Epic's arguments against Apple aren't sitting well with the judge

David Matthews

Posts: 391   +71
Staff member
In brief: Epic took Apple to court, arguing that Apple uses its App Store in an anti-competitive manner. However, U.S. District Judge Yvonne Rogers doesn't seem phased by Epic's arguments.

After deliberately flouting Apple's in-app payment policies, Epic launched a lawsuit against Apple accusing it of anti-competitive practices. The two companies appeared at a hearing on Monday via Zoom. However, U.S. District Court Judge Yvonne Rogers did not seem particularly pleased with Epic's legal arguments, per a report from CNN.

Specifically, Judge Rogers disagreed with Epic's argument that Apple violated antitrust laws by requiring that apps use Apple's in-app payment system to be listed in the App Store.

“Walled gardens have existed for decades,” said the judge. “Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. What Apple’s doing is not much different… It’s hard to ignore the economics of the industry, which is what you’re asking me to do.”

Epic's ultimate goal is to use its own launcher or at least use its own payment system to skirt Apple (and Google's) 30% cut via in-app payments. However, Apple has argued that this could lead to security issues. Epic countered, saying that it wasn't a security threat because it is a well-established company and business partner to Apple. Judge Rogers again disagreed.

“You did something, you lied about it by omission, by not being forthcoming. That’s the security issue. That’s the security issue!”

“You did something, you lied about it by omission, by not being forthcoming. That’s the security issue. That’s the security issue!” said Rogers. “There are a lot of people in the public who consider you guys heroes for what you guys did, but it’s still not honest.”

This ongoing battle between Apple and Epic has been entertaining. Both sides are flinging corporate mud at each other in simultaneous efforts to save face. Epic hosted a Fortnite tournament, which rewarded winners with expensive tech—other than Apple products. Apple denied Epic Games accounts from using Apple's single sign-in system.

Apple's tussle with Epic extends to other developers as well. Spotify, Epic, Deezer, Protonmail, and other developers have formed the "Coalition for App Fairness," which advocates "freedom of choice and fair competition across the app ecosystem." Even Microsoft is fighting with Apple to allow game-streaming services like xCloud and Stadia on the App Store.

Monday's hearing didn't settle anything regarding Fortnite returning to the App Store, though a decision is forthcoming. Judge Rogers recommended a jury trial to "understand what real people think."

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FF222

Posts: 238   +182
"“Walled gardens have existed for decades,” said the judge. “Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. What Apple’s doing is not much different… It’s hard to ignore the economics of the industry, which is what you’re asking me to do.”

Indeed. And murder and slavery have also existed for thousands and millions of years, so, the judge can't possibly do anything against them either. Right?

There's no "economics" in the industry that would make walled gardens necessary (just like no walled garden is necessary or even allowed in the auto parts industry), let alone have corporations completely free hand over what terms they set up and enforce in these gardens, including the amount they charge, and for what kind of service (or the lack of these) they charge. A flat cut of 30% from all transactions (not even profits, just income) just shouldn't fly at all.

Just like with price gouging, there should be at least limits set to what they can and can't do, and demanding a high flat cut of all transaction should count as unjust enrichment.
 

Endymio

Posts: 621   +514
There's no "economics" in the industry that would make walled gardens necessary
Sure there is. Because, without the wall, the garden doesn't get built.

A flat cut of 30% from all transactions (not even profits, just income) just shouldn't fly at all.
Why should you determine the price someone else charges for their own products and services? Would you like it if Apple was allowed to set the price you sold your house at?
 

Darth Shiv

Posts: 2,068   +656
"“Walled gardens have existed for decades,” said the judge. “Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. What Apple’s doing is not much different… It’s hard to ignore the economics of the industry, which is what you’re asking me to do.”

Indeed. And murder and slavery have also existed for thousands and millions of years, so, the judge can't possibly do anything against them either. Right?

There's no "economics" in the industry that would make walled gardens necessary (just like no walled garden is necessary or even allowed in the auto parts industry), let alone have corporations completely free hand over what terms they set up and enforce in these gardens, including the amount they charge, and for what kind of service (or the lack of these) they charge. A flat cut of 30% from all transactions (not even profits, just income) just shouldn't fly at all.

