A significant lawsuit between Apple and Epic Games could offer hints for what Big Tech’s relationship with antitrust could look like down the road. Apple and Epic Games began their trial on May 3, opening what is estimated to be a three-week trial for the two companies.
The lawsuit in question relates directly to Apple’s supposed monopoly on iOS apps. In August 2020, Epic Games decided to allow Fortnite players to save money by purchasing V-Bucks, the in-game currency, through Epic Games. By buying directly from Epic Games, the Fortnite creator cut out the middleman of Apple. The latter takes a 30% fee of any transactions completed in the iOS marketplace.
Upon hearing that Epic had done this, Apple immediately booted Fortnite off its service, sparking a massive uproar online. Google did the same, removing the app from the Android store for similar reasons. Apple also yanked Epic’s developer licenses for both iOS and Mac OS. Epic immediately filed a pair of antitrust lawsuits in California against the two tech companies. Epic Games CEO Tim Sweeney claimed that Apple “locked down and crippled the ecosystem by inventing an absolute monopoly on the distribution of software, on the monetization of software,” and that Google “essentially intentionally stifles competing stores by having user interface barriers and obstruction.” Apple would later file a countersuit, claiming that Epic intentionally breached Apple’s guidelines regarding the 30% cut to spark controversy, only to have the filing dismissed.
Apple’s control of the App Store market has consistently been tight. “One of the big questions of the case here is whether Apple is using its monopoly on iOS and extending it to the market of the App Store abusing its market power,” argued Stan Sater, a technology attorney at Founders Legal. The iOS system is culpable to such concerns because of its “closed” nature. If a company wishes to sell its app to 1 billion iPhone users, it must do so through Apple and pay it a 30% cut. Epic’s lawyers compared this market control to the antitrust lawsuits involving Microsoft. The U.S. government would accuse the creator of Windows of using its free internet browser to restrict competitors such as Netscape from gaining a significant market advantage.
Apple’s response to this comparison has been to emphasize its secure nature as a platform, claiming that the closed nature of iOS “ensure[s] that iOS devices were more protected from those malware and instability issues and quality issues that the PC world was used to.”
This lawsuit is not Apple’s first legal run-in regarding the App Store. In June 2020, the Department of Justice announced an antitrust investigation into the App Store regarding the 30% cut. The European Union has also opened its antitrust investigation into the App Store after Spotify complained about Apple’s license agreements in 2019.
“Market definition will be a key factor in this case, but it’s not the only factor in antitrust analysis,” said Ashley Baker, director of policy at the Committee for Justice. “Possession of market power alone still isn’t enough to establish antitrust liability.” Baker argued that Epic vs. Apple has gotten more attention in the press due to increased interest in antitrust policy related to technology.
Baker told the Washington Examiner that the lawsuit would be better considered a “contract dispute between two private litigants” than a case that would model potential antitrust-oriented breakups. “While a lot of the rhetoric surrounding the antitrust debate focuses on corporate breakups, structural separation in that sense is not a proposed remedy in this case. It also wouldn’t achieve anything other than driving up costs for both consumers and developers and shifting fee structures to alternative revenue schemes.”
While the trial is still in progress, Baker believes the state of antitrust law leans in Apple’s favor. “Courts are very reluctant to force companies to change their business models when there is no clear showing of consumer harm.”
