But in any case, no court has ruled in Apple's favor yet, and Epic denies their claim, so at the moment the infringement is perceived to exist by Apple, but not proven as fact yet.
I'm sure you can come up with plenty of examples of contracts that are on their face invalid and which would be ludicrous to sue over ("what if it was a contract to kill someone!?"); however, the contract at issue here is certainly not so clear cut and, even in those cases, they could still sue you for breach of contract and you would need to still prove that the contract is invalid (no matter how easily it could be done). A subsidiary question: if the contract is so obviously illegal, why did you (or Epic) agree to it?
So it does not make sense to phrase this conversation as "They broke the rules!", because that is implying that they did something "wrong".
> if the contract is so obviously illegal, why did you (or Epic) agree to it?
Because Apple has significant market power, as defined by US anti-trust law, and is using that market power in an illegal manner?
Thats the point. Apple is illegally using its market power, to push these contracts.
That's because they did. Apple's developer agreement (like most contracts) has a severability clause that says if any individual term of the contract is unenforceable, the rest of the contract still remains in effect.
This means that even if Epic's theory of the case is right, they still breached the contract by sneaking hidden code into the App Store, and Apple can still legally exercise their right to terminate the contract.
No, not if ending the contract helps them maintain their significant market power, and helps Apple continue their illegal anti-competitive behavior, or helps keep out competitors.
The courts have ruled in the past, that if enforcement of certain contract provisions helps a company maintain their significant market power, then this all falls under anti-competitive behavior, and can all be illegal.
This is generally referred to as the concept of "monopoly maintenance".
Contract enforcement, that would be otherwise legal in other situations, can be illegal, if it is helps maintain a companies market position.
> That's because they did.
Nope. Companies have no obligation to follow illegally anti-competitive contracts. If the contract is illegally anti-competitive, then they can break it.
And the company that is trying to maintain their illegally anti-competitive market position can be forced to take certain actions, and continue to deal with the company that was within their rights to not follow the anti-competitive contract.
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
This is the definition that I am referring to when talking about what the FTC is referring too regarding market and monopoly power.
And according to the FTC, all that is required to fall under section 2 of the Sherman anti trust act is significant and durable market power.
Technically, some states still have laws in the books that certain types of sex is punishable as "sodomy," regardless of the consent of the practitioners. Since the US Supreme Court ruled that it's a violation of civil rights to constrain two consenting adults on how they get freaky in the bedroom, the existence of those laws is utterly moot. Are they still "laws" if nobody can enforce them?
That Epic alleges some of the other terms of the agreement relating to Apple's IAP commissions are not enforceable doesn't change the fact that Epic did actually break the agreement.
(Keep in mind the agreement also has a severability clause that states that if any individual term is found unenforceable, the rest of the agreement remains in effect.)
But if it was solely that they could easily have negotiated a fee cut and left everyone else in the lurch.
Or perhaps they tried and this was the next step.
Either way we all stand to gain from google and apple stores being forced to play by the same rules everyone else has to abide by.
Apple and Google have both seen how the completely open app download model works (it's been how PCs have worked for a long time). Most consumers want their phones to work and not have any risk of downloading spyware or viruses or apps that brick their phone. Most consumers don't want to research every app to see if the app is trustworthy enough to trust with their identity information or payment information. That said, there's probably a middle ground between where Apple/Google are now and a completely open marketplace that gets most customers what they're hoping to get while also giving larger app developers more of what they want.
Actually, if the company has significant market power, which does not require a monopoly, then anti-trust law can absolutely force a company to do business with others.
And in this case, Apple has about 50% of the US smartphone market, which is within the realm of when anti-trust law applies.
To give a relevant example, if microsoft banned all browsers from being installed on a windows PC, that did not go through their app store, then this would be clearly illegally anti-competitive.
> ompanies can't win a lawsuit against Whole Foods for not allowing their products to be sold in Whole Foods.
If whole foods had significant market power, then they absolutely could be forced to allow products to be sold in their stores. They don't have this much market power, that this would be illegal, though.
The FTC case against Microsoft was specifically that Microsoft was a monopoly. It's clear that there's a duopoly right now with Apple and Google in the US mobile phone OS space.
This is a misrepresentation of how section 2 of the sherman anti trust law works.
It is a very common misconception, though, so don't worry.
The sherman anti-trust act does not require a literal monopoly. Instead, it only requires significant market power.
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
"Courts do not require a literal monopoly before applying rules for single firm conduct"
So, according to the officially released government information and guidance from the experts on the matter, the previous point still stands.
Apple can still be illegally using market power, even if they do not have a literal monopoly. As a literal monopoly is not required, under section 2 of the sherman anti-trust act.
