power of regulation. It takes years to decades to get this right - no one has the answers, and governments aren’t great with uncertainty (see how policy and science mix!).
Laws move very slowly, especially with partisan gridlock. Do we really think these platforms have a 50 year lifespan? If not, it’s probably not worth regulating.
Be careful what you wish for.
> Judge Gonzalez Rogers did recommend, though, that the case be taken to a jury trial in July next year to settle these issues permanently. “It is important enough to understand what real people think,” said Rogers. “Do these security issues concern people or not?”
If Microsoft introduces wiOS (Or OS W?) in which you can only run applications you install through an app store, then users and developers will decide whether that's an experience they want and if it is, then an ecosystem will develop around it just as happened with Apple. If not, it will just be an expensive lesson for Microsoft while everyone remains on their preferred OS.
If it turns out all major OSes lock their users into app stores and there remains a significant market for users who don't want that experience, the market will be primed for another OS competitor to take that share.
Of all people, Microsoft could do it. They have before. A Windows X with a appstore only would be a trivial variant for them.
Either way, it’s irrelevant to the parent comment: if you agree to the terms, they willfully defy them... well, you’re violating your commercial agreement.
What next, I sue amazon for discontinuing my AWS services when I start running spambots on it or some other willfull violation of their avceptable use policy [1]?
Its ridiculous.
The only ones winning here are lawyers.
[1] - yes, they do have one, and you will get suspended if you violate it. https://aws.amazon.com/aup/
Early market movers have an advantage and that will keep growing.
Another reason why many hospital systems, military, etc department pays microsoft to support XP. Those OS aren't "better". Most people using them won't choose them over windows 10 or Mac if given the option.
You have open source Android or Linux to start with.
As long as Linux can be installed on desktops you technically have a choice.
No.
There are massive barriers to entry for some markets, particularly platforms, and it's naive to indicate that 'some competitor will come along'.
Many markets are 'locked down' to the point wherein there is very little competition among them, and high tech gives us many examples of that.
Ed Colligan, CEO of Palm: "We've learned and struggled for a few years here figuring out how to make a decent phone, PC guys are not going to just figure this out. They're not going to just walk in.”
Those were fundamental market disruptions and it doesn't happen very often.
Some markets do that every 'generation' (gaming consoles) but usually not.
Laptops may have presented such an opportunity, but they were slowly differentiated from the desktop.
So 'new markets happen' and during that time, yes, there's opportunity for new participants ...
But who 'won' the 'new smartphone wars'?
Apple and Google. Literally the two richest companies in tech. (Or close to).
That 'new market opportunity' was championed by none other than the giant gorillas of tech (and business) says something about the nature of power and competition.
I'm curious to know what they plan to do with iPad OS though... the MacCatalyst and Swift UI strategy will be interesting to watch evolve in light of these challenges.
But Microsoft doesn't make hardware that's the only target for their desktop OS, so they don't have the market lock-in Apple does, nor could they claim the app store and the hardware they don't make are part of the same product for PCs running Windows.
In contrast? They already do this for the XBox Live store, where they are the sole online distribution channel for software running on the console they manufacture.
Second, why break up AT&T in 70s/80s, you know what you are getting into when you sing up a contract with them.
ETA: Fixed wrong link.
Didn't US have a mail service at that time?
I think that is an alternative "platform" for communication (just like Android to Apple), a bit of a stretch but not much.
In relation to this lawsuit it's mostly the same, but in general it's way different. The iOS is not a gaming platform. While gaming consoles are purely for entertainment and mostly optional in almost everyone's life, phones are not. The iOS walled garden is a lot more like a Windows or Mac walled garden would be, if it existed, which would be horrible.
Phones are somehow not accepted as a general purpose personal computing platform, while they clearly are. I don't think Epic Games could reasonably sell that argument in their position, but it doesn't mean they are wrong.
Of course there is. It's called the App Store, and it's where all of the apps that support the iPhone 3g are. And just like your example with the PS3 these apps are likely not maintained. The fact that you can't download the latest version and run it on an iPhone 3g is no different than not being able to play PS4 games on a PS3.
I have an iPhone 4 in my desk, as a reminder of how quickly the world moves. I just turned it on. It connected to wifi and worked just fine. I'm sure no different than your PS3.
Epic would be perfectly happy with a big-boy exemption for Fortnite that the "little devs" (who actually might be hurt by the 30% cut or "walled gardens") would never see. They're half owned by Tencent, which stands for everything wrong with exploitative F2P tactics and China's foot-in-the-door politics. I don't want them to win.
But Apple, of course, is clearly planning to cut off open platform development in favor of a single-store system, slowly creeping into macOS. Worse: Microsoft is learning from them and will clearly attempt to replicate any such system should they be successful, which would end up in something closer to a true monopoly.
It's kinda awful. I wish this wasn't two companies suing each other over creed but an actual investigation by a government agency for exploiting a monopoly position.
Want to put out some software and not pay the $99/year Developer Fee and still have a simple install process for your users? Good luck with that.
Brew install whatever you need.
Apple is doing a decent job here. Art Student gets a very easy to use computer with a safe app store.
Comp Science student can compile and install whatever they need.
And the judge explicitly disagreed.
Just kidding. It’ll be $59.99 at both stores. There is, practically speaking, no competition in the retail space either.
