Judge Issues Split Decision in Epic v. Apple

Posted on August 25, 2020 by Paul Thurrott in Apple, Games, iOS, Mobile, Mobile gaming with 50 Comments

Tim Sweeney, CEO and founder of Epic Games. Source: Travis Dove for The New York Times

A U.S. District Judge has handed legal victories—and corresponding legal defeats—to both Apple and Epic in their App Store feud. Put simply, Apple is temporarily free to ban Fortnite from its store, but it cannot kill Epic’s developer account or ban its Unreal Engine.

In the words of the judge, neither side got the “slam dunk” they had each respectively hoped for.

“Having carefully reviewed the parties’ briefing, and the parties’ oral arguments, the Court grants in part and denies in part Epic’s motion for a temporary restraining order,” U.S. District Judge Yvonne Gonzalez Rogers wrote in the ruling. “Apple … are temporarily restrained from taking adverse action against Epic Games with respect to restricting, suspending[,] or terminating any affiliate of Epic Games … from Apple’s Developer Program, including as to Unreal Engine. This temporary restraining order is effective immediately and will remain in force until the Court issues an order on the motion for preliminary injunction.”

However, the judge also ruled against granting a temporary restraining order based on “Epic Games’ requests as to Fortnite.” That is, Apple can continue banning Fortnite from the App Store until or unless Epic returns it to its pre-ban condition in which it no longer tries to bypass Apple’s in-app purchasing fees.

For those interested in this case or in the recent groundswell of complaints by developers against Apple in recent months, there are some interesting notes in the analysis portion of the ruling. Judge Gonzalez Rogers was unable to determine the likelihood of Epic succeeding in its ten antitrust claims against Apple given the “limited record before the Court” and the “high burden” of demonstrating that abuse. But the judge also noted that “there are overlapping questions of facts and law” Epic’s complaints, “including substantively similar claims based on the same Apple App Store policies: namely, the 30 percent fee that Apple takes from developers through each application sale and [in-app purchase] in … application[s].”

The judge also confirmed my concern with Epic’s second filing, which is that the company had found itself in an emergency of its own making. “Epic Games remains free to maintain its agreements with Apple in breach status as this litigation continues,” she writes, “but as [was decided in a similar previous case], ‘[t]he sensible way to proceed is for [Epic to comply with the agreements and guidelines] and continue to operate while it builds a record. Any injury that [Epic Games] incurs by following a different course is of its own choosing’.”

The preliminary injunction is in effect until at least September 28, at which time the two sides will confront each other in court at a hearing.

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Comments (55)

55 responses to “Judge Issues Split Decision in Epic v. Apple”

  1. Avatar

    wright_is

    Well, I would say that the judge is talking sense and summed it up pretty nicely.

    Sent both sides to the naughty corner.

  2. Avatar

    curtisspendlove

    I’m actually fairly impressed with this judge. An actually fair ruling for both parties, but neither really getting what they want.


    When you play in the “billions” category you often get what that money will buy you. I think this is going to be very interesting to watch it play out.


    It is fairly clear that Apple is going to be handed at least some slaps on the wrist in this whole thing. And I expect this will finally force them to change a few things.


    However, I don’t think Epic fully considered the fact that Apple does not like to lose. And I think we’re going to see some Epic fallout. ;)


    (I don’t think you’ll ever see Epic up on stage again in a keynote. And I think you’ll see any mention of Epic to be a backhanded one. They are about to ge the NVIDIA treatment.)

  3. Avatar

    glenn8878

    Apple has pressured developers to place in-app charges when they didn't do it before. This is where there could be real injury. The question of whether there should be a lower percentage cut of the revenue will be hard to argue. It's not the developer that bear the cost, but customers. If customer don't want to pay more, do it off the app platform, but Apple has pressured developers to put in-app charges on the AppStore.

  4. Avatar

    colin79666

    Perhaps an insight into where this is going:

    ”While the Court anticipates experts will opine that Apple’s 30 percent take is anti-competitive, the Court doubts that an expert would suggest a zero percent alternative. Not even Epic Games gives away its products for free.”


    I read that as a warning shot at Apple that it better cut the rate voluntarily or find it gets cut for them.

    • Avatar

      crfonseca

      In reply to colin79666:

      But it's not Apple's products, it is? Why should Apple get any cut when Epic sells you an emote, or whatever it is that they sell in Fortnite?

      Apple already gets a fee from Epic as it does from any other iOS developer, if they think that fee is too low, they're free to raise it.

      Also, I don't think that's what Epic wants anyway, what Epic wants is to be able to use their own payment system that completely bypasses Apple Payments to sell their stuff inside their own game.

