Apple vs. Epic: The App Store’s antitrust endgame?

The Big Story

Epic's fight to stop 2020 from becoming '1984'

I'm sure you know the basics already, but just in case, here's a one-sentence recap of the whole Epic-Apple mess of yesterday:

• Epic pushed an update to Fortnite on iOS that let users buy cheaper V-bucks directly from Epic instead of through the App Store, which is pretty much the dictionary definition of "how to violate Apple's rules," so Apple kicked Fortnite off the App Store, which Epic saw coming, and it immediately filed a lawsuit alleging Apple's policies are illegal, and also aired a piece of genius satire spoofing Apple's "1984" ad that promptly went viral.

First of all, kudos to Epic, which played this brilliantly. Every other tech company should be taking notes.

• It made a bold assertion in a lawsuit — that "the anti-competitive consequences of Apple's conduct are pervasive," and that developers have no choice but to "accede to Apple's oppressive terms and conditions" — and then rigged up an experiment that seemingly proved exactly that, right before taking the case public.
• By using Apple's own ad — and reputation, and history — against it, Epic made a statement that a lot of people are going to remember for a long time. It's not impossible to imagine that the legacy of that first "1984" ad, one of the all-time great commercials, will now always include the Fortnite version.
• Epic also put out an FAQ about the whole ordeal that says, in essence, "This all really stinks and it's totally Apple's fault and we're just trying to save you money!"

As for what Epic actually wants? Its suit makes a long case against Apple's 30% commission, but the crux of its demands is all the way down in points 16 and 17.

• "But for Apple's illegal restraints, Epic would provide a competing app store on iOS devices," the suit says. Epic already has its own games store for PCs and Macs, so I suspect it's telling the truth here.
• Epic draws a distinction between the App Store on iOS — which is the only place to get apps — and the Mac, where there are plenty of options. "The result is that consumers and developers alike have choices, competition is thriving, prices drop, and innovation is enhanced," the suit says. This is what Epic really wants: not just a cheaper way to be in the App Store, but a way to be on the iPhone without being in the App Store at all.
• Case in point: Google also banned Epic from the Play Store on Thursday, on similar grounds. If you want to be in the Play Store, you have to use Google's payments. Epic's also suing Google, but you'll notice there's no ad and no histrionics. That's because it's easy enough to sideload Android apps — in fact, that's how Fortnite worked on Android for years before only recently joining the Play Store — and that suits Fortnite just fine.

Fortnite is the rare app that has a shot in this fight. As we've talked about with game-streaming, there are a lot of people who would likely think twice about buying an iPhone if it couldn't play one of the planet's most popular games.

• And Fortnite can survive without being on the iPhone, which is more than you can say for your average music service or email app.

What's next

'We applaud Epic Games' decision'

Where this goes next is … tricky. Both sides have picked hills to die on, and neither has an easy out.

• Tim Cook, you're not exactly going to give in, are you? After so much talk of having one set of rules for everyone, and a decade-long drive to control more of the App Store experience, giving in to Epic so publicly would upend the whole App Store model. And besides, Apple's focus on safety and consistency are good and important.
• Same goes for you, Tim Sweeney: You're not going to let Epic say "just kidding" and go back to the old way, are you?
• The reality is that lines have been drawn, and this one may really end up having its day in court.

Meanwhile, other companies are cheering Epic's move, and maybe thinking about making their own. You'd expect Spotify to be in favor of any company picking fights about the App Store, and you'd be right.

• Spotify said in a statement to Recode: "We applaud Epic Games' decision to take a stand against Apple and shed further light on Apple's abuse of its dominant position." Keeping the App Store competitive, it said, "is an urgent task with far-reaching implications."
• That's about par for the course in the tech community, where there wasn't much love for Apple to be found Thursday.

There's another trend here, though. One overlooked part of Epic's move was that it did it without actually updating the Fortnite app: instead, it just made the change on its servers. (And then, you know, gave it a name and issued a press release just in case Apple didn't notice.)

• Any app that's just a wrapper around a web service — which increasingly describes more and more apps — could do the same thing. Will Apple have to crack down on the way apps are built, and served, to keep this from happening again?

It really does feel like this is the endgame of this fight, the App Store boss battle. And I suspect both sides are getting ready for a long one.

More Apple

What's inside Apple's everything bundle

It probably didn't help Apple's case Thursday that in the midst of all this fighting, Bloomberg was reporting that the company is about to launch its long-rumored services bundle. And in the process, it will take on even more of the apps and companies it's been clashing with about App Store fees.