It is a completely uncontroversial statement, backed up by the information released by the government, that a literal monopoly is not required, for something to be covered by section 2 of the sherman anti trust act, and that, instead, only significant market power is required.
50% of the market share, in the US, is within the realm of market share, where anti-trust law may apply.
Actually, this is incorrect. This is known as a refusal to deal and very specifically applies to companies with monopoly power only.
More than eighty years ago, the Supreme Court set out the fundamental principle that still guides consideration of cases involving refusals to deal in the United States. As the Court stated in United States v. Colgate, ìin the absence of any purpose to create or maintain a monopoly, the Sherman Act does not restrict the long-recognized right of a trader or manufacturer engaged in any entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. Accordingly, refusals to deal are actionable only when done by a firm creating or maintaining a monopoly power.
https://www.ftc.gov/sites/default/files/attachments/us-submi...
The FTC itself says that there are situations that a company with significant market power can be forced to deal with other companies in certain situations.
> very specifically applies to companies with monopoly power only
Monopoly power, according to FTC, is defined as significant market power. So not a literal monopoly.
The FTC defines that here:
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
"Courts do not require a literal monopoly before applying rules for single firm conduct"
> nly when done by a firm creating or maintaining a monopoly power.
This supports my point. The FTC is agreeing with me here, by saying that the government can force companies to deal with others, if it relates to their anti-competitive behavior, and they have signficant market power.
Read up on what the FTC means, when it is talking about this. It is talking about significant market power.
You're really fixated on this phrase but you don't really seem to understand what they mean. A literal monopoly means a single company that controls the entire market. Of course that is not required. I did not say a literal monopoly was required. The text I quoted did not say a literal monopoly was required. No one said a literal monopoly was required.
The text I quoted says that monopoly power is required. That is all.
Which is in reference to significant market power.
So cool. It seems like you agree with me, that it is significant market power which is required.
And Apple's significant market power, of ~50% of the US smartphone market can fall within that realm.
The point that I am making is that 50% of a market is within the realm of what courts have deemed to be significant market power, where significant market power is defined according to section 2 of the Sherman anti trust act.
And it seems like you agree with me and the FTC that 50% of the market share can fall within this definition, and can be within the realm where section 2 of the Sherman anti trust act applies.
Here is another quote talking about this, from the FTC:
"A "monopolist" is a firm with significant and durable market power.".
So significant and durable market power. That is the definition. Glad you agree with my definition that is simply a quote from the FTC.
> "which does not require a monopoly"
Do you see how your original statement was misleading? Monopoly power is in fact required in order to pursue a refusal to deal.
In the future when you see someone use the term "monopoly power", you should interpret that to mean "significant and durable market power" instead of "a literal monopoly". It will reduce confusion.
No, it is not misleading. Instead, your terms are misleading.
They are misleading, because when someone says "monopoly power", what someone would immediately jump to is a singular firm.
But that is not true. Instead, the only thing required is significant and durable market power.
The less misleading term would be to say that a company only has to have significant and durable market power, for it to fall under anti trust law, and you should also point out that it does not require a literal singular firm.
> when you see someone use the term "monopoly power"
No, actually. What I will do is correct them to instead use the less misleading term.
It is a huge misconception that people have, that anti trust law only requires a singular firm for it to apply. It is extremely common for people to say that.
It is so common that the literal FTC had to made this clarification in their official information that they released.
If the freaking FTC had to release this clarification, then I think that it is important to point this out.
> It will reduce confusion.
What would instead reduce confusion even more, is if people made a specific effort to point out that a singular firm is not required for anti trust law to apply.
Because this is the most common misconception when people talk about anti trust law.
(It is so common that the FTC has to clarify this in their documents!)
Actually, it is extremely common. It so common that the literal FTC has to put out information to correct this misconception.
Just go look at the offical FTC statement.
https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
Because apparently, the FTC thinks that this is important enough, and a common enough mistake, that they have to correct this common misconception.
Also, Do you take back your pervious statements, and agree with me when I said the following then? "Actually, if the company has significant market power, which does not require a monopoly"
Because if you now agree with me, then great.
Because my original statement was that a company has to have significant market power, which you said was incorrect.
But it now seems like you agree me with, that all that has to happen is that a company has to have significant market power.
It seems like you do not think that I was "incorrect" to point out that only significant market power is required for the Sherman act to apply. So your previous statement, where you said that this was "incorrect", no longer holds.
That is great that it seems like you no longer think that my original statement was incorrect, where I said that only significant market power was required.
There is nothing altruistic about anything Epic is doing.
30% vs 80% was a very generous gift.
But agree that Fortnite's 70% of IAP in presumed perpetuity is going to be a larger number than Apple's 30% for a limited window (the time during which Epic's own payment solution continued to work).
