SAN RAMON, Calif. (AP) – On Monday, Apple faces one of its most serious legal threats in recent years: A lawsuit that threatens to disrupt iron control over its billion-dollar app store each year, while feeds more than 1.6 billion iPhones, iPads and other devices.
The federal lawsuit is being filed by Epic Games, maker of the popular video game Fortnite. Epic wants to demolish the so-called “fenced garden” of the app store, which Apple began building 13 years ago as part of a strategy created by co-founder Steve Jobs.
Epic accuses Apple of once turning the small digital storefront into an illegal monopoly that pushes mobile apps for a significant portion of their revenue. Apple charges a commission of 1
Apple’s hugely successful formula has helped make the iPhone maker one of the world’s most profitable companies, with a market value that now exceeds $ 2.2 trillion.
Private Epic is weak by comparison, with an estimated market value of $ 30 billion. His aspirations to get a bigger hinge part of his plan to offer an alternative iPhone app store. The North Carolina company also wants to get rid of Apple’s commissions. Epic says it diverged more than hundreds of millions of dollars from 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 courtroom drama that could shed new light on Apple’s management of the 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 distancing and will require masks at all times.
Neither side wanted a hearing, leaving the decision to U.S. District Judge Yvonne Gonzalez Rodgers, who already seems to know that her decision is likely to be appealed, given the stakes in the case.
Much of the evidence will revolve around secret but crucial arguments about market definitions.
Epic claims that the iPhone has become so ingrained in society that the device and its ecosystem have become a monopoly that Apple can use to get rich unfairly and thwart competition.
Apple claims to face significant competition from various alternatives to iPhone video games. For example, he points out that about 2 billion other smartphones do not use iPhone software or work with its app store – mostly those that rely on Google’s Android system. Epic has filed a separate lawsuit against Google, accusing it of illegally carving apps through its own Android app store.
Apple will also portray Epic as a desperate company that craves revenue outside of the aging Fortnite. He claims that Epic simply wants to release the iPhone ecosystem, in which Apple has invested more than $ 100 billion over the past 15 years.
The estimated revenue of Apple’s app store ranges from $ 15 billion to $ 18 billion a year. Apple disputes these estimates, although it has not made its own data public. Instead, he stressed that he does not collect a cent from 85% of the applications in his store.
The commissions that are added, according to Apple, are a sensible way for the company to recoup its investment, while funding an application review process that it calls for to keep applications and their users secure. About 40 percent of the approximately 100,000 applications submitted for review each week are rejected due to an issue, according to Kyle Andir, Apple’s chief executive.
Epic will try to prove that Apple is using the security issue to disguise its true motivation – maintaining a monopoly that brings more profits than app makers who can’t afford not to be available on the iPhone.
But a smaller company may face a difficult battle. Last fall, a judge expressed some skepticism in court before rejecting Epic’s request to reinstate Fortnite in Apple’s app store pending the outcome of the trial. At the time, Gonzalez Rodgers claimed that Epic’s allegations were “on the verge of antitrust law.”
The process is expected to continue for most of May, with a decision coming in the coming weeks.