Apple Epic Trial
Is Fortnite just a game? The answer is crucial to Epic v. Apple.
The trial is going deep on game industry definitions for good reason.
Photo: Getty Images
One of the most curious questions arising from the ongoing Epic Games v. Apple antitrust trial, now on its seventh day of testimony, is why both sides are so intent on establishing their own definitions of basic tech and game industry terms.
Does a phone qualify as a game console, or is it a computer, or both? What's a special-purpose device, and what's a general one? But perhaps the most perplexing line of inquiry has been what is and what is not a video game. Is Roblox a game, or just a platform, or maybe it's an app store? How about Minecraft? What any of this means for the future of Fortnite is still a bit fuzzy, but it's starting to come into focus with each passing day in court.
Defining these terms is important because they help make industry jargon more accessible, especially in a bench trial that will be decided by a judge who is not a gaming expert, but is very much an antitrust one. Yet far more important is that Apple and Epic both have strategic incentives for their respective interpretations of the game and tech industries to win out in the courtroom.
At its heart, this trial is about whether the creator of a closed ecosystem can illegally monopolize software distribution on a platform it owns, and whether Apple and the App Store fit the bill. To do that, lawyers on both sides have to try and establish what the market is. Is it the video game market, the entire mobile app market or just the iOS app market? Apple is far from having a monopoly on the first, arguably has a dominant position in the second and does have top-down control of the third.
The distinctions between Apple's power and how it wields it in those various markets will determine just how consequential the outcome of the trial will be. That will be true both when the trial is decided later this month and for many years into the future, when the verdict becomes either a foundation or a cautionary tale for how other companies think about challenging the App Store.
If Epic succeeds in broadening the scope of the proceedings to include all of iOS and the App Store, it may win a ruling that strikes at the totality of Apple's platform and threatens to open up the entire iPhone ecosystem to competitors. That's an apocalyptic scenario in Apple's eyes; its opening argument called this case a "fundamental assault on Apple's secure and integrated ecosystem." So the iPhone maker is dead set on narrowing the scope of the debate to the game industry, where a ruling could result in less direct or collateral damage to iOS in the event Apple does lose. Narrowing the argument to the game industry also makes Apple's 30% commission on the App Store appear more palatable, because in that case it competes on an even playing field with similar commissions from Microsoft's Xbox Store, Sony's PlayStation and Valve's Steam, among others.
Apple is invested in this argument, so much so that its legal team last week aggressively and antagonistically cross-examined Xbox VP Lori Wright, who argued Microsoft sells Xbox consoles at a loss and makes up for it with software and services. Apple then filed a motion to undermine her testimony for lack of evidence. Microsoft has since submitted evidence to support Wright's testimony, but Apple's move suggests comparisons likening the iOS game market and the console game market are critical to its defense.
So how do you narrow the scope of a case this complex? Well, you argue a whole lot about whether the app in question, Fortnite, is just a game, or if it's something more. That's what Epic CEO Tim Sweeney argued in his testimony last week when he called Fortnite a "phenomenon that transcends gaming."
In Epic's eyes, Fortnite is more than a game because it includes concerts, deep social interactions and very real and very lucrative digital commerce. But Epic has also admitted that Fortnite needs to grow beyond the bounds of its popular battle royale game mode or risk declining into obscurity, as many popular online games do.
"We've reached basically full penetration on console, and mobile offers the biggest growth opportunity … Everybody has a mobile device, and they have it with them all the time. Not everybody has a console and not everybody has a gaming PC," Matthew Weissinger, Epic's marketing director, testified on Monday. Weissinger revealed that Fortnite, prior to its removal, counted roughly 2.5 million daily active users on iOS, or about 10% of its total, and represented the fastest-growing market for Fortnite across all platforms.
Sweeney spoke in broader terms last week, casting the outcome of this trial as existential to Fortnite's future and its ability to power a unique blend of internet economy and online social space. "The long-term evolution of Fortnite will be opening up Fortnite as a platform for creators to distribute their work to users … and creators will make the majority of profits," Sweeney said last week. "With Apple taking 30% off of the top, it makes it very hard for Epic and creators to exist in this future world."
If Fortnite is just a game, then this is about one game company's quest to get one game special privileges that let it bypass the App Store's restrictions, and that's not especially convincing. If Fortnite is more than a game, as numerous Epic executives have now contended, then Epic's quest can be recast as one to open a door to Apple's walled garden, to the benefit of developers everywhere. It's no secret that Epic called its campaign to launch these lawsuits "Project Liberty." To Epic, this is a fight for its freedom to build Sweeney's version of the metaverse and not stay beholden to any device manufacturer or operating system creator.
Of course, this is just one small slice of a multi-faceted debate happening between both sides. The ontology of the video game won't be decided by this case, and whether Fortnite is considered a game or something more than one likely won't be the most important factor Judge Yvonne Gonzalez Rogers considers when reaching a verdict. The trial is just now wading into the thorny antitrust arguments that will ultimately decide the market we're dealing in and whether it can be proven Apple has harmed consumers and stifled competition within it.
But the scope of Fortnite and whether it can be considered more than just a game sits at the heart of Epic's lawsuit and, as we've heard in recent testimony, the future of its business. Epic may be commonly thought of as a game developer today, but its ambitions are to be a multimedia giant that "transcends gaming." Standing in its way are Apple, the App Store and that 30% cut.