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Thursday, December 3, 2020

Apple asks court to make Epic pay damages in Fortnite lawsuit

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You won’t be seeing this logo on an iPhone for a while.

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Angela Lang

Apple raised the stakes in its lawsuit with Epic Games over the hit video game Fortnite Tuesday. The iPhone maker requested monetary damages if it successfully convinces a judge that it was within its rights to kick Fortnite off its more than 1.5 billion active iPhones and iPads last month when Epic activated code it knew broke Apple’s app store rules.

In its countersuit filing, Apple argued it’s not merely the custodian of its app store, but that it nurtures its service through regular software updates, new features and advertising. It said, for example, that Epic’s made $500 million from its apps on Apple devices. The company also said it helped market Fortnite through its App Store, with a billboard in Times Square, and other “marketing communications.”

Apple pitched all these efforts as part of its broader work to support its app store, which now counts more than 27 million developers worldwide, and 1 billion customers across 175 countries. There are also 1.8 million apps, Apple said.

All told, Apple repeated its claim from last week that it supports to 2.1 million US jobs supported by its app store economy

But, Apple argued, “The App Store is also a business.” And though Apple doesn’t say how much it costs to run its App Store, the company said it took commissions of about 18% of the $140 billion in sales facilitated through apps on its service.  

“Through the App Store, Apple serves as the platform that connects developers with the millions of iOS customers who rely on Apple to provide a safe environment to download apps onto their Apple devices without compromising privacy, security, or functionality,” Apple said.

Epic, in its filings, has argued that Apple is a monopolist, unduly exerting control over its app store and hurting competition by not allowing alternative payments services, among other things, on its platform.

Apple’s filing marks the latest escalation in its lawsuit with Epic Games over money and power. Epic filed its suit against Apple on Aug. 13 after it provoked the iPhone maker by intentionally breaking its app store rules. Apple retaliated by kicking Fortnite off its App Store and threatening to revoke Epic’s developer accounts, which include its Unreal Engine business selling software tools to game developers.

If it weren’t a lawsuit between a company worth trillions and a company worth billions, we probably wouldn’t be paying attention. After all, Apple’s just defending the up to 30% commission it charges on payment processing for apps on its App Store. And while that may seem high, Apple’s argued it’s largely in line with the rest of the industry. Still, Epic doesn’t want to pay that. Instead, it just wants to be able to charge people directly for whatever they choose to pay for through its app.

But Apple’s massive size and Fortnite’s cultural influence mean however the judge in the case rules will likely to set the tone of the relationships between app developers and device makers for years to come. 

Over the past few years, Epic’s taken the billions of dollars it’s made from Fortnite and used that to help fund a new online game marketplace to compete with Valve Corp.’s popular incumbent, Steam. It’s also promised developers it would take a 12% commission of games sold over its Epic Games Store, less than half that 30% Apple and other companies typically charge.

“Epic’s lawsuit is nothing more than a basic disagreement over money,” Apple said in its filing, which also served as a response to Epic’s initial lawsuit toward Apple. “Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.”

Apple’s argued its rate is fair, though it hasn’t directly addressed how much lower Epic’s fees are for its store. Instead, it said its app store fees are, “similar or identical to commission rates charged by other app marketplaces and digital platforms, including Google Play, the Amazon Appstore, Steam, and Xbox.”

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