Epic argues it breached contract because Apple's terms are 'unlawful'

Cal Jeffrey

Posts: 2,630   +614
Staff member
A hot potato: Epic Games is continuing to keep antitrust issues and monopolistic behavior front and center in its ongoing legal feud with Apple. The latest argument comes in a reply memo to Apple's countersuit against Epic's breach of contract.

On Saturday, Epic's attorneys fired off a rebuttal against Apple's claims of breach of contract, saying, among other things, that Epic broke terms of contractual obligation because those terms were "unlawful."

"When Epic took steps to allow consumers on iOS devices to make those payments directly, it breached some of the contractual restrictions that Apple imposes on iOS developers," the memo reads. "Epic did so because those contractual restrictions are unlawful."

Epic's lawyers contend that the company took a stand to show that competition could exist within Apple's walled garden and "that customers would welcome and benefit from it." In other words, Apple has no legal right to claim damages or allege "theft" on a product that it does not own. It further contends that it took action without Apple's knowledge because it knew that Apple would use monopolistic behavior to prevent that competition from occurring.

Epic Versus Apple - Epic Co... by Mike Wuerthele

"Apple has no right to the fruits of Epic's labor, other than the rights arising under a contract. Epic chose to take a stand against Apple's monopoly to illustrate that competition could exist on iOS, and that consumers would welcome and benefit from it. Epic did so without advance notice to Apple because Apple would otherwise have used its monopoly control to prevent that competition from happening."

Epic says that it did what it did to show that competition can exist in the iOS ecosystem and that Apple's restrictive policies are nothing other than "tools" that the tech giant uses to enforce its monopoly. Epic's lawyers are so confident in their arguments that they said Epic Games has no problems paying up if they cannot prove that Apple acting in an anticompetitive manner.

"The parties will litigate these points in the coming months, and Epic has conceded that if it fails on its antitrust claims, Epic will be responsible for any sums owed to Apple under the License Agreement," the legal team said.

A hearing is scheduled for November 10 in US District Court in Oakland, California.

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jonny888

Posts: 115   +165
Apple has no right to the fruits of Epic's labor
And presumably Epic has no right to demand that Apple distribute their product for them for free on *their* hardware platform?

Both sides of this argument seem to be FUBAR. For every good point each side raises, they also shoot themselves in the foot. I actually suspect the verdict will be decided by whoever sabotages themselves the least.
 

Squid Surprise

Posts: 3,557   +2,449
When you deem a law "unlawful", the process is to continue following the law while you protest/fight it... unilaterally deciding the law is "unlawful" is not in Epic's power - nor should it be!

The courts will (and should) decide this matter - until that time, Epic should be following the rules... that they aren't simply smacks of greed, not "good citizenship".
 

jonny888

Posts: 115   +165
When you deem a law "unlawful", the process is to continue following the law while you protest/fight it... unilaterally deciding the law is "unlawful" is not in Epic's power - nor should it be!

The courts will (and should) decide this matter - until that time, Epic should be following the rules... that they aren't simply smacks of greed, not "good citizenship".
That's not technically true. Apple's Ts & Cs aren't laws, they form part of a legally binding contract. But contracts can be void-ed if the terms are deemed to violate existing laws.

For example, you could happily sign a contract that says you're obliged to sacrifice your first born child in exchange for services. But no court would ever expect you to honour that contract, because killing itself is illegal, making the contract void and non-uphold-able.

That said, you're right that they're putting the cart before the horse. They should have contested the terms in court *before* breaking them. Because as you say, it puts them in a sticky situation if the terms are later deemed to be legal.
 

FF222

Posts: 245   +184
And presumably Epic has no right to demand that Apple distribute their product for them for free on *their* hardware platform?
Epic does not demand anything like that from Apple. That's just your and Apple's straw man, because neither of you can attack Epic's actual argument.

Both sides of this argument seem to be FUBAR.
What you meant to say was that both Apple's argument and also its/yours straw man that you used to replace Epic's actual argument are "fubar".

Epic's actual argument (ie. that Apple has no right to demand a cut of payment for no services/work rendered) on the other side is completely justified.
 

Cal Jeffrey

Posts: 2,630   +614
Staff member
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When you deem a law "unlawful", the process is to continue following the law while you protest/fight it... unilaterally deciding the law is "unlawful" is not in Epic's power - nor should it be!