It's only a matter of time until this will be the only option. Will your argument change when this comes to pass?
Distribution is not determinant in license fees.
Also, some console games that you buy on disc lock features behind IAP. Even when you sell the physical disk, you can’t sell the associated in app purchases.
Amazon don't have to pay 30% for every transaction I make through the Amazon app on my iPhone. Same with eBay. Yes, I know Apple class these as different categories, but when push comes to shove what's the real difference here?
Epic are providing electronic assets that they have paid in-house artists to create and want to distribute in exchange for their in-game currency (V-Bucks). Why should Apple cream 30% off the top of that revenue?
Other than the electronic distribution, Apple has no fixed or variable costs relating to these in-game assets.
I fully agree Apple should take a cut of Fortnite being a reviewed, and therefore trusted, app on their store. I find it hard to justify the ongoing 30% cut of additional assets that bear no discernable cost.
Every business owner, mall owner, or head office of a franchise takes a large cut of the profits with likely little in fixed or variable costs. Saying this should change is like arguing society is fundamentally flawed. With the market as it is now Apple can ask for the 30% just for being associated with the brand.
So is this case is going to determine if phones are general purpose computers or game consoles?
Many people use a phone instead of a computer, often it's an individual/families only internet access. I don't think there are any examples of general purpose computers acting as walled gardens.
Edit: Change first sentence to question.
There is zero law that makes this distinction.
It worries me that game consoles, an appliance used for playing games, could be used to set a precedent for general purpose computing that could quite possibly lead in a direction non/very few of us want to go.
One could even argue that they’re media creation machines, with the presence of RPG Maker (and a few other pieces of software I can’t recall the names of at the moment).
Also, I can’t help but notice the circular logic—a game console isn’t general purpose because it’s locked down so as not to be general purpose.
The problem is simple. There is no way for a user to load their own signing keys for the boot ROM to load other OSes like linux, or even simpler disable signature checks.
There is no way to give iOS your own signing keys or disable signing checks to run applications. As such there is no way for me to run Firefox rendering engine. This is because the app store policies. Then there are other open source applications that don't want to bother with having a developer account with apple.
There also the fact proprietary software probably raises their prices. So the user eats the 30% instead unlike the case if that software were able to self distribute.
Many countries have VAT at around 20% on each sale for example so wouldn't Apple be losing money if they went down close to even 20%?
If Epic were to allow side-loading on iOS, developers may notice a financial hit from increased pirating of apps.
Regardless, Epics actions don't remove the case that Apple has a monopoly and uses anti-competitive practices to benefit itself at the cost of the consumer and creator.
Apple is controlling access to customers with iOS devices. There is no alternative.
Epic is not. Any competitor can sell to the same people that buy from Epic's store.
It can fight the 30% but as long as Apple allow small business and people like us pay 99 get publish I am on that m... walled garden side.
Its' not honest, but it's definitely not 'the security issue'.
I'm not sure what people are expecting the legal system will do in favor of Epic. At best Apple will be found to use Unethical cornering the market strategies, but that's unrelated to the TOS.
platform. walled garden. precedent. dishonest. ... load of judicial bs
everybody charging 30% is evidence of monopolistic behavior, not a defense argument
judge is okay with walled gardens because she works in one
Why does that sound like it's a reality tv show?
Our biggest hope lies in the EU, at least they try to fight these giant corporations..
That hasn't been true historically.
It would rebut many of these complaints but I honestly don't think it would be very popular.
> She also reiterated that Epic Games made a "calculated decision" to defy Apple's App Store rules, and the court doesn't provide injunctions for contractual disputes. Epic was "not forthright," she said. "There are people in the public who consider you guys heroes for what you did, but it's not honest.
I also fail to see how that is relevant. She comes off as overly interested in Apple succeeding here.
That means that saying, "Well, other people do it too" is exactly what a judge should be examining at this point. There was a T&C contract, the form of which is standard across the industry, and Epic broke the T&C on purpose. Which likely means no injuctive relief at this point.
You could argue that the T&C are onerous and/or that there are anti-competitive behaviors, but neither of those can be addressed in this preliminary phase.
I don't see any basis for claiming that the judge has an "over interest" in Apple succeeding. That claim implies impropriety, and such a claim should carry a high bar for evidence.
I support that outcome. I don’t think Apple should be targeted. If walled gardens are bad, they should be banned everywhere, not just the one Epic happens to want to profit from.
> Microsoft has had a walled garden.
No it doesn't. I have never purchased anything from Microsoft. 90% of the software I have purchased is straight to the vendors (e.g. InternetDownloadManager, ACDSee, etc.). The remaining 10%, even when it comes to Microsoft products (OS, Office), I purchased them back-in-the-day from stores, and I got the CDs/DVDs. Same with computer games. AoE, Diablo I-II-III and expansions, and many more.
I know that M$ tried to pull everyone through their (imho) crappy Store, but still, I can get everything I want/need outside their marketplace and straight from the Devs, bypassing their store. Unless the Judge strictly means the mobile app store, in which case, I exited WM6 a 10+ years ago and have no knowledge of this.
Apple's app store isn't comparable to the XBox store (revenue on the apple store was 50 billion last year, compared to three on the xbox), it's comparable in reach to the Windows ecosystem overall.