Epic/Apple lawsuit proceeds to trial by jury as early as July 2021, Fortnite still barred on iOS

    
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Epic/Apple lawsuit proceeds to trial by jury as early as July 2021, Fortnite still barred on iOS

It looks like the ongoing legal tussle between Epic Games and Apple over Fortnite and the 30% App Store cut will be moving to the courts. In a hearing on Monday, Judge Yvonne Gonzales Rogers has stated that the antitrust matter should now move to a trial by jury, which could happen as early as July 2021.

The decision comes as part of a three-hour-long hearing during which Judge Gonzales Rogers reportedly drilled into both Epic and Apple with questions about the case, and while both companies repeated their originally stated points, the hearing did raise some new insights.

When asked why Epic objects so vehemently against the 30% cut, which is viewed by the judge as an industry standard, Epic argued that app distribution is an “aftermarket” derived from the smartphone primary market and is not part of a single product, and pointed to examples of apps that provide physical services like ridesharing apps or card payment apps that allow companies to have other payment processing systems. Consequently, 63% of iOS players only use the Apple platform, and the severing of Fortnite from iOS has effectively cut Epic off from what it calls a valuable user base that spends more on the game than on Android.

Apple’s counter-argument states that Epic’s exclusion is “self-inflicted” and further states that iOS players “need reasonable alternatives available, and they have that in spades,” referring to Fortnite’s cross-platform progression feature. It further argues that Apple’s payment system (IAP) was never marketed as a separate product, instead as a means to deliver safety, security, and other benefits to Apple’s users. In response, Epic pointed to 54% of iOS Fortnite users employing Epic’s direct payments instead of Apple’s from August 13th to August 27th as evidence that players want options. “We eliminated Apple’s ability to say there is no separate product. We showed that there is,” said one of Epic’s lawyers.

Ultimately, the judge agreed with Epic’s evidence but also stated that the company could have still complied with Apple’s requirements but chose not to. The judge also agreed that IAP is not a separate product and agreed with Apple’s view of Epic’s payment options inclusion as a form of sabotage, stating that Epic was “not forthright.” That said, Judge Gonzales Rogers believes that additional opinions are needed in this matter and did not rule on whether Fortnite should be barred from iOS, meaning the restriction is still in place.

“I think this is going to be a fascinating trial,” said Gonzales Rogers in the hearing. “Walled gardens have existed for decades. Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. In this particular industry, what Apple is doing is not much different. I think personally this case should be tried to a jury. I want everyone to think about that. I don’t think individual judges have the be-all and end-all here.”

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David Goodman

I’ve been watching the Hoeg Law channel on YouTube go over this, they have a lot of videos in the series (Virtual Legality, they do a lot of gaming legal stuff, etc.)

My belief is that the TRO is just going to wrap into the PI as-is. I don’t think Apple made enough of a case about security to change the Judge’s earlier decision about removing Epic International from the app store.

But I also don’t think Epic made ANY leeway towards convincing anyone that it will likely succeed on the merits (the case is too novel for that, for one), or that the injuries it did suffer were anything but self-inflicted. The judge REALLY doesn’t like that they deliberately breached their contacted in a calculated manner and agreed to a contract in bad faith.

All of the reputational damage they suffered were a direct result of the specific method they used to bring this lawsuit about.

I also don’t think “public interest” means what their lawyer is trying to say it means. “Public interest” isn’t “Well a lot of people play our video game!” – and Fortnite hasn’t even EXISTED long enough for that whole “it’s a metaverse!” argument to hold any water as a social platform.

As the Hoeg law channel put it, and I think I agree: (Summarized) I think Epic might have a good argument here, and they do make some of good points, but they are the WORST champions of this cause anyone could have asked for. It deserved a better company with better representation.

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Bruno Brito

“I think this is going to be a fascinating trial,” said Gonzales Rogers in the hearing. “Walled gardens have existed for decades. Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. In this particular industry, what Apple is doing is not much different. I think personally this case should be tried to a jury. I want everyone to think about that. I don’t think individual judges have the be-all and end-all here.”

This feels reeeeally foreboding. I’m interested in the worst case scenario where this crap ends up screwing all kinds of storefronts and forcing companies like Blizzard and EA to offer other games.

