SAN RAMON, CALIFORNIA – On Monday, Apple faces one of the most serious legal threats in years: A lawsuit threatening to increase its hardware control of its app store, which brings in billions of dollars each year while supplying more than $ 1 billion. 6 billion iPhones, iPads and other devices.
The federal court case is being handled by Epic Games, maker of the popular Fortnite video game. Epic wants to overturn the so-called “fenced garden” of the app store, which Apple began building 13 years ago as part of a strategy led by co-founder Steve Jobs.
Epic claims that Apple has turned a once-tiny digital showcase into an illegal monopoly that squeezes mobile apps for a significant chunk of their profits. Apple receives a 15% to 30% commission for in-app purchases, including everything from digital gaming items to subscriptions. Apple refuses to charge Epic.
Apple’s highly successful formula has helped turn the iPhone maker into one of the most profitable companies in the world, one with a market value of over $ 2.2 trillion.
Private Epic is comparative, with an estimated market value of $ 30 billion. Her ambitions to grow bigger depend in part on her plan to offer an alternative iPhone app store. The North Carolina company also wants to get rid of Apple supplies. Epic says it owed more than hundreds of millions of dollars to Apple before Fortnite was kicked out of its app store last August after Epic added a payment system that bypassed Apple.
Epic then sued Apple, sparking a court drama that could shed new light on Apple’s management of its app store. Both Apple CEO Tim Cook and Epic CEO Tim Sweeney will testify in a federal courtroom in Oakland, California, which will be set up to allow for social distances and require masks at all times.
Neither side wanted a lawsuit, leaving the decision to District Judge Yvonne Gonzalez Rogers, who already seems to know that her decision is likely to be appealed, given the stakes of the case.
Many of the elements will revolve around funny but critical arguments about market definitions.
Epic claims that the iPhone has become so ingrained in society that its device and ecosystem have become a monopoly that Apple can exploit to unjustly enrich itself and overturn competition.
Apple claims to be facing stiff competition from various video game alternatives on the iPhone. For example, he points out that about 2 billion other smartphones do not use iPhone software or work with its app store – mostly those based on Google’s Android system. Epic has filed a separate lawsuit against Google, accusing it of illegally fixing apps through its own Android app store.
Apple will also portray Epic as a desperate company hungry for revenue sources beyond Fortnite aging. He claims that Epic just wants to reload an iPhone ecosystem in which Apple has invested more than $ 100 billion in the last 15 years.
Estimates of revenue from the Apple App Store range from $ 15 billion to $ 18 billion a year. Apple disputes these estimates, although it has not made its data public. Instead, he stressed that he does not collect a single minute of the 85% of applications in his store.
Procurement in its pockets, Apple says, is a sensible way for the company to recoup its investment while funding an application control process that it says is essential to keeping applications and users safe. About 40% of the approximately 100,000 applications submitted for testing each week are rejected for some sort of problem, according to Kyle Andeer, head of Apple.
Epic will try to prove that Apple is using the security issue to disguise its true motive – maintaining a monopoly that makes more money than app developers who can’t afford not to have an iPhone available.
But the smallest company can face an uphill. Last fall, the judge expressed skepticism in court before rejecting Epic’s request to reinstate Fortnite at the Apple App Store pending the outcome of the trial. At the time, Gonzalez Rogers claimed that Epic’s claims were “on the verge of antitrust law.”
The trial is expected to last for most of May, with the decision coming in the coming weeks.