• Here's Bloomberg's rundown on what's being called Apple One: It's actually several bundles, starting with a combination of TV+ and Music and going up to one that includes those services along with iCloud, Arcade, News+ and more. No hardware in the bundles yet, but I'd bet on that changing quickly if this takes off.
• A new subscription is coming, too: Apple's reportedly working on a virtual-fitness app with classes similar to Peloton.

Apple's trying to vertically integrate at an unprecedented level. If it could own the services, the software they run on, the devices that runs on, the credit cards you pay with, and the loans you take when you can't afford it all? Well, it becomes a relatively unstoppable machine, with practically no holes for competitors to exploit.

• Which, of course, is precisely the point — and precisely what Epic and others hope to change.

A MESSAGE FROM ITI

During the upcoming 2020 National Political Conventions, Protocol will host a two-event series on the tech and policy needed to enable a diverse future workforce and a strong economy. Join us on Wednesday, August 19 at 12 p.m. ET for our first event in the series. We will explore how leaders in tech and policy are enabling a diverse future workforce. This series is hosted in partnership with ITI.

Register here.

People Are Talking

On Protocol: Ron Wyden said Trump's dealings with China are "ham-handed," but that there are plenty of real things to worry about:

• "It's fundamentally unfair from a competition standpoint for China to restrict access to U.S. social media companies [while] at the same time Chinese-owned apps are allowed to operate here. I think that's a recipe for China owning the future of the internet."

Mike Pompeo said, again, that the White House is thinking even bigger about China bans:

• "We're going to make sure that American data [does] not end up in the hands of an adversary like the Chinese Communist Party, for whom we have seen data uses in Western China that rival the greatest human rights violations in the history of mankind."

On Protocol: The year of electric cars is 2023, but EVBox's Megha Lakhchaura said the time to invest in them is now:

• "If 2023 is the date, let's do everything now. Let's not wait until we have all these cars, and then we stress our distribution grid because we haven't thought about it."

Making Moves

Tera Randall is the new VP of communications at Epic Games. She joined earlier this month, and I'm guessing she's quite busy.

IBM is earmarking $1 billion to invest in other cloud companies, as it tries to recruit more partners onto its own platform.

Kathy Kam is the newest member of the Linux Foundation's board. She's still Facebook's head of open source, and in factFacebook's also joining the foundation as a Platinum Member.

In Other News

• Slack and Atlassian are teaming up to take on Teams. The two companies are becoming closer partners, so that Jira and Confluence and Trello users can do more in Slack. Together, they're trying to build an unbeatable system for software devs, so we'll see how that goes.
• Did the White House get involved in an Oracle case? That's what one Labor Department lawyer says: She alleges that Labor Secretary Eugene Scalia jumped into a pay discrimination case and pushed for a settlement.
• On Protocol: A TikTok employee is suing the Trump administration over its executive order, saying it violates due process laws. Not everyone thinks it's going to work.
• American companies are worried about a WeChat ban. More than a dozen execs got on a call with White House officials this week, The Wall Street Journal reported, to express their concerns about what would happen if Trump's ban really went through. Disney, Walmart and even Apple were on the call.
• Turns out people can't be trusted over screen time. At least, not when they self- report how often they use an app: Facebook ran a study that found people tend to overstate how much time they spend on the app, and understate how many times a day they check it. In each case, by a lot.
• Don't miss this story about Wikipedia-editing insanity in the wake of Kamala Harris's VP announcement, from The Atlantic. It's a good window into what we're all going to fight about for the next few months, and how ugly it's going to get.
• Amazon lost a big legal fight in California. A judge ruled that the company can be held liable for defective goods sold on its platform, even when those goods are made and sold by third-party sellers. Amazon's always said it's just a platform and bears no more responsibility than a shipping company, but that may be changing.

One More Thing

Planet Earth: Reddit edition

OK, fine, so this video in which David Attenborough (the best narrator ever) reads posts from r/relationships (the best subreddit ever) is fake. But I don't care! The AI-created version of Attenborough's voice is almost as delightful anyway. And besides, if Attenborough were ever to do a version of "Planet Earth" entirely about humanity, there would be worse places to start than r/relationships. In the meantime, though, can I get Attenborough to read … everything on my computer? This is the Alexa-voice I've been waiting for.

A MESSAGE FROM ITI

During the upcoming 2020 National Political Conventions, Protocol will host a two-event series on the tech and policy needed to enable a diverse future workforce and a strong economy. Join us on Wednesday, August 19 at 12 p.m. ET for our first event in the series. We will explore how leaders in tech and policy are enabling a diverse future workforce. This series is hosted in partnership with ITI.

Register here.