      I don't think they have an issue with Apple taking some commission when you use their system, but one could argue that 30% is too much, it's just that that's not what they want in the end.

      Which takes me back to the initial point, why should Apple get any money for things sold by Epic inside Epic's own game?


  5. Avatar

    lvthunder

    So breaking contracts and agreements mean nothing since you can't be punished for breaking them if you are big enough.

  6. Avatar

    scovious

    In reply to lvthunder:

    Then it's a good thing that judges makes these decisions and not robots. All contracts are not legally binding, there can be unenforceable or illegal components that any rational judge would throw out...

  7. Avatar

    Andi

    In reply to lvthunder:

    Contracts can lose their power when being made by dominant players in one market.

  8. Avatar

    toukale

    In reply to lvthunder:

    The judge only rule that way to ensure the other developers that counts on unreal engine do not become victims to no fault of their own. I don't think the judge would have ruled that way if that were not the case. For this reason, I think it was the most sensible ruling.

  9. Avatar

    nbplopes

    In reply to lvthunder:


    general-purpose computer is one that, given the appropriate software development, should be able to perform most common computingtasks. Personal computers, including desktops, notebooks, smartphones and tablets, are all examples of general-purpose computers.


    Given their flexibility they are the most used kind of computers by consumers and professionals.


    The spectrum of application of a Gaming Console is reduced mostly o gaming. Routers to route information, modems to provide access to the Internet, smart speaker to listen to audio ... no amount of software development change that as they aren’t built for general application.


    Anyone in computer science and engineering is familiar with these concepts. Actually these concepts are thought today in the early ages as part of an introduction to computing.


    Now you can have whatever opinion. it’s just a matter of putting a bunch of experts in court and this understanding is easily verifiable.

  10. Avatar

    waethorn

    Does Apple not have a clause in their TOS/EULA to say that you can't sue them and instead have to use arbitration?


    There's some new clause in Microsoft's EULA regarding that.

  11. Avatar

    jboman32768

    I didn't think Epic could continue their lawsuit AND go back to complying with Apple policy, because their lawsuit depends on demonstrating the harm imposed on the consumer by the policy.


    I think if the judgement allowed Epic to charge 30% higher prices in the Apple version of Fortnight then all would be fair and the market would correct this problem. Apple could then decide how competitive it wanted its platform to be. Apple users are largely locked in, so they would still pay the premium.

  12. Avatar

    curtisspendlove

    In reply to lvthunder:

    It is my understanding that Epic, being fairly clever, or careful, or whatever have separate legal entities for their games and dev tools.


    In this case they have violated the Fortnite agreement, but not the dev tools agreement.


    I’m assuming that is the case anyway. Haven’t read the whole brief and probably won’t.


    If that *is* the case and there are two separate agreements then this is absolutely the fair way since no actual breech of contract happened on the Unreal Engine legal entity’s contract.


    Regardless it would be silly, and potentially hazardous to allow third parties to sink on the Fortnite ship.


    They should at least be able to protect their current assets and choose if they want to continue using Epic’s developer tools for non-released products.

  13. Avatar

    Hawaiianteg

    In reply to lvthunder:

    I think like other people have said that is because its gonna affect so many other people not related to the case she went that way. Im sure if that wasn't the case it would have been also blocked. Epic is really lucky with also the fact that it isn't Epic games that was named under the contract to the engine.

  14. Avatar

    Andi

    In reply to lvthunder:

    What an apologetic and ridiculous thing to say. A smartphone is not like an Xbox or a Playstation. A console is a static luxury device that performs a fixed function behind the tv.

    The quintessentially mobile smartphone is the most personal PC we have. It's the sole access to internet for countless millions in the US and around the world. You apply for a job from a smartphone, you navigate your way around town, place investments, collect revenue, it is your indispensable tool if you are an uber driver or some other type of gig worker. It has usurped the general purpose the PC used to have.

    Apple and Google wield to much power and expect to be payed rent in perpetuity. Sooner or later the exclusivity of the IAP payment processor must fall. It cannot go indefinitely.

  15. Avatar

    nbplopes

    In reply to lvthunder:


    • 3.1.1: If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.


    .....


    • 3.1.3(b) Multiplatform Services: Apps that operate across multiple platforms may allow users to access content, subscriptions, or features they have acquired in your app on other platforms or your web site, including consumable items in multiplatform games, provided those items are also available as in-app purchases within the app. You must not directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods must not discourage use of in-app purchase.


    .....


