Apple, Epic unveil lines of attack in App Store trial

In the high-stakes antitrust fight over how much Apple’s App Store charges developers, both companies presented road maps of their cases to a California federal judge on Thursday.

Apple

Apple Inc. plans to argue at a trial that consumers and developers will suffer if Epic Games Inc. succeeds in upending how the iPhone maker's app marketplace is run. The games maker will counter that Apple's “anti-competitive” conduct allows it to profit at their expense.

In the high-stakes antitrust fight over how much Apple's App Store charges developers, both companies presented road maps of their cases to a California federal judge on Thursday. Their filings comes ahead of a May 3 trial before the judge with no jury.

In a summary of its legal arguments, Apple contends the 30% commission it charges most developers isn't anticompetitive, but that it's a typical fee across other mobile and online platforms. Moreover, Apple argues that taking a share of the revenue is justified by the billions of dollars it has invested in developing the proprietary infrastructure that underpins its App Store in the company's iOS operating system, including software development kits and application programming interfaces.

“Epic has benefited handsomely from its contractual relationship with Apple,” Apple's court submission said. “Epic has used Apple's proprietary SDKs, and thousands of proprietary APIs to develop games for iOS users.”

The maker of Fortnite, which Apple removed from its store last year, accuses the iPhone maker's app store of being an illegal monopoly because developers are barred from making their iPhone and iPad apps available through their own websites.

Epic said in its filing that Apple harms innovation and uses its control over iOS to monopolize app distribution. Users of iOS don't agree to buy apps only through the App Store and “Apple conditions developers' access to the billions of iOS users on contractual restrictions that cement Apple's control over all iOS app distribution,” according to Epic's filing.

The games publisher wants no restrictions on apps, either on technology or content, accessed through the App Store, Apple said in its filing. But Epic overlooks the benefits of Apple's app review process -- such as protecting users' privacy and controlling malware attacks on the platform -- that have helped developers and consumers, Apple said.

Epic's filing, meanwhile, claims Apple's app review process is “cursory, opaque and yields poor results” -- and doesn't always ensure quality and security. App Review has limited ability to spot “Jekyll” apps that can change how they function after they get past Apple's review process, Epic said in its filing.

‘13 Minutes'

“As of April 2016, the human review process typically took approximately 13 minutes per app for new apps and 6 minutes per app for updates to existing apps,” Epic said. “In certain instances, reviews took less than a minute to review apps.”

Epic Games Store will become profitable in 2023, nearly five years after launch, because “it has front-loaded its marketing and user acquisition costs to gain market share,” Epic disclosed in its filing. The Epic filing included data on Apple App Store revenue, but those details were redacted.

The Fortnite maker has earned more than $700 million in revenue from iOS customers during the two years that the game was available on the App Store, according to Apple's filing. There is nothing preventing Epic Games from developing web apps for the iPhone and allowing users to access them via the browser, the company added.

Apple also repeated its criticism of how Epic launched the fight, accusing the game maker of mounting a carefully orchestrated public-relations campaign -- with the hashtag #FreeFortnite -- in a bid to set up its own payment system and app store on the iOS platform.

Apple Chief Executive Officer Tim Cook and Epic CEO Tim Sweeney are among the executives that will testify at trial. Both companies have also engaged a small army of economists to lay out their positions to the judge.

The case is Epic Games Inc. v. Apple Inc., 20-cv-05640, U.S. District Court, Northern District of California (San Francisco).

Written by Malathi Nayak and Vlad Savov.