Just like with price gouging, there should be at least limits set to what they can and can't do, and demanding a high flat cut of all transaction should count as unjust enrichment.
Apple's walled garden gives them ultimate control over the security and therefore INTEGRITY of their ecosystem. As an engineer (who is most definitely NOT an Apple fan), this is ABSOLUTELY the best way to implement a security model. Don't bank on others not stuffing up your device/ecosystem reputation. Control the security at all costs.

This is what Apple has done. And they have the right to charge what they deem fit for the privilege of being part of this ecosystem. This cost has been the same since day dot. EVERYONE jumped in accepting those terms. Epic has tried something against their rules and deserves no latitude - there is absolutely no reasonable expectation that Apple shouldn't have dealt with them the way they have.

If Epic wants to build their own closed eco good luck to them. Apple's is NOT anywhere remotely close to a monopoly. Go to Android if you want custom stores.

So I absolutely reject the ludicrous comparison to slavery. That just nowhere near comparable. Apple and those ecosystems have to deal with the VERY REAL situation of device and ecosystem security which is extremely brittle at the best of times in this modern world. I would say it is undeniable that Apple has a far superior security model to Android.
 

Kotters

Posts: 331   +225
Who is this surprising? Epic has no real standing here, especially having manufactured the initial crisis.

I want to see Apple open up as much as anyone else. I abhor walled gardens, and especially hate seeing Facebook do its best to wall off affordable VR the same way. That doesn't change the fact that Epic's entire suit is laughable at best.
 

gigantor21

Posts: 251   +395
TechSpot Elite
Who is this surprising? Epic has no real standing here, especially having manufactured the initial crisis.

I want to see Apple open up as much as anyone else. I abhor walled gardens, and especially hate seeing Facebook do its best to wall off affordable VR the same way. That doesn't change the fact that Epic's entire suit is laughable at best.
That's the main problem for me.

The App Store has real problems, but Epic is the last company I'd trust to lead the fight to fix them. And their messiah complex throughout all this has been as insufferable as it's unconvincing.
 

Darth Shiv

Posts: 2,068   +656
That's the main problem for me.

The App Store has real problems, but Epic is the last company I'd trust to lead the fight to fix them. And their messiah complex throughout all this has been as insufferable as it's unconvincing.
Epic think the Apple tax is high for ingame purchases. Which it probably is. But it has been front and center the whole time and Apple has a very high burden to police the ecosystem. They created the iOS ecosystem, marketability etc. It's their right to set the price to be part of it and the price they charge has obviously enabled them to get where they are today right?

I mean Epic being right about their point does not mean they have the right to do what they did.

The best way I see of handling this would be to cut down on ingame content on iOS. Run the good content only via competing platforms where you get the margin "you deserve" and make Apple reconsider their economics.
 
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FF222

Posts: 238   +182
Apple's walled garden gives them ultimate control over the security and therefore INTEGRITY of their ecosystem.
No, it doesn't. Apple itself admitted in court that they can't control for security issues. They used this as the argument for why they don't want to keep the Unreal Engine either in the store, despite it being not in violation of the App Store rules.

In Apple's words: Unreal Engine is a "potential threat" that "poses as a second potential 'trojan horse' that would enable Epic to carry through on its threats to undermine the App Store and insert further unauthorized features." Epic could "insert malware, or other unauthorized features such as alternative direct payment mechanisms" into "the non-Epic apps that are available on the App Store and rely on Unreal Engine"

That's Apple admitting that they can't guarantee the security of their platform, unless they can preemptively remove anyone they suspect would violate their rules. Which in turn also means that anyone who they don't suspect of planning to violate their rules, or who violate the rules without knowing they do, because for ex. themselves and their apps also fell victim of a hack or an infection unknown to them, can infiltrate their platform.

And they are not wrong about this: iOS already has long history with apps that have successfully evaded Apple's security checks and have been distributed by the store for months before getting caught and removed. Just Google "Wandera App Store trojan" or " XcodeGhost"!

As an engineer (who is most definitely NOT an Apple fan), this is ABSOLUTELY the best way to implement a security model.
Demanding a 30% cut of every transaction is not a security model, neither is flat out forbidding the use of alternative payment processors (even established and trusted ones). It's a business model, if anything.

