Why the Apple vs. Epic Games battle is more than just games
CNBC’s “Squawk Alley” team discusses the Apple and Epic Games battle as it heats up with separate legal filings with Basecamp co-founder David Heinemeier Hansson. Subscribe to CNBC PRO for access to investor and analyst insights on Apple and more: https://cnb.cx/3dIH56N
On Wednesday, Apple and Epic Games laid out in separate dueling legal filings what they consider to be the key facts and main legal issues ahead of an antitrust trial that’s scheduled to start in May.
Apple and Epic Games, best known for its game Fortnite, have been in a legal battle since last year after Epic Games tried to avoid Apple’s 30% App Store fee through a server software update that skirted past Apple’s App Store payments system. Apple responded by removing Fortnite from its App Store, effectively preventing iPhone users from playing the game.
Top executives from both companies are expected to testify in-person in federal court in Oakland, California in a trial that is expected to last weeks.
Apple executives including Apple CEO Tim Cook, Apple software SVP Craig Federighi, and former marketing head Phil Schiller may testify, according to court filings. Epic Games CEO and founder Tim Sweeney is also on the trial witness list.
The late-night filings from each company are lengthy and packed with detail. Below you can find a bulleted summary of how each company will plan to make its case in court:
Apple will argue that:
Its 30% commission is essentially the same as other online software stores like Google Play or stores for video game consoles and Apple’s fee has decreased over time.
It faces competition both for iPhones as well as other platforms to play games.
Its App Store policies have led to a boom in the software industry and result in greater safety and security for users.
The App Store is a core, integrated feature of the iPhone, and that using Apple payments for digital purchases is a key feature.
Epic will argue that:
Apple forces consumers to bear high switching costs to stop using Apple products, locking them in.
As Apple has accumulated more customers and locked them in, the importance of selling software to Apple customers has grown.
Apple controls the only way to install software on an iPhone through the App Store.
Apple uses its App Review process, which manually screens individual apps, for anti-competitive purposes, removing apps for business reasons under the pretext of security.
Because some developers have chosen to raise iPhone software prices because of Apple’s 30% fee, it causes consumers to pay more, and Fortnite is an example.
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