The courts will (and should) decide this matter - until that time, Epic should be following the rules... that they aren't simply smacks of greed, not "good citizenship".
The other thing Epic is arguing here is that Apple's countersuit which is asking for punitive damages does not fall under tort. The only thing Apple is entitled to is whatever was stipulated in the contract.
 
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Cubi Dorf

Posts: 256   +123
They are not saying a law is unlawful. They are say Apple contract is unlawful, meaning apple is breaking current law with their contract terms. No law is in question. People break contracts every day. It doesn’t making them criminals. This is normal in contract dispute.

When you deem a law "unlawful", the process is to continue following the law while you protest/fight it... unilaterally deciding the law is "unlawful" is not in Epic's power - nor should it be!

The courts will (and should) decide this matter - until that time, Epic should be following the rules... that they aren't simply smacks of greed, not "good citizenship".
 

Endymio

Posts: 1,018   +856
Epic's actual argument (ie. that Apple has no right to demand a cut of payment for no services/work rendered) on the other side is completely justified.
Huh? Apple demanded nothing. They made an offer to allow others to use their store, with distribution, sales, billing, and a goodly portion of the marketing done by them, in exchange for a cut of any profits generated. Epic freely entered into that arrangement. Apple's deal seems quite good, as it has attracted hundreds of thousands of developers... not that it matters, of course. Since the store is Apple's property, they can offer whatever terms they wish... just as you can offer to sell your house for any price you so desire.

But if you honestly believe Epic has been treated unfairly, you can of course offer them free space in your own home for them to sell their products from. You can handle all the sales and billing for them as well-- free of charge, of course. If you have no problem with Apple being required to do so, you should be amenable to doing so yourself.
 
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Cubi Dorf

Posts: 256   +123
Epic is say Apple terms are illegal agreement due to antitrust law. If Epic win this argument then Apple terms are invalid and Epic did nothing wrong in violate those term. If Epic lose they agreed to pay Apple. Epic is not do anything bad here unless you think to challenge Apple is bad.
 

Axiarus

Posts: 592   +389
Epic is say Apple terms are illegal agreement due to antitrust law. If Epic win this argument then Apple terms are invalid and Epic did nothing wrong in violate those term. If Epic lose they agreed to pay Apple. Epic is not do anything bad here unless you think to challenge Apple is bad.
Epic brought exclusivity to PC. They will always be in the wrong in my eyes.
 

Axiarus

Posts: 592   +389
Huh? Apple demanded nothing. They made an offer to allow others to use their store, with distribution, sales, billing, and a goodly portion of the marketing done by them, in exchange for a cut of any profits generated. Epic freely entered into that arrangement. Apple's deal seems quite good, as it has attracted hundreds of thousands of developers... not that it matters, of course. Since the store is Apple's property, they can offer whatever terms they wish... just as you can offer to sell your house for any price you so desire.

But if you honestly believe Epic has been treated unfairly, you can of course offer them free space in your own home for them to sell their products from. You can handle all the sales and billing for them as well-- free of charge, of course. If you have no problem with Apple being required to do so, you should be amenable to doing so yourself.
I have no idea why people do not understand this. It is literally just Apple hate. They have spent millions creating their ecosystem and brand. They can set whatever terms they want. Can they give other companies passes as well? Yup.
 
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"Apple has no right to the fruits of Epic's labor, other than the rights arising under a contract."

I disagree and to say that is hypocritical in my opinion. What's the difference between Apple charging 30% and Epic Games charging developers 12% when they use the Epic Games Store? There is no difference.

To be fair, it's 12% after $1 million which most developers (especially indies) won't reach and so they get to keep all of that money which is awesome. The problem is Epic needs to act on what they preach. If Apple doesn't have any right to the revenue of Epic's titles after Epic uses their platform, then Epic should not be charging developers 12% regardless of the threshold to meet because Epic has no right to the revenue of another developer's titles. EDIT: That is of course Epic Games isn't funding the developing company's project development costs.
 
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tellmewhy

Posts: 48   +16
It’s like someone who assembles houses and he puts his name on a sign permanently nailed at the front of the houses, SELLs the houses to people and demand 30% from the price of any item that is has sold to the house owners. So it demands that anyone who want to sell items to those house owners he must use exclusively it’s own store so he can take the 30% cut. He spread contracts with those rules to anyone so he can wall that situation.

Well sorry apple maybe you had difficult childhood but that’s it’s not how the FREE market works, this is how the taxes work. You have make a misunderstood somewhere.

I think at the end apple will have to return the total SUM of that 30% cut to all those developers.
 

