On Monday, the three-week-long antitrust trial between Fortnite developer Epic Games and iPhone maker Apple came to a conclusion with attorneys for both sides offering closing arguments to U.S. District Judge Yvonne Gonzalez Rogers, who at times interrupted to ask pointed questions. Rogers said that she expects to render a ruling sometime before August.
The battle between Epic and Apple could have serious ramifications for both companies depending on which side prevails; for Apple, it could mean that it has to change the way it runs its App Store ecosystem, how much it charges developers or both. For Epic it could mean that it has to abide by Apple’s rules and pay the 30% commission per transaction to return Fortnite to Apple’s devices (and avoid losing its developer status related to Unreal Engine) or forgo offering the popular battle royale game on the platform.
While the parade of experts, star witnesses such as Epic CEO Tim Sweeny and Apple CEO Tim Cook, and all the internal emails, memos and reports have some impact a large measure of it is just window dressing, as Rogers has to determine one fact: does Apple’s monopoly on iOS coupled with its market power constitute an antitrust violation and are there any previous precedents to support Epic’s claims?
Here are five important takeaways from the trial as we wait for a verdict from Rogers.
1: No matter how Rogers rules, you can expect that attorneys on both sides have already begun drafting the framework for an appeal to the Ninth Circuit court. This will make a resolution for both sides drag on for months. Judges know that any verdict they deliver will automatically be appealed shortly after being rendered, so Rogers will carefully consider her ruling and will be strongly supported based on existing precedents because no one wants their rulings to be overturned by a higher court.
2: Apple made a mistake in comparing the 30% commission it charges on app purchases to consoles. While 30% may be the industry standard for gaming marketplaces like Valve’s Steam, comparing it to what Microsoft and Sony charge may have been an error in judgment because console makers take a loss on hardware sales, but make up the difference on software sales. Apple, on the other hand, makes a considerable profit on each new iPhone sale.
3: Epic wants to continue to do business with Apple. It’s not improbable that Epic can return to the Apple App Store and restore Fortnite like nothing ever happened in the future, If it loses the lawsuit and a subsequent appeal It would be bad business to not return to the platform considering that it made $700 million in 30 months on iOS devices. Companies sue each other all the time; for example, Microsoft and Apple refused to do business for years but inevitably mended fences and Apple began selling MS enterprise software on Apple computers.
4: A ruling against Apple’s anti-steering policies is probably Epic’s best hope for relief. Apple banned Fortnite in August of last year because Epic used a server-side update to implement in-app advertising for V Bucks (Fortnite’s in-game currency) at a discounted rate. The move allowed Epic to circumvent Apple’s payment system and avoid paying the 30% commission on transactions. Anti-steering means that app developers can’t advertise in their apps directly to customers offering better deals or third-party stores. Having that provision removed from the rules would solve a lot of problems for Epic and thousands of other developers.
5: Regardless of the outcome, politicians around the world are paying close attention to this case, and given their noticeable disdain towards technology companies for a myriad of reasons too numerous to mention here, Apple’s can expect to be entangled in a fight against regulatory action beyond just political lip service and demagoguing. The European Commission has already taken action against Apple for the way its treats music streaming services such as Spotify, but this is just the tip of the iceberg.
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