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Apple judge weighs in on fight over Fortnite

August 24, 2020, 11:40 PM UTC
Updated August 25, 2020, 1:29 PM UTC

The judge hearing Apple Inc.’s fight with Epic Games Inc. said she’s “inclined” not to order the iPhone maker to immediately reinstate the Fortnite app as the companies faced off in their first courtroom showdown.

But U.S. District Judge Yvonne Gonzalez Rogers said during a hearing Monday that the dispute over Apple’s App Store isn’t a “slam dunk” for either side. She was sympathetic to the game developer’s argument that Apple retaliated against it by threatening to cut off Epic’s graphics technology, known as Unreal Engine, a suite of software used by millions of developers to build 3-D games and other products.

After subjecting both sides to tough questions and critical comments for more than an hour, Rogers said she will issue a temporary order soon and will hold a Sept. 28 hearing on a longer-term solution.

Apple faces a backlash from some developers who say its standard App Store fee of up to 30% and other policies are unfair and designed to benefit iPhone maker’s own services. The fight blew up Aug. 13 when Epic told customers it would begin offering a discounted direct purchase plan for items in Fortnite, and Apple then removed the game app, abruptly ending access for more than a billion iPhone and iPad customers.

Rogers appeared unconvinced by Epic’s argument that it’s suffering “irreparable harm” from the damage to its reputation by customers complaining that they can’t play Fortnite.

The judge asked Epic’s attorneys why the company can’t “flip the switch” on its independent storefront and return to “status quo” so gamers can get back to playing Fortnite.

That is “really asking us to require that consumers pay more than they should,” Epic’s lawyer Katherine Forrest said.

But the judge also said Apple’s decision to block access to the Unreal Engine “does to me look retaliatory.”

The bigger issue in the case is whether Apple’s control over its App Store amounts to a monopoly. Apple isn’t alone in taking a commission. Rogers noted that Epic takes a 12% cut from third-party game developers in its store that offers computer games.

“The definition of the market will be an interesting and complicated issue.“ Rogers said. “The battle here will not be won or lost on a temporary restraining order” or a preliminary injunction, she said.

Apple’s lawyer defended its App Store policies, saying they take into account other stores and mobile platforms.

“Apple, while a serious and ardent competitor in that arena, is nothing approaching a monopolist once you look at the entirety of the situation,” attorney Richard Doren said.

But Rogers said iPhone users can’t make app-based purchases from Amazon and other mobile platforms.

“So the question is: Without competition, where does that 30% come from?” the judge said. “Why isn’t it 10, 15, 20? How is the consumer at all benefiting from the fact that you get to say what you want it to be?”

Of the 2.2 million apps available on the App Store, the 30% fee is billed to more than 350,000. Apple reduces the fee to 15% after a consumer uses a subscription for more than a year.

Cutting off Epic from Apple’s iOS and Mac developer tools would mean the gaming company can no longer distribute Unreal Engine to other developers, Epic said Sunday in a court filing. Microsoft Corp., which makes the Xbox, uses the technology for games developed for consoles, PCs and mobile devices and is backing Epic in court.

Apple has said that Epic Chief Executive Officer Tim Sweeney sought a “side” deal seeking an exclusive storefront for Fortnite, a move that Apple executives argued would fundamentally upend how the App Store works. Sweeney maintains he wasn’t asking for special treatment but for Apple to make the same option available to all developers.

The case is Epic Games Inc. v. Apple Inc., 20-cv-05640, U.S. District Court, Northern District of California (Oakland).

(Updates with judge questioning lawyers at hearing)