Cubi Dorf

Posts: 256   +123
If you build something that doesn’t mean you can do whatever you want with. example: if you build house that doesn’t mean you can operate illegal drug business inside. you have to follow laws. Depending where you build you may not even be allow to build a fence outside it! This case is to determine if Apple is follow laws. Apple say they are. Epic say not. Courts will decide.

I have no idea why people do not understand this. It is literally just Apple hate. They have spent millions creating their ecosystem and brand. They can set whatever terms they want. Can they give other companies passes as well? Yup.
 

Endymio

Posts: 1,018   +856
If you build something that doesn’t mean you can do whatever you want with. example: if you build house that doesn’t mean you can operate illegal drug business inside.
This very well may be the worst analogy I've seen to describe the situation. Do you really believe it's applicable? There are literally centuries of case law precedent allowing shop owners to control what is and isn't sold in their establishments, up to and including online and virtual stores.

Epic's sole hope is if the judge decrees Apple holds monopoly power over Epic's apps, a ruling which itself flies in the face of antitrust precedent. I give Epic perhaps a 2% chance of winning at the district level, and 0% on appeal.
 

tellmewhy

Posts: 48   +16
This very well may be the worst analogy I've seen to describe the situation. Do you really believe it's applicable? There are literally centuries of case law precedent allowing shop owners to control what is and isn't sold in their establishments, up to and including online and virtual stores.

Epic's sole hope is if the judge decrees Apple holds monopoly power over Epic's apps, a ruling which itself flies in the face of antitrust precedent. I give Epic perhaps a 2% chance of winning at the district level, and 0% on appeal.
Can a store owner demand that no other store will open in the area where are the houses it has sold (because it’s an assembler of houses too)?

You can’t develop and install any app on ios without apple approval. That’s against the rules of free market (fcc). It applies to consoles too.

Google was smarter and allowed even with obstacles other apps to be installed. So the court will not demand from the Google to repay the 30% but just to remove the obstacles.
But apple for SURE if the court is independent it will have to open the ios AND pay back the 30% to all the developers until the ios had released. I don’t know the rules for macos but if they are the same as ios it will apply and there.
 
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Endymio

Posts: 1,018   +856
You can’t develop and install any app on ios without apple approval.
Sure you can. Have you never heard of sideloading? Apple simply refuses to assist you in the process.

But apple for SURE if the court is independent it will have to open the ios AND pay back the 30% to all the developers
You want to bet on it? I'll give you odds much better than even.
 

tellmewhy

Posts: 48   +16
Sure you can. Have you never heard of sideloading? Apple simply refuses to assist you in the process.
As has proven in reality that isn’t enough for a sub market to be established. But I bet that it would be against the EULA which apple has give you to sign so apple isn’t neutral but clearly negative to that (maybe there are and hardware anti measures). I don’t have their EULA right now so maybe there is not such term but I am pretty sure they will have put it in because they like to be “a step ahead”. They had try to enforce every unreal engine developer outside the platform they control so its obvious they are strongly negative to that.
 

m4a4

Posts: 2,040   +1,923
TechSpot Elite
Sure you can. Have you never heard of sideloading? Apple simply refuses to assist you in the process.
Don't be disingenuous. Sideloading apps on a vanilla install of iOS is not only unsupported by Apple, it is downright opposed by them. Using an exploit or jailbreaking it to install an app isn't the same as what Android allows.

It isn't even worth making the argument, why do you people keep parroting such a lame excuse? It's an exception (at best), not the rule lol
 
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jbc029

Posts: 107   +190
Epic's actual argument (ie. that Apple has no right to demand a cut of payment for no services/work rendered) on the other side is completely justified.
You mean other than providing a storefront and ongoing access.and support through their platform? That service that requires constant work to maintain availability and a modicum of security?
 

Endymio

Posts: 1,018   +856
Sideloading apps on a vanilla install of iOS is not only unsupported by Apple...
Of course it's unsupported. Why should Apple have to debug problems caused by downloading unverified software written by unknown individuals?

....it is downright opposed by them.
It's that pesky thing called freedom. Apple is free to desire that you don't circumvent their security. You are free to do so if you wish. When Apple starts lobbying for legislation to legally bar you from sideloading apps, they'll be in the wrong.

why do you people keep parroting such a lame excuse?
Probably because so many people seem to believe their own personal desires should be made laws of nature. Honestly, you need an entire paradigm shift. Apple didn't invent the app store, but they did popularize it. In the days before the iPhone, many phones had no ability to load apps not specifically pre-installed by the manufacturer themselves. Apple changed that-- and now you believe you have some god-given right to tell them exactly how to implement it? The myopic absurdity of human nature knows no bounds.