Rewinding the clock: The iPhone hit a market that was full of low-quality hardware running lower-quality software. Apple brought to the consumer a tightly-controlled ecosystem that came with a quality guarantee. For my relatives who don't want to think hard about their phone working, I still recommend they buy Apple; pay Jobs's company the money, and they'll take care of you, from extended warranties to an app store designed to tamp down as best it can on scams and crap apps.
And Epic is currently trying to do just that, make the law say that those "arbitrary rules" are non-valid and anti-competitive.
Even if it is the Apple ecosystem, "the Apple platform which brings value", if they engage in anti-competitive behaviour, they need to be dealt with.
Some might argue that there were people who enjoyed using Bell Systems and were content with the value it was providing, it also had a "vertical integration" in the communications systems, and yet they were forced to comply with the anti-competitive laws (https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System )
I'm pretty sure there is a good reason why Epic got early support from Microsoft. As much as this is about the app store tax, it is also a massive PR play to convince game developers to shun Apple.
Epic isn't standing up for anyone except their own shareholders. This isn't some play to help consumers. It's a play to collect more money from a customer-base that is not theirs.
Whether they are doing it for us or not, we are likely to benefit through reduced store fees, and thus reduced cost of goods in the store, if they succeed.
Epic knows that they broke the rule and they anticipated that Apple would react to the breaking of the rule. What they are trying to prove is that Apple can retaliate against a multi-BILLION dollar corporation in a way that not only hits the bottom line of the corporation, but it also has a negative effect on consumers (because ultimately the breaking of Antitrust laws in the USA revolves mostly around consumer damage, not corporate damage).
Epic is making sure that they do everything "right" in the best interest of the consumer, as Apple takes all these various actions against them. So in this case, they are now doing blanket refunds for this game (which by the way is technically a different game than the one that originally violated the rules on iOS). Epic is making sure that they have done the best for the consumer during each of these reactions that Apple has made.
Eventually we will see a court case about this where Epic basically shows exactly this. Apple cares more about itself and its' money than the consumers and made these reactions that do not benefit the consumer, but benefit themselves. Meanwhile poor little Epic, the "victim", continued to valiantly do the right thing for consumers while being bullied by scary Apple.
Also they want to show the extent that Apple controls Epic's business.
Lastly, if a multi-billion dollar corporation like Epic can't take on Apple... what chance does the independent developer have to take on Apple? Everyone must play by Apple's rules or pay the dire consequences for it.
This whole cat and mouse game between Apple and Epic is exactly that. Epic is just collecting ammunition right now to eventually convince governments to do something against Apple's dominance.
Take on in what way? Forcing their hands with sheisty tactics and breaching contract? Plenty of indie devs get by just fine without that bs.
> Everyone must play by Apple's rules or pay the dire consequences for it.
It’s their platform, and who said anyone _had_ to write iOS apps? This is entitlement.
Epic also owns an app store, so any constraints on what Apple can do in their walled garden constrain what Epic is allowed to do in its walled garden.
A Hunger Games analogy: Epic isn't the one-person Mockingjay but an entire District 13. It will ultimately fail or fight to a stalemate against the might of the Capitol (Apple), unless other Districts (major game studios, or software developers) join in.
Look at Unreal licensing, it's extremely developer friendly, they could ask for a cut of all sales easily but instead they aren't greedy.
I have no horse in this race but I'd love to see Epic lead the industry to change for the better.
Epic isn't doing this to be altruistic and "the good guy". They're doing this because they want to be able to take advantage of customers 100% as opposed to only 70%.
That's highly debatable. If Epic really had their consumers best interests in mind they would cure the breach and put Fortnite back in the App Store while the lawsuit proceeded, as the judge recommended.
The court hasn't ruled yet but the judge on the case has agreed with all of Apple's responses and denied all of Epic's claims in the preliminary injunction. The only action taken was to prevent Apple from continuing further action based on what's in the terms until damages could be established.
In that respect, it is very similar factually, even if you find it repugnant to equate the two in any way.
In Epic’s case, they could have sued without violating the terms. The judge presiding over the case has been very clear on this. Epic already has standing by nature of being an Apple developer.
There are many reasons the two situations are not comparable, but the very basis of your analogy is incorrect.
The update was live for a couple hours, and I am sure a lot of people purchased the cheaper (against the rules) option. They now have an exact number to tell the courts how much they are loosing to Apple, instead of a hypothetical situation where Apple could argue that customers love apple pay and would use apple pay over 3rd party payment systems.
They "could no longer make any money" because of their own actions. Apple did not make them break the contract. I think we will see them lose big in the courts. Public opinion is a different matter of course.