    • 3.1.3(a) “Reader” Apps: Apps may allow a user to access previously purchased content or content subscriptions (specifically: magazines, newspapers, books, audio, music, video, access to professional databases, VoIP, cloud storage, and approved services such as classroom management apps), provided that you agree not to directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods are not designed to discourage use of in-app purchase.


    So its true than. If your app is not free and passed the review, the rules do not apply to everyone. In the end of the day is at Apple discretion. If you give away your app for free, don’t know why you would want in-payments.

  16. Avatar

    nbplopes

    I think Epic got what they expected as most likely. Apple and its accolades probably did not. As per Apple contract, the company is entitled to do what the company did to Epic. Upon breach, ban its developer account across all product in its vertical integration scheme. Yet was not able to put it into effect fully according to the law.


    Meaning that there are still many doubts what look like clear cut to Apple. I think this is more a warning to Apple than Epic.

  17. Avatar

    toukale

    As expected, some of us have been saying all along Epic can have their lawsuit while still comply with the contract. Irrespective of the outcome of this case, Epic and Unreal engine have taken a hit. Now every developer will at least entertain the idea of an alternative to Unreal engine. Apple can seal the fate of Unreal on Apple's platform, simply by having Unity on stage in their next wwdc, that will send a clear message to every developer to abandon ship. No developer will want to tie their fate to an engine the platform owner will not support 100%.

    • Avatar

      Andi

      In reply to toukale:

      UE is better than Unity IMO, but I digress, Apple can do what it wants marketing wise, that's correct. What it cannot do is scuttle Unreal Engine by enforcement as that is abuse of dominant position.

      • Avatar

        lvthunder

        In reply to Andi:

        If you can't enforce an agreement or a contract it is useless.

      • Avatar

        toukale

        In reply to Andi:

        Agree, but nothing can stop Apple from updating their OS that somehow break things for Epic and continually do so every time. Nothing can stop Apple with working hand in hand with another engine (like they did with Unreal before). All those will be sign to developers to abandon Unreal on Apple's platform. If anything Epic just made sure their lives on Apple's platform will not be an easy one. I expect Apple to fill that road with as many hurdles as they can.

    • Avatar

      scovious

      In reply to toukale:

      I forgot how compelling it was to make game on an Apple device... I guess it doesn't matter that almost all games prioritize console development PC development before taking into account Apple. The universal game engine with the most robust features for next generation is completely unappealing because I can't export it to iPad... hmm...


      The more likely scenario is that Apple as an ecosystem will get skipped by the developers who know they will make 10x what they can on an iPad by selling on Consoles and PC. If you think the market power of the App Store is going to change game studios over to Unity you must not understand game development...

      • Avatar

        toukale

        In reply to scovious:

        I was referring to Gaming on Apple's platform, obviously that's what they control. Apple is listed at #4 for gaming revenue and they don't even have a dedicated gaming story (console etc...) For years Apple have been hostile to the gaming industry and they still manage to be that high. Like it or not casual gaming is where most of the money will be in the future.

      • Avatar

        curtisspendlove

        In reply to scovious:

        The more likely scenario is that Apple as an ecosystem will get skipped by the developers who know they will make 10x what they can on an iPad by selling on Consoles and PC


        I would argue that most games that do well on mobile are not games that would also do well on console.


        Epic kinda landed on a gem with Fortnite.


        Apple doesn’t really get (nor do they seem to want to get) “gaming” as per the traditional sense.


        I dare say most “real gamers” (those that own a PC or Console for AAA style games) do not do a lot of “gaming” on mobile.


        Those that do their primary “gaming” (casuals) on mobile aren’t looking to play a huge AAA style title for a few hours at a time. It is more “pick it up at the Dr office and play a while” ... “pull it out in the grocery store line” etc.


        This is still more about what percent is “fair” to take advantage of whatever an App Store has to give. And also whether or not Apple can be forced to allow third party App Stores (and Google can be forced to make theirs less scary).

        • Avatar

          William Clark

          In reply to curtisspendlove:

          I dare say most “real gamers” (those that own a PC or Console for AAA style games) do not do a lot of “gaming” on mobile.


          I don't know that this is true. I have a PC which I play AAA titles on, including Fortnite once upon a time. However, I also play some games on my iPhone/iPad. It just depends. I don't equate mobile gaming with PC/Console gaming. Mobile gaming is about something I can pick up quickly, play for a bit and put it down. PC gaming is more involved and may require more commitment (MMORPG).


          Some games work best with keyboard and mouse and others with a touch screen. I think "real gamers" play games that are fun, regardless of the platform they are on.