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Rndomuser

It would be interesting to see how this would be decided. At the very best Epic might be allowed to put their launcher on iOS without being forced to use Apple’s app store. At the worst, this will serve as a good promotion for Fortnite and the rest of Epic’s products so even if their games will not be allowed on Apple’s platforms – they will compensate this by increased sales coming from people who use other platforms for games ;-)

In any case this is a win for general consumer. Even in the worst case, the Epic is likely to benefit from whole deal from increased revenue from other platforms like Windows-powered and Android-powered devices (I can still download and install Fortnite launcher on my Galaxy S20 without voiding warranty, using a trusted download source), which is good because more money to Epic = more chance of seeing more discounts and promotions on Epic Store (which I personally like using and which is the next place I buy my games from if they are not available on GOG) and more chances of Unreal Engine being improved faster (which in turn is good for many game developers, including smart MMORPG developers like CCP which have decided to switch to Unreal Engine for all future games instead of wasting time on developing their own custom engine).

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McGuffn

I like the part where Epic’s own lawyers admit they entered the contract in bad faith and then broke/circumvented it in bad faith.

Thanks for admitting you’re crooked and not worth doing business with. What’s next, putting human flesh in your meat pies?

Like before I think Epic will lose but if it wins I look forward to playing all of Microsoft’s exclusives on the PS5 or whatever.

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Danny Smith

Epic has secured themselves a seat in the pantheon of “great Bumbleking moments in videogame history”. What an absolute self own. They made t shirts, they made a fully rendered CG video parodying a parody that their zoomer consoomers don’t know or understand fully self assured apple, the little guy, would cave to the pressure of epic.

Now reality is setting in. They can pretend to be Robin Hood all they want but they got greedy, played themselves and now are going to lose, what? a billion dollars or more in a year of legal battles if they even get back why they currently lost through their own dumbass choices.

What an absolute farce.

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Bruno Brito

Now reality is setting in. They can pretend to be Robin Hood all they want but they got greedy, played themselves and now are going to lose, what? a billion dollars or more in a year of legal battles if they even get back why they currently lost through their own dumbass choices.

Consider the following: They could have tried this legitmally and wasted more. Clearly they felt that the money spent on litigation was worth a shot.

Gonna be fun watching them burn.

Leo
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Leo

This is probably not going to be resolved in the near future, especially with appeals after the trial that are sure to happen. I wonder how much Epic planned for this with their original breaking of the contract.

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Arktouros

Well even the Judge seems to be aware that only 10% of Epic’s Fortnite business comes from the iOS store. She also seems aware that this will impact multiple other walled garden areas as well such as Microsoft, Sony, Nintendo and the rest. Sacrificing 6% of your revenue (remember only 60% of their iOS players are exclusive to iOS) at a chance to setup an Epic Games Store on iOS, Android, Xbox, Playstation etc is a pretty good gamble.

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Arktouros

Seemed like they are most likely headed towards the same conclusion the TRO came to that Fortnite will remain off the store and Unreal Engine will remain on the store. The judge seemed largely unconvinced by either party’s arguments because Epic did this to themselves and so they can’t claim irreparable harm meanwhile Apple’s crying that Unreal Engine is an avenue for mass exploitation was equally unconvincing.

The judge all around seems pretty savvy about the situation which is pretty nice to see.

My favorite part reading part of the transcripts was Epic arguing that more people preferred the direct payments option. What they preferred was lower prices. People always prefer lower prices, obviously. The issue is that, as Epic Games Store has shown, is just because there’s a lower revenue share doesn’t mean there will be lower prices for the consumer.

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Bryan Correll

Trial by jury? Yawn. Can’t we have trial by combat instead?

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Mark Jacobs

Sounds like you just sent out the Schlag symbol in the sky calling on his mighty memeness to enshrine that thought forever BC. :)

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bobfish

I’m sure that is going to go well for Epic, a bunch of parents on the jury who probably hate that their kid has been addicted to Fortnite for the last couple of years.

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Jeremy Barnes

Epic never intended for this to go to a jury which isn’t going to have a lot (any) of teens on it. They made several mistakes when they brought this suit. They didn’t understand the company they were suing. There’s no way Apple wasn’t willing to go all the way with this and they certainly aren’t going to compromise.

Apple’s walled garden is central and core to their business. Losing a few million due to lost fortnite sales and a “PR Campaign” was never going to budge them. If Epic intended to build a crushing wave of PR against them then their ‘commercial’ and efforts so far were woefully underfunded. If they wanted to make a dent on that front, they were likely going to have to spend a couple hundred million to get any kind needle movement against Apple.

