Fortnite Vs. App Store Judgment Is In, Apple And Epic Games Responds
The ongoing and high profile Epic Games v. Apple trial has now come to a close, with Judge Yvonne Gonzalez Rogers (YGR) ruling that Apple’s anti-steering approach to the App Store is anti-competitive.
However, Apple did win out on all other counts.
The ruling came on Friday afternoon via a 185-page verdict. Part of that verdict saw YGR say that while the court “cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws,” the trial did show that Apple’s conduct is anticompetitive according to local Californian law.
Having defined the relevant market as digital mobile gaming transactions, the Court next evaluated Apple’s conduct in that market. Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws. While the Court finds that Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal. The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist.
Nonetheless, the trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws. The Court concludes that Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.
Apple released a statement saying that the court has proven what it has been saying for years — the App Store is not anti-competitive.
Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law. As the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million U.S. jobs, and where the rules apply equally to everyone.
Predictably, Epic has already said that it plans to appeal the decision, saying that the game company is “fighting for fair competition among in-app payment methods,” according to CEO Tim Sweeney. He also said that Fortnite will not be coming back to the App Store until it is allowed to use Epic’s payment system. Apple isn’t required to let Epic bring Fortnite back at all, according to the ruling.
Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers. https://t.co/cGTBxThnsP
— Tim Sweeney (@TimSweeneyEpic) September 10, 2021
In fact, Epic Games must now pay Apple for the time it infamously added its own payment system to Fortnite without Apple’s approval.
(1) damages in an amount equal to (i) 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus (ii) 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment; and
(2) a declaration that (i) Apple’s termination of the DPLA and the related agreements between Epic Games and Apple was valid, lawful, and enforceable, and (ii) Apple has the contractual right to terminate its DPLA with any or all of Epic Games’ wholly owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion.
As a reminder, Fortnite has been out of the App Store since Apple banned Epic after that payment system was added. The whole legal battle was based around that fact, with Epic wanting to bypass App Store payments and sell VBucks via its own system.
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