The other things you said are not even worth addressing, because they have nothing to do with what I said, and do not even contain an attempt at logical argument.
 

FF222

Posts: 238   +182
Sure there is. Because, without the wall, the garden doesn't get built.
Just like cars don't get built because car makers can't build a walled garden of parts and fuel supply around them, or force car owners to pay for the latter through them (while they're taking a 30% cut). Or houses don't get built, because the company building them can't force the home owners to pay their electricity and utility bills through them (taking a 30% cut off those).

And Windows, Linux, etc... they were never built, because Microsoft, Red Hat, etc. could not force users to purchase apps only through them. Oh, wait.....

There's nothing in the world that would _necessitate_ a walled garden for a product or even a platform to be built. That not only has been proved wrong by several examples, but for every product or platform that has a walled garden attached to it, there exist literally dozens, thousands and sometimes even millions of similar products, that do not have a walled garden attached, and are still economically feasible and generate profits for their manufacturers or maintainers.

Why should you determine the price someone else charges for their own products and services?
Why would you ask a loaded question asserting something I did not say (like that I should determine the price of anything), if you could also argue with what I actually said? Well, you wouldn't.... if you could argue with it. But you can't, and that's why you created this straw man of yours.

And don't even get me started about how bad your "analogy" is. A correct analogy would be asking you how you'd feel if your landlord (or the company who built the house you live in or have a business in) would demand 30% of all your income (paycheck, business income), because they have created the space where you could conduct your revenue generating activities? And why stop there? Your electric company or your internet service provider could also demand 30%, because they've created the network that enabled you to conduct business activity, regardless of the actual product you selling possibly having nothing to do with electricity, internet data transfer, etc? Everyone who created something that you use when conducting business could demand their 30% cut, separately, off all your income/revenue. Couldn't they? Or would that be ridiculous?

Well, that's how ridiculous is for Apple to demand a 30% cut of all transactions just because they've created iOS, the iPhone or the App Store.
 
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Endymio

Posts: 621   +514
Just like cars don't get built because car makers can't build a walled garden of parts [around] them...
When was the last time you bought a Mercedes with parts in it Mercedes didn't approve? When did you last visit a Ford dealership, and find parts for sale there that Ford didn't approve? Never, I suspect.

You will say that you can buy Mercedes parts, or Ford parts, from OTHER dealers and install them yourself. Yes, you have that right. You have the same right with Apple as well. You are allowed to purchase an app from anyone you wish. But not at the Apple store. You are likewise allowed to install that app on your iPhone. But Apple won't help you do it. Your analogy is no different than forcing Mercedes to sell Hyundai parts in Mercedes dealerships.

A correct analogy would be asking you how you'd feel if your landlord...would demand 30% of all your income (paycheck, business income), because they have created the space where you could conduct your revenue generating activities?
You are apparently unaware that commercial space is commonly leased under just such a profit-sharing arrangement. Google "Percentage Lease" for details.

And Windows, Linux, etc... they were never built, because Microsoft, Red Hat, etc. could not force users to purchase apps only through them. Oh, wait.....
I'm glad you bring up Microsoft, as long before the days of the iPhone, Microsoft and Apple stood at two ends of a spectrum. On one end was Microsoft, and their open ecosystem model, with Apple's closed ecosystem on the other-- closed not only in terms of software applications, but hardware as well. I (and most other people) tended to prefer to Microsoft model, but Apple had plenty of die-hard zealots, prepared to argue the advantages that the closed model imparted to them as users.

I bring this up because both companies were given the freedom to make those architectural decisions themselves, and users were likewise free to choose which model they preferred. The market decided the winners and losers, not the court system. That worked out very well then, and it's working out just as well today.
 
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kimo1

Posts: 119   +193
And also, I got paid a huge sum by Apple to side with Apple to make sure paradise gardens will always have all the rights. Jk. But still, the richest do not get harmed in court nowadays.

Apple is just offering a market service, even giving free profit earning suggestions. You want customers, you use, you don't, then don't. There's no global law to tell how to be a balanced middle man.
 

FF222

Posts: 238   +182
When was the last time you bought a Mercedes with parts in it Mercedes didn't approve? When did you last visit a Ford dealership, and find parts for sale there that Ford didn't approve?
Why are you asking questions that have nothing to do with the discussion? Or did you see anyone complaining about not being able to buy an iPhone with not iPhone parts?