      • Avatar

        William Clark

        In reply to toukale:

        I forgot how compelling it was to make game on an Apple device...


        tell that to Angry Birds, Temple Run, Cut the Rope, Words with Friends and several other games that made a bundle from iPhones before they ever, if ever, made a dime on consoles or PCs.

  18. Avatar

    david.thunderbird

    Bet he and his clerks researched that on an iphoney.

  19. Avatar

    jdjan

    Epic has miscalculated. Why would you sue a business partner with whom you have made millions of dollars?


    It has to be win:win. If it’s not win:win, then stop doing business with Apple and move on. Suing your business partner does not set you up for a strong collaboration in the future.

  20. Avatar

    jbinaz

    So this was not an "epic" decision.


    I'll show myself out.

  21. Avatar

    jimchamplin

    Apple needs to change the App Store policies, plain and simple. It’s their biggest “Big Tech Bullshit” thing. Not the only thing, just the biggest. But Epic acted in such a foolishly cavalier way, being clever and snide while - they had to have known - putting partners and Unreal devs in jeopardy.


    Seems the judge could see through both the Apple hubris and the Epic amounts of churlishness involved in this affair.


    Aside: Epic really needs to change back to Epic Megagames. No idea why they thought having less personality was a good thing. On the other hand, their one megahit in this era was a game that originally was a cool team survival game that they cobbled into being a clone of PUBG.

  22. Avatar

    nbplopes

    In reply to cavalier_eternal:


    Yes. But still. If you look at Apple contract / agreement, the company can do basically whatever it wants over what it considers their property. I guess it overstep ... a warning.


    On another note I think the Judge went overboard when both companies were warned not to harm bystanders in their dispute. This warning just shows the current power of Apple and their App Store. Because if Apple gets want it wants the only way Epic has not to harm bystanders is to comply with App Store rules. That includes their Fortnite customers.


    This the Crux of the matter. Epic can either give the 30% or hurt their customers by leaving.


    As far as competition goes and considering 50% market share in the US there should be a clear separation what are iOS customers and what are App / Digital Services customers. In a regular setup this is clear because there is more than one way serving the customers in their device of choice with a crucial component, app. Here there is no choice.


    Should remind you that all services except “reader apps” are by policy required to provide in app purchases if they sell elsewhere. Furthermore what are reader apps it’s kind of a fluid thing, by example.

    • Avatar

      lvthunder

      In reply to nbplopes:

      I'm not required to provide in app purchases in my app.

    • Avatar

      SvenJ

      In reply to nbplopes: You do have to keep in mind that Epic is not a little boutique developer, and they got where they are while paying that 30%. Would they have more money if they weren't paying it? Sure, if you believe they would be where they are without being in the Apple ecosystem. They have certainly benefited from being in the app store. Is 30% the right fee for that? Apple, Google, MS all seem to think so. That's what they charge. Epic thinks 0% is the right number.


      • Avatar

        jgraebner

        In reply to SvenJ:

        I don't know how it will shake out legally, but I think an important distinction is that Epic isn't asking that Apple not be allowed to charge companies for handling payments. Their objection is to Apple forcing Epic to pay them to do something that they are fully equipped to do themselves. I think Epic's case against Apple is a lot stronger than their case against Google, mainly because of Apple's rule that Epic isn't allowed to even include any messages inside the app telling customers to go to the web to make purchases. That is a rule that clearly exists only to benefit Apple and could easily be a step too far as the caretaker of a platform with 50% market share.




      • Avatar

        wright_is

        In reply to SvenJ:

        They were successful long before they brought Fortnite to iOS. They are a major gaming company with the resources to directly supply their users with content and to handle the payment process themselves for a lot less than the 30% Apple are charging.

        In fact, they take "only" 12% from their own Epic Store.

      • Avatar

        Paul Thurrott

        A couple of things. It doesn't matter how big or how small Epic. It's being abused by Apple, and all the developers that are too small (most of them) or too timid (Microsoft) to directly fight back themselves are cheering them on. Thank God Epic has the right combination of leadership and financial backing to make this happen. Epic literally does not think that 0 percent is the right number. Epic charges 12 percent in its own store. On that note, here's an example of how this company can change things. When Epic entered the PC game store maker at that 12 percent fee point, Steam, the market leader, dropped its own fees by 33 percent. Epic is simply trying to get rid of onerous and unfair fees. Not get rid of fees. You should celebrate this. And hope Epic succeeds because this will literally benefits everyone. You know, except Apple, which has abused its ecosystem for far too long as it is.
        • Avatar

          rickcosby

          In reply to paul-thurrott:

          I would prefer that market pressure, not courts, decide the outcome. Steam