I could point out that there are real and compelling reasons for Apple's walled garden, such as security, consistency and easy of use, etc. But I won't, because that's irrelevant. Even if Apple's decision here made their phones not only inferior, but nigh unusable, it's still a business decision. Their business decision. You don't like it, don't buy their products. If you don't like how the free market works, try visiting the booming economies of Cuba or North Korea, live there a little while, and report back to us.
 

Squid Surprise

Posts: 3,557   +2,449
Don't be disingenuous. Sideloading apps on a vanilla install of iOS is not only unsupported by Apple, it is downright opposed by them. Using an exploit or jailbreaking it to install an app isn't the same as what Android allows.

It isn't even worth making the argument, why do you people keep parroting such a lame excuse? It's an exception (at best), not the rule lol
There are TONS of jailbroken iOS devices.... and sideloading HAS become a viable market. I know plenty of people who make their livings selling "unsupported" apps to people on their jailbroken iPhones.

Yes, Apple opposes this - of COURSE they do!! Not only does it circumvent their security, they also don't get a cut of the profits... but it's still legal to jailbreak your iOS device as of the time of this post :)

Epic CHOSE to design their games to work on iOS - no one forced them to. They simply want a larger share of the profits - well... too bad for them.
They are not saying a law is unlawful. They are say Apple contract is unlawful, meaning apple is breaking current law with their contract terms. No law is in question. People break contracts every day. It doesn’t making them criminals. This is normal in contract dispute.
When you sign a contract and decide that it's "unlawful", the CORRECT procedure is to fight it in court BEFORE you simply break the contract... especially if you've been abiding by it for a substrantial amount of time... we're NOT talking about sacrificing newborn children here.
 

m4a4

Posts: 2,040   +1,923
TechSpot Elite
Of course it's unsupported. Why should Apple have to debug problems caused by downloading unverified software written by unknown individuals?

It's that pesky thing called freedom. Apple is free to desire that you don't circumvent their security. You are free to do so if you wish. When Apple starts lobbying for legislation to legally bar you from sideloading apps, they'll be in the wrong.

Probably because so many people seem to believe their own personal desires should be made laws of nature. Honestly, you need an entire paradigm shift. Apple didn't invent the app store, but they did popularize it. In the days before the iPhone, many phones had no ability to load apps not specifically pre-installed by the manufacturer themselves. Apple changed that-- and now you believe you have some god-given right to tell them exactly how to implement it? The myopic absurdity of human nature knows no bounds.

I could point out that there are real and compelling reasons for Apple's walled garden, such as security, consistency and easy of use, etc. But I won't, because that's irrelevant. Even if Apple's decision here made their phones not only inferior, but nigh unusable, it's still a business decision. Their business decision. You don't like it, don't buy their products. If you don't like how the free market works, try visiting the booming economies of Cuba or North Korea, live there a little while, and report back to us.
I hope you're getting paid by Apple to write those paragraphs, because it's kinda sad that you've went off topic so much.

The point is, sideloading on iOS is the exception, not the rule. Don't pretend it's not.
 

m4a4

Posts: 2,040   +1,923
TechSpot Elite
There are TONS of jailbroken iOS devices.... and sideloading HAS become a viable market. I know plenty of people who make their livings selling "unsupported" apps to people on their jailbroken iPhones.

Yes, Apple opposes this - of COURSE they do!! Not only does it circumvent their security, they also don't get a cut of the profits... but it's still legal to jailbreak your iOS device as of the time of this post :)

Epic CHOSE to design their games to work on iOS - no one forced them to. They simply want a larger share of the profits - well... too bad for them.

When you sign a contract and decide that it's "unlawful", the CORRECT procedure is to fight it in court BEFORE you simply break the contract... especially if you've been abiding by it for a substrantial amount of time... we're NOT talking about sacrificing newborn children here.
Tons? Give me a more real number, or are you just going to also be disingenuous here?
And stay on the whole "sideloading" topic. That's another thing you people can't seem to do when blindly defending a trillion dollar company lol

Arguing that iOS has sideloading (as competition so we don't need to worry about the App Store or having freedom on your device) is a BS argument in the context presented above.
As I've said, it's the exception, not the rule. And no argument presented so far even comes close to making it seem honest.