You will say that you can buy Mercedes parts, or Ford parts, from OTHER dealers and install them yourself. Yes, you have that right. You have the same right with Apple as well. You are allowed to purchase an app from anyone you wish.
Wrong. Your Mercedes won't stop you from installing anything in it that's not manufactured from Mercedes, and if it would try to do that, that would be illegal. Your iPhone on the other hand doesn't allow you to install anything that's not from Apple's store.

You are apparently unaware
No, it's you who's not aware even of the basic of the situation discussed here.

I'm glad you bring up Microsoft, as long before the days of the iPhone, Microsoft and Apple stood at two ends of a spectrum. On one end was Microsoft, and their open ecosystem model, with Apple's closed ecosystem on the other-- closed not only in terms of software applications, but hardware as well.
No it was not. They didn't even deal in the same business, because Microsoft didn't sell computers and Apple didn't sell software.

I bring this up because both companies were given the freedom to make those architectural decisions themselves
No. As said, you don't even have the basics right. Not of historics, and not the current situation.
 

winjer

Posts: 82   +241
Indeed. And murder and slavery have also existed for thousands and millions of years, so, the judge can't possibly do anything against them either. Right?
This is an extremely dishonest argument.
As if murder and slavery would ever compare to selling apps and games...
 

Endymio

Posts: 621   +514
Wrong. Your Mercedes won't stop you from installing anything in it that's not manufactured from Mercedes
Have you tried installing third-party software onto your Mercedes? Mercedes and other automakers don't allow third-party applications at all. Do you see any third-party developers selling add-ons to Ford SYNC, or Toyota EnTune, or Audi's MediaCenter? Perhaps in the future this will change, but for now, it's even more of a walled garden than Apple provides.

Your iPhone on the other hand doesn't allow you to install anything that's not from Apple's store.
Of course it does. You can sideload apps into iOS. Apple discourages the practice, but that doesn't make it illegal nor impossible.

They didn't even deal in the same business, because Microsoft didn't sell computers and Apple didn't sell software.
Actually, Apple sold so much software they spun off at least three separate software companies. But your statement misses the main point entirely. Microsoft and Apple both developed operating systems-- one of which was open to one and all third-party applications, and one of which was not. The issue then is the same issue now: should we allow both models to compete freely with each other, or should a court mandate one of those models out of existence?

No, it's you who's not aware even of the basic of the situation discussed here.
How so? You asked a rhetorically-intended question attempting to illustrate the "absurdity" of a real-estate developer charging a percentage of revenues generated at sites they built, not realizing that this is actually common practice. It seems rather evident who here doesn't grasp the situation.
 

Cubi Dorf

Posts: 246   +121
I don't think this court battle is being entertaining at all. It being annoying. The question is if Apple have monopoly on app sale and payment? Is it ok to have monopoly of app sale on iOS since there is competing system (android)? Is anti-trust issue?

To me, there is too significant difference between game console license or car firmware or car parts to consider those as history in this case.

I believe if Apple win, all other operating system except Linux will do same thing. Google will block other app store. Microsoft will take tighter control of app install. They can either ban Steam and make you buy game on Window store or just add 30% to Steam sale, whichever they want. They would get huge monies. I think it will mean to be paying more for software outside of just Apple. People will not quit Window and quit PC gaming because of this. They will just paying more money for same product. There is too much money in this for these company to ignore. It will becoming industry standard if Apple win.
 
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Vulcanproject

Posts: 1,238   +2,056
Apple are the gatekeepers to their platform. It'll take a miracle to force them to hand over the keys. Not in a U.S court. Not if the FBI can't even get Apple to co-operate with criminal cases. Forget it.

Still the lawyers are going to be really well off and definitely will be retiring early. I saw one sat in the court room browsing houseboats in Miami with a misty look in their eye.
 
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trparky

Posts: 814   +781
I dislike walled gardens as much as the next person here but when it comes to security, I basically think that it's a must. Look at Android, an article was posted about how YET AGAIN several apps had to be removed from the Google Play Store because they were infected with some malware.

