Apple and Epic Games’ Courtroom Battle Commences
The Potential Impact of the Lawsuit
Yesterday marked the beginning of a legal showdown between Apple (AAPL) and Epic Games, the game developer behind Fortnite. The outcome of the three-week trial could have a significant impact on how app developers make money in the future.
In August, Epic Games sued Apple and Google (GOOGL) after Fortnite was kicked out of both companies’ app stores. Apple and Google said Epic broke their rules by creating a system to process payments within the game., which could prevent Apple and Google from taking a commission out of in-app purchases. Epic Games argues Apple’s 30% cut is too high and that Apple operates its App Store in a manner that prevents fair competition.
An Uphill Battle for Epic
Epic Games may have a tough time proving Apple engaged in anti-competitive practices. A decision could come down to the definition of a “market” in the digital age. Epic contends that Apple has a monopoly on mobile app distribution with its App Store. Apple argues it is just one of many distribution channels.
Epic Games’ Chief Executive Officer Tim Sweeney, who spent months preparing for the legal battle, testified Monday. Others on Epic’s witness list include company executives, former Apple employees, and workers at other technology companies including Microsoft (MSFT). Apple’s witness list includes the company’s CEO Tim Cook, and other executives including the head of the App Store.
Apple Faces Other Antitrust Complaints
Epic Games is not the only one to accuse Apple of anti-competitive practices. Late last week the European Union found Apple violated antitrust rules because it abused its dominant position in the distribution of music streaming apps. The preliminary ruling stems from a complaint Spotify (SPOT) filed with the EU. Regulators in the UK and lawmakers in the US are also looking into the way Apple distributes music streaming apps.
The legal battle between Apple and Epic Games will have long-term ramifications for the mobile app market. With appeals, counter lawsuits, and delays likely in the future, it may be some time before the full impact of the trial becomes clear.
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