Epic V Apple Trial Wrap-Up: Judge Makes Landmark Decision In Massive Tech Case
The Epic v Apple trial took place earlier this year and now the judge has handed down a decision.
A clash of industry titans took place inside a California district courtroom starting in May. Throughout weeks of testimony, lawyers from Apple and Epic argued their cases about digital storefronts and virtual economies, with major ramifications expected when a decision was made about the future of digital landscapes. On September 10, that decision finally came. For background on how we got here, read our primer on the Epic v Apple suit.
September 10: The Decision
Judge Yvonne Gonzalez-Rogers concluded in the ruling that the court could not prove that Apple was engaging in monopolistic behavior under federal or state anti-trust laws, but that "the trial did show that Apple is engaging in anti-competitive conduct under California’s competition laws." This was the only count that the court sided with Epic Games on, with Apple winning all other nine counts.
Epic was ordered to pay millions for breaking Apple's rules initially, but this could be a drop in the bucket compared to the cost to Apple. With the judge ruling that Apple must allow alternative payment methods on the App Store, Apple could theoretically miss out on billions in revenue.
"Success is not illegal," the ruling continues. "The final trial record did not include evidence of other critical factors, such as barriers to entry and conduct decreasing output or decreasing innovation in the relevant market. The Court does not find that it is impossible; only that Epic Games failed in its burden to demonstrate Apple is an illegal monopolist."
It's likely there will be an appeal of some kind in this case, so keep checking back with GameSpot for the latest.
According to Washington Post reporter Shannon Liao, Apple CEO Tim Cook is unlikely to testify in the Apple vs. Epic court case until the very last day of testimony.
The judge in the case asked on the behalf of reporters when Cook might appear, and Apple's lawyers said it would likely be the final day. The court case is projected to run until May 21, so that could be the day Cook testifies, though timelines can change.
Judge asks when Apple CEO Tim Cook will be on the stand, asking for media. Apple counsel says likely the last day, which is consistent with what we've heard before.— Shannon Liao (@Shannon_Liao) May 11, 2021
Week Two began with Epic marketing boss Matt Weissinger testifying about Fortnite's popularity on mobile. He said Fortnite has the biggest growth potential overall on mobile. That's in part because not everyone owns a console or a gaming PC, but a much bigger percentage own a smartphone that could play Fortnite. Weissinger testified that Epic has been meaningfully impacted by Apple's decision to remove Fortnite from iPhone.
When Fortnite was available on iOS, it made up around 10% of the total number of players for the game overall. Revenue from iOS also made up a very low percentage of overall sales, Weissinger said.
A newly released email from Epic's CEO Tim Sweeney showed Sweeney complaining about companies spending money to have their apps highlighted in the App Store. The recipient of the email was redacted. Sweeney said he was frustrated that Fortnite didn't show up in some searches. He also said, "I can only imagine how an indie developer must feel when they're trying to make a living and the $900B company that runs the App Store sells their search result to a $730B company. This is an awful practice and should stop."
Tim Sweeney getting angry at Apple in 2018 over Fortnite not being the number 1 result in the App Store. All because Microsoft, PUBG, and others kept buying ads in the App Store for search results pic.twitter.com/BuYrWf4ygX— Tom Warren (@tomwarren) May 6, 2021
During his testimony on Thursday, Apple's App Store manager Matt Fischer discussed Apple's relationship with Epic. He said both companies seemed to enjoy a positive, mutually beneficial relationship over the years. Fischer pointed out that Apple and Epic worked together to show off Infinity Blade on stage during an Apple presentation. This was so successful that Apple invited Epic to return to promote the next Infinity Blade series. Over time, however, the relationship appeared to have broken down.
Fischer said Apple and Epic hadn't spoken in about a year, leading up to the start of the legal drama. Fischer said he felt "blindsided" by the action Epic took against Apple that led to the court case.
One of the most notable developments on Wednesday, May 5, was testimony from Xbox's Lori Wright. She spoke about Xbox's involvement in the digital games landscape. Among other things, she addressed who she believes to be competitors to Xbox. Wright said the main competitor to Xbox is PlayStation, and Nintendo to a lesser degree.
She was more clear about iPhone, saying, "We don't see an iPhone as a competing device."
Wright says main competition to Xbox is PlayStation and to a lesser degree Nintendo Switch. "We don't see an iPhone as a competing device."— Tom Warren (@tomwarren) May 5, 2021
Wright also confirmed in her testimony that Xbox hardware is sold at a loss, and this continues to be the case. The losses are made up for with sales of games and subscriptions, Wright explained.
"Does Microsoft ever earn a profit on the sale of an Xbox console?" No says Wright. "If Microsoft sells consoles at a loss, why does it keep selling consoles?" Wright responds that the biz model is for a consumer end-to-end experience, and "hardware is critical" for that.— Tom Warren (@tomwarren) May 5, 2021
A document entered into evidence included mention of competing titles that Microsoft believed might release in 2020. These include a pair of high-profile Nintendo games, The Legend of Zelda: Breath of the Wild 2 and Metroid Prime 4.
A redacted document entered into evidence on Wednesday showed an email between Tim Sweeney and PlayStation executive Phil Rosenberg concerning PlayStation's stance on cross-play. The email, which is dated to June 2018, includes some strong words from Sweeney. He said in the email, "Sony's interoperability restrictions have put both of our companies in an untenable position adversarial to our customers. Many Fortnite players are kids, and their friendships are being torn apart by Sony's segregation of players on competing platforms. Frankly, we do not believe Sony's position is even legal."
Sweeney goes on to say, "Please understand that Epic firmly believes that this action is a matter of legal right and moral duty, and that I am conveying this to you following extensive deliberation and legal analysis across several continents with Epic's board members and major investors, and that we are prepared to pursue this course with all available resources, wherever it leads us, and for however long."
Rosenberg replied to Sweeney, saying, "As we have discussed in the past, we would never want to inhibit a gamer from enjoying a video game anywhere he or she wants. We love our consumers too."
Sweeney later replied to Rosenberg, alluding to Epic taking some kind of public action if Sony didn't get on board with cross-play. "In processing the tone and thoughts in these emails, please understand that Epic much prefers, and we assume Sony also prefers, to have the frankest possible policy discussion in private now than to have any sort of public conflict later."
The trial continued on Tuesday, May 4, and a big chunk of the early testimony came from Epic founder and CEO Tim Sweeney. Among other things, Sweeney revealed that he does not have a PlayStation 5 at home, though he does have one in the office.
Tim Sweeney has just reveled he does not have a PlayStation 5 at home. But he has one at the office.— Geoff Keighley (@geoffkeighley) May 4, 2021
Documents included as evidence in the case included email exchanges between Sweeney and Xbox boss Phil Spencer regarding cross-play and other business practices.
earlier, Tim Sweeney discussed an email to Xbox chief Phil Spencer in January 2018 about crossplay. "Microsoft did not have a very clear position," says Sweeney. "They often spoke publicly in support of cross-platform. Epic wanted to eliminate the ambiguity with Microsoft."— Tom Warren (@tomwarren) May 4, 2021
In another exchange, Sweeney apparently called on Phil Spencer to offer free Xbox Live multiplayer around the time Epic's big play to begin its battle with Apple over Fortnite. This ultimately didn't happen, but Sweeney capped off his message to Spencer by saying, "You'll enjoy the upcoming fireworks show," presumably in reference to the impending Epic vs. Apple drama.
Some of the documents that became public on Monday at the start of the trial were never intended to be made available for everyone to see. The judge in the case said, "Some of these documents I ordered sealed over the weekend were in fact released. I'm not sure if at this point whether the genie is out of the bottle."
the Judge in the Epic Games v. Apple trial just addressed the flood of documents yesterday. "Some of these documents I ordered sealed over the weekend were in fact released. I'm not sure if at this point whether the genie is out of the bottle." https://t.co/CsQN4bC5wZ— Tom Warren (@tomwarren) May 4, 2021
Some of the documents appeared to contain information that the relevant parties might not have wanted the world to see. One such document pertained to Sony's policies regarding cross-platform play and how it charged developers for this.
Epic is said to have paid Sony a fee to unlock cross-play in Fortnite on PlayStation.
Epic CEO Tim Sweeney just confirmed that Sony is the only platform holder that requires Epic to pay compensation for crossplay. Epic had to agree to pay these additional fees to enable crossplay in Fortnite.— Tom Warren (@tomwarren) May 3, 2021
People have pointed out what they believe to be hypocrisy on the part of Tim Sweeney. In an August 2020 tweet, Sweeney said the battle with Apple is not about Epic seeking a special deal, but instead it's about "basic freedoms of all consumers and developers."
In court, Sweeney is reported to have said that he would indeed have accepted a special deal with Apple. You can see the exchange below.
A document obtained from the trial revealed several potential characters coming to Fortnite. These may not all come to pass, but it's a unique look inside Epic Games and its expansive plans to keep wrapping up more popular characters into its Fortnite metaverse. Those included additions like Nintendo's Samus Aran, musicians like Ariana Grande and Lady Gaga, and actor The Rock. Some of these were presented as part of Fortnite's "Icons" series, which so far has centered around professional Fortnite players.
Among the disclosures revealed at the start of trial, we saw a series of emails exchanged between Epic Games and Sony in 2018 related to Sony's reluctance to allow cross-play on its platform. Epic courted Sony with offers of ideas like a unique character for PlayStation Plus subscribers, and said their partnership could "make Sony look like heroes." SIE senior director Gio Corsi rejected the proposals, saying they were good ideas but unconvinced that they showed cross-platform play would be good for the PlayStation platform.
As part of Epic's financial disclosures in the trial, the company revealed that over 2018 and 2019 its headline game Fortnite made $9 billion. We don't know how much of that is profit, however.
The financial revelations didn't stop there, as we also learned how much Epic paid out to various platform partners between January 2017 and October 2020. In that time, it paid approximately $237 million to Apple, $246 million to Microsoft, and $451 million to Sony. This was presented by Apple as evidence that iOS is not the biggest platform for Fortnite.
The court proceedings got off to a rowdy start as listeneers who had dialed into the Zoom call to listen in were accidentally left unmuted. This being the Internet, the more than 200 participants started shouting "free Fortnite" (the slogan introduced in Epic's PR efforts) or even promoting their own YouTube channels. After roughly 20 minutes, the court got the mute functionality working so that the trial could proceed.
As part of the pre-trial court documents, we learned that despite the massive install base of iOS device users, it's not the largest Fortnite platform by a long shot. In fact, PS4 was the biggest driver of Fortnite revenues from March 2018 through July 2020, with Xbox One following in second. Apple's iOS devices accounted for only 7% of total Fortnite revenue during the period.
In its disclosures before the trial began, Epic Games indirectly revealed that it is intentionally withholding Fortnite from appearing on Xbox's streaming service. The service, which was called xCloud in testing, has not received Fortnite because Epic views the service to be in competition with Epic's own PC offerings.
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