Like it or not, that Apple walled garden maintains security and, in this world, security is a must. I'll take the walled garden, thank you very much.
 

tellmewhy

Posts: 31   +8
Government system is a walled garden (think the taxes) too and the justice system is just an arm of the government system sooo… taxes is a “good” thing and they will stay :)

Layers are the catalysts but engineers are the main elements.
 

Cubi Dorf

Posts: 246   +121
If another company operate an app store on iOS, they could have security equal or better. Security is not a reason to disallow competition. Apple is not the only company capable of running a secure app store.

I dislike walled gardens as much as the next person here but when it comes to security, I basically think that it's a must. Look at Android, an article was posted about how YET AGAIN several apps had to be removed from the Google Play Store because they were infected with some malware.

Like it or not, that Apple walled garden maintains security and, in this world, security is a must. I'll take the walled garden, thank you very much.
 

Avro Arrow

Posts: 211   +203
“Walled gardens have existed for decades,” said the judge. “Nintendo has had a walled garden. Sony has had a walled garden. Microsoft has had a walled garden. What Apple’s doing is not much different… It’s hard to ignore the economics of the industry, which is what you’re asking me to do.”

No, what they're asking you to do is enforce the antitrust laws that exist in your country. Just because the US government has been too lazy to stop other companies from circumventing them doesn't mean that the practice should continue. Nintendo, Microsoft and Apple shouldn't be doing it either. Using IPs to maintain perpetual monopolies is in direct conflict with Adam Smith's free market philosophy. A true free market uses open standards so that anyone can compete in any sector. The oligarchies and duopolies that exist in the USA (and most of the world) aren't much different from monopolies because they can so easily become virtual monopolies (like Intel and nVidia have both had).

If she rules against Epic Games, she's setting an extremely dangerous precedent because she doesn't have the guts to stand up and say "This is wrong and it's wrong that other companies do it as well!" despite being a judge. There's no doubt that she's a Boomer because she just demonstrated it with a statement that would seem insightful to the unintelligent but is transparently ignorant to those who are intelligent enough to step back and look at the big picture.

That's the problem with Baby Boomers and it's not even their fault. They were never exposed to the gigantic mass of knowledge that became available to a young Generation-X through the early internet. The biggest gift that the internet has given our society is new knowledge but the second-biggest gift was in making us realise just how much we DON'T know. Baby Boomers didn't get to experience that and they're still stuck in the analogue age.

This is why the generation gap between the Boomers and Generation-X is the largest that the world has ever seen thus far. The advent of the home computer and the internet completely changed our ways of thinking and obliterated all of our previously ubiquitous paradigms.

Gen-X and Gen-Y parents have a far better understanding of our Millenial children because the internet taught so many of us to think for ourselves and our use of the internet has kept us that way. Boomers believed in free thought when they were hippies but being in the work force re-programmed them to place higher value on tradition and social norms, regardless of whether those traditions or norms have an overall positive or negative effect. They didn't have the internet to keep the more flexible way of thinking they had when they were young. Now they arrogantly think that they know better because that's how the generation before them treated them but with the rise of the computer, they can't handle the fact that they DON'T usually know better than Gen-X and Gen-Y so they become belligerent and inflexible, just like this judge.

This judge is a product of her time and nothing will get better until the last Boomer judge retires.
 
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Endymio

Posts: 621   +514
No, what they're asking [the Judge] to do is enforce the antitrust laws that exist in your country.
I realize you've never actually read the Sherman Act, or any antitrust case derived from it. The judge has. Apple's acts cannot possibly by a Sec 1 violation, and a Sec. 2 violation could only be adjudged if one takes the rather absurd position that Apple's iOS is not in direct competition with Android.

Using IPs to maintain perpetual monopolies is in direct conflict with Adam Smith's free market philosophy.
Talk about a muddled confluence. Firstly, no IP-based monopoly is "perpetual" as all IP is time-limited. US patents expire after 20 years, for example. Secondly, Apple is nowhere near a monopoly in the app or even the mobile app marketplace. Thirdly, the concept of free markets encompasses protection of property rights: intellectual property no less than tangible property.

The biggest gift that the internet has given our society is new knowledge but the second-biggest gift was in making us realise just how much we DON'T know.
The internet is certainly making me realize how much you don't know. :innocent: