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.

Is Fortnite just a game? The answer is crucial to Epic v. Apple.

If Fortnite is more than a game, than the stakes in Epic v. Apple could end up being much greater.

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.

Climate

A pro-China disinformation campaign is targeting rare earth miners

It’s uncommon for cyber criminals to target private industry. But a new operation has cast doubt on miners looking to gain a foothold in the West in an apparent attempt to protect China’s upper hand in a market that has become increasingly vital.

It is very uncommon for coordinated disinformation operations to target private industry, rather than governments or civil society, a cybersecurity expert says.

Photo: Goh Seng Chong/Bloomberg via Getty Images

Just when we thought the renewable energy supply chains couldn’t get more fraught, a sophisticated disinformation campaign has taken to social media to further complicate things.

Known as Dragonbridge, the campaign has existed for at least three years, but in the last few months it has shifted its focus to target several mining companies “with negative messaging in response to potential or planned rare earths production activities.” It was initially uncovered by cybersecurity firm Mandiant and peddles narratives in the Chinese interest via its network of thousands of fake social media accounts.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Some of the most astounding tech-enabled advances of the next decade, from cutting-edge medical research to urban traffic control and factory floor optimization, will be enabled by a device often smaller than a thumbnail: the memory chip.

While vast amounts of data are created, stored and processed every moment — by some estimates, 2.5 quintillion bytes daily — the insights in that code are unlocked by the memory chips that hold it and transfer it. “Memory will propel the next 10 years into the most transformative years in human history,” said Sanjay Mehrotra, president and CEO of Micron Technology.

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Fintech

Ripple’s CEO threatens to leave the US if it loses SEC case

CEO Brad Garlinghouse said a few countries have reached out to Ripple about relocating.

"There's no doubt that if the SEC doesn't win their case against us that that is good for crypto in the United States,” Brad Garlinghouse told Protocol.

Photo: Stephen McCarthy/Sportsfile for Collision via Getty Images

Ripple CEO Brad Garlinghouse said the crypto company will move to another country if it loses in its legal battle with the SEC.

Garlinghouse said he’s confident that Ripple will prevail against the federal regulator, which accused the company of failing to register roughly $1.4 billion in XRP tokens as securities.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Policy

The Supreme Court’s EPA ruling is bad news for tech regulation, too

The justices just gave themselves a lot of discretion to smack down agency rules.

The ruling could also endanger work on competition issues by the FTC and net neutrality by the FCC.

Photo: Geoff Livingston/Getty Images

The Supreme Court’s decision last week gutting the Environmental Protection Agency’s ability to regulate greenhouse gas emissions didn’t just signal the conservative justices’ dislike of the Clean Air Act at a moment of climate crisis. It also served as a warning for anyone that would like to see more regulation of Big Tech.

At the heart of Chief Justice John Roberts’ decision in West Virginia v. EPA was a codification of the “major questions doctrine,” which, he wrote, requires “clear congressional authorization” when agencies want to regulate on areas of great “economic and political significance.”

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Enterprise

Microsoft and Google are still using emotion AI, but with limits

Microsoft said accessibility goals overrode problems with emotion recognition and Google offers off-the-shelf emotion recognition technology amid growing concern over the controversial AI.

Emotion recognition is a well established field of computer vision research; however, AI-based technologies used in an attempt to assess people’s emotional states have moved beyond the research phase.

Photo: Microsoft

Microsoft said last month it would no longer provide general use of an AI-based cloud software feature used to infer people’s emotions. However, despite its own admission that emotion recognition technology creates “risks,” it turns out the company will retain its emotion recognition capability in an app used by people with vision loss.

In fact, amid growing concerns over development and use of controversial emotion recognition in everyday software, both Microsoft and Google continue to incorporate the AI-based features in their products.

“The Seeing AI person channel enables you to recognize people and to get a description of them, including an estimate of their age and also their emotion,” said Saqib Shaikh, a software engineering manager and project lead for Seeing AI at Microsoft who helped build the app, in a tutorial about the product in a 2017 Microsoft video.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins