On the ‘frontier’ of antitrust law, a judge recommends a jury make the call in Apple vs. Epic
"When you are taking on the biggest company in the world, when you know it's going to retaliate, you don't lie down in the street and die."
The legal battle between Apple and Fortnite maker Epic Games continued on Monday in a hearing over whether Fortnite would remain kicked out of the App Store and the fate of Epic Games' Unreal Engine and other app properties as a result.
More than 500 people tried to tune into the hearing, maxing out the number of people who could dial into the Zoom call. Instead, fans of Fortnite violated court rules and started streaming the hearing onto YouTube and Twitch as part of the #FreeFortnite campaign.
But while Epic had its own internet fan base, the game maker hadn't seemed to warm over Judge Yvonne Gonzalez Rogers, who wasn't "particularly persuaded" by some of Epic's arguments, but also called some of Apple's reactions overblown.
She said she will be issuing a written order, but did not give a timeline on when she would make a decision.
The fight between the two companies centers on Apple's control over its App Store. Epic sued both Apple and Google last month for what it claims are monopolistic practices, like charging a 30% commission from all purchases of digital goods and not allowing developers to use their own payment systems. It also recently launched a new Coalition for App Fairness with other app developers like Spotify and Match Group to help lobby the companies to change their guardrails. Apple's core arguments continued to center around customer privacy and security, and Epic's recent actions were, in its mind, proof that controls are needed.
Epic had defied Apple's rules when it added a hotfix to the app and introduced a way for its game users to buy their own V-bucks and bypass Apple's payment systems. The stunt got Fortnite thrown out of the App Store, and it responded in a well-choreographed plan of immediately filing suit against Apple. (It would repeat the tactic against Google, too.)
"There's plenty of people in the public who consider you guys heroes for what you did, but it's still not honest," Gonzalez Rogers said.
Epic's lawyers argued that it was a necessary step it had to take because it showed that there was consumer demand for an alternative payments system after over half the buyers used Epic's option. (Apple's lawyers argued that the fact that it was only half showed that users still trust Apple's products more.)
Epic also defended its #FreeFortnite marketing campaign, which included a shot-by-shot re-creation of Apple's iconic 1984 ad, as necessary preparation.
"When you are taking on the biggest company in the world, when you know it's going to retaliate, you don't lie down in the street and die," said Epic lawyer Katherine Forrest.
But the hearing also teased out the beginning of some of the bigger questions surrounding this case, like whether we're talking about the iOS App Store market as a whole, like Epic would argue, or whether this should be compared to the video game market as an industry instead.
"This particular market has frequently had walled gardens, and it's hard to ignore the economics of the industry, which is what you're asking me to do," Gonzalez Rogers said.
There's also the question of when exactly Apple became a monopoly as Epic argues it now is. One of Apple's defenses is that it's always charged the 30% rate and, if anything, has only lowered that rate for companies offering digital subscription products. The 30% is also in line with other markets like Google's, which doubled down on its right to take a 30% cut and announced Monday that it would soon force companies like Netflix and Spotify into using its own payment systems.
"At what point in time did Apple become a monopolist?" asked Gonzalez Rogers.
It's a question that may end up in the hands of a jury to figure out instead. In the end, the judge recommended that the two sides proceed to a jury trial since she assumed whoever the losing party is will file an appeal and that the appellate court looks more favorably on jury verdicts. (This could have been in reference to the Qualcomm verdict, which was a bench decision overturned by the courts in August). "I know I'm just a stepping stone for all of you," she said.
Jury trial or not, Gonzalez Rogers signaled that it's likely that the Apple vs. Epic case would start next summer and could have a July 2021 trial date.
"As we've noted, these are important cases and they're on the frontier of antitrust law. You might as well find out what the people really think and want," she said.