Apple hits back in Epic’s app fight

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The outcome of a legal challenge by Fortnite maker Epic against Apple will have some impact on the future of gaming, and how regulatory agencies and others perceive antitrust boundaries.

Epic, which filed in federal court in California last year, is suggesting that Apple’s policy regarding in-app payment systems is anticompetitive. Apple requires game makers on the Apple Store platform to use its own in-app payment system. After Epic initiated something called “Project Liberty” to get around Apple’s in-app payments process, the company removed the Epic application from the store.

“Epic has framed its case around the idea that Apple’s iPhones, with an installed base of more than 1 billion users, represent their own distinct market for software developers,” writes Stephen Nellis at Reuters. “Epic has argued that Apple has monopoly power over that market because it decides how users can install software on the devices and says it abuses that power by forcing developers to deliver their software through the App Store, where developers are subject to fees on some transactions.”

In its defense, Apple is claiming that its store is its intellectual property, and that it has to collect 15% to 30% commissions to maintain the app store. Here’s part of a relevant Apple statement cited at 9to5Mac:

Epic’s monopoly maintenance claim is premised on the notion that the antitrust laws preclude Apple from imposing conditions on the licensed use of its intellectual property, and impose on Apple a duty to deal with Epic on the terms preferred by Epic—to the detriment of other developers and consumers alike. But Apple has no obligation to license its intellectual property, and aside from a limited exception not applicable here, businesses are free to choose the parties with whom they will deal, as well as the prices, terms and conditions of that dealing.”

The issue of antitrust action against Apple is interesting here. Of course, Apple doesn’t have a monopoly on gaming itself. The implied targeting of Epic’s challenge centers around the Apple App Store as a unique marketplace for the massive smartphone market. Here, one could argue that Apple only has one competitor – Android – and that since Android or “non-Apple” smartphones are mostly bought by a certain class of tech savvy user, the Apple iPhone and its marketplace are dominant in this sector in some very unique ways.

However, Apple will continue to push back, as it has in accusations by tax collectors that it used its Ireland offices to avoid certain kinds of international taxation.

Look for all of this to make its mark on Apple’s stock ticker, and the company as a whole.

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