I hate Apple. They’re an abhorrent company to me and the way they handle their products and force things on their users. However, their users *like* that. They like they don’t have to worry or ever figure anything out. It just works.

I have a hard time understanding how Epic so badly misjudged their ability to ‘scare’ Apple into some sort of settlement.

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Mark Jacobs

I disagree. I think Epic knew exactly what they were doing. Frankly, while you’re correct that the jury isn’t going to have any teens on it, they are probably counting on the fact that during the jury selection process they will be able to pick folks whose kids and/or family could have played Fortnite. :)

I’ve been saying this since the beginning, Epic has done a lot of really smart things from a legal perspective and knew exactly what they wanted.

Overall, if you are looking for a big settlement you usually want a jury trial. Juries are going to be more open for the emotional arguments/issues involved in the decision-making and more prone to accept the “This company is evil! You must make them pay for it! Do it for the children!!!!” than most judges who are supposed to be more objective. Reining in excessive jury awards has been an issue forever. Lawyers are against it (duh, right?) and companies are for it and Congress, well, they are mostly lawyers so… OTOH, in a super-rich company vs. a multi-trillion dollar company, they might be a tad less sympathetic to Epic, even versus a company that could buy them and not skip a beat, like Apple than they would have been if the company was small and struggling.

It’s going to be a fascinating trial if it happens. BTW, I don’t expect it to happen, I expect a deal will be struck. One of the things you learn in law school is that the vast majority of cases that are filed, criminal or civil, never go to trial and I don’t expect this one to either. That was one of the factoids that turned me off being a full-time lawyer when I was in law school.

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bobfish

I’m not sure there is any argument where Epic is pro-children and Apple isn’t.

Epic has a game which has consistently had bad press because of the amount of time children play it, on top of that it’s monetization method can be quite harsh without proper guidance.

Apple on the other hand provide devices which are easy to use, reliable and heavily protected. They also recently have made great effort to promote Apple Arcade, a small subscription fee service that has over 100 games in it with no in-app purchases.

Any parent remotely savvy about these companies is more likely to come down in favor of Apple.

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McGuffn

But Epic has fortnite concerts which are a “business” that has been hopelessly harmed by apple’s cruel decision to enforce a mutually agreed upon contract.

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Mark Jacobs

Bobfish, LOL, I was being sarcastic. You know, the whole “Do it for the ‘XXXX’ group ” appeals that are made. :)

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Arktouros

People are really fond of thinking of the children ;)

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McGuffn

Nobody ever thinks of the shareholders or the lobbyists. Poor bastards.

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Bruno Brito

I’ve been saying this since the beginning, Epic has done a lot of really smart things from a legal perspective and knew exactly what they wanted.

I completely disagree. We have this tendency of thinking that big corporations using the law as a stepping stone towards profit is smart for god knows what reason, but everytime that the judge hears Epic, she literally berates them for “a self-inflicted wound”.

I don’t know what you’re seeing here, Mark, but must be different from what i’m seeing. Because i’m seeing an entire squad of lawyers on both sides being treated as children, and the only thing that impedes the judge from just telling them to get the hell out is the law.

I’ve told this before: The judiciary HATES being used as a prop. This farse will bite Epic back in the ass, be it in the form of a costly loss + humiliation, or be it as a win that will end up messing the entire biosphere of how companies behave with their storefronts and platforms.

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Mark Jacobs

Time will tell BB but she also said that Epic raised enough valid issues that it should go to a jury to decide. “I think this is going to be a fascinating trial,” and ” I think personally this case should be tried to a jury. I want everyone to think about that. I don’t think individual judges have the be-all and end-all here.”

Shots fired across both bows, not just Epic, not just Apple. That’s judge-speak for “Make a deal boys!” :)

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Bruno Brito

“I think this is going to be a fascinating trial,” and ” I think personally this case should be tried to a jury. I want everyone to think about that. I don’t think individual judges have the be-all and end-all here.”

Which is what i mentioned: It can be a win that messes up the entire biosphere of how storefronts work.

What i mean by that is, if by any way, shape or form, this thing becomes precedent for any company to want to sell in ANY storefront, i’m highly sure that companies with their exclusive stores ( Battle.net, Origin, Arc, etc etc ) will sharpen their pikes for Tim’s head.

For some reason, this reminds me of the Blurred Lines lawsuit that messes copyright infrigiment judicial decisions to this day.

It’ll be a great trial, but it can have terrible consequences for those companies, so you know, i’m going to enjoy it greatly.