Thus you think their fight has no merits and you pretty much explained why they did this.
If their case has merit, then the contract is null and void, thus no breach happened and they'll get back on the shop and everyone's win.
If they lose the case, then now the public, including law makers, has a better understanding of the impact of this kind of policies, which in the longer term may means some changes will happens around monopoly laws.
Now suppose the vendor decides to start using their own payment system and give Bloomingdale's no share of the revenue. This is of course counter to the signed contract. Bloomingdale's takes the step that is already spelled out in the contract they both agreed to. First, they issue a warning and ask the vendor to stop and return to the terms of the contract. The vendor refuses. Bloomingdale's now takes the next steps specified in the contract and removes the vendor's property from the store and ends their revenue from the store.
So now imagine that the vendor runs to the courts (and the public) and says Bloomingdale's damaged their business by not allowing them to sell in the store at no cost. They would be laughed out of the court room. This is what Epic has done. Using the "damage" caused by their own actions to justify their actions is a losing strategy.
Its actually a bit worse than my example because Epic wants to sell other vendor's goods through their store and make a cut of all of those sales. They basically don't want to follow the rules of Apple's app store so they can create their own app store. The hypocrisy is telling.
If Epic felt they had sound legal basis to question the Apple store rules (and existence) they would simply bring a lawsuit and try to effect change. They also could have simply entered into direct negotiations with Apple and made their case. They could lobby other vendors to join them. They could continue to follow the rules until the court's decide and no users would be impacted and their revenue would continue the entire time. They made other choices and so they have hurt their own business.
Personally, I think the app store royalties and policies need to be updated and made more appropriate to the scale of the business and the community. However, I also disagree with Epic's approach to the issue. You don't have to be an Apple acolyte to consider Epic's choices to be inappropriate.
Epic appears to be valued at 17-ish billion. Apple is the largest company on earth.
Comparing their sizes, that's something like the People's Republic of China fighting with New Zealand.
I've seen this strange attempt of comparing Epic to Apple before though, as if a single individual games company actually has the same resources as the company controlling a significant part of the global computing infrastructure
But a $17B company has all the resources it needs to fight a lawsuit, bully, buy press, etc.
The lawsuit is a drop in the bucket compared the sustained economic damage that Apple causes by simply turning the light switch off. And this is where the size matters, because Apple can easily sever every individual developer, while the reverse is not true.
As for the lights being turned off - Epic did that to themselves. Even after filing the lawsuit they were given the option to remain in the store, by both Apple, and the court, as long as the returned to compliance with the rule. They would have been able to continue their lawsuit while still shipping through the App Store.
Epic is completely responsible for the damage to their own business and to their customers. They were given the option to continue both the lawsuit, and to sell through the App Store, which they declined.
As for being cut off from customers. It’s worth considering that Epic is part owned by TenCent, and must remain on good terms with them if they want to retain access to the Chinese market.
The totality of the Chinese market is larger than the iOS segment of the US market. There is no reason to suppose that this move is not driven by the desire of the CCP to reduce Apple’s power.
That would be a good explanation for why they are continuing to harm their iOS customers when they don’t otherwise have to. Perhaps they chose to take that hit because it’s less than the hit they would take if they were forced to exit China.
Behaving like they do is called "antitrust"
That's so an obvious lie, seriously please be honest. You could use ANY analogy where there's no danger, which would then have more similarities, but still decided not to do that?
Hell you could even go with going 80 miles an hours in a 60 miles an hour zone and then challenging the legality of that. Why would you go with an infraction that big as an analogy?
You chose a dangerous one to break, while there's literally no danger involved in the infringement of Epic. You chose to use theses emotions to support your argument.
That's like being caught for speeding, but being punished for breaking and entering in addition to speeding.
They could have disputed the agreement in court without breaking it first, but they chose to break it.
Apple has no reason to continue to do business with Epic. Epic is clearly demonstrating their hostility to Apple. It would be self-harm, and possibly even a breach of fiduciary duty for Apple to continue to do business with a hostile party.
They made a detailed plan, in advance, to breach the contract, and prepared attack ads against Apple to run immediately after their planned breach, and they prepared a detailed PR attack agenda to unleash as well.
If I were Apple, I'd be tempted to unleash hell and completely destroy Epic over this. That's what Epic deserves.
Epic saw a play in breaking their contract strategically and then claiming it was illegal in the first place.
Apple is “unleashing hell”, but the problem is that’s (likely) illegal. It’s going to count as retaliation.
Honestly, the sooner these so-called devs complaining about Apple pack up and leave the better. Apple doesn't need you and Apple's users don't want you. Good riddance and good luck making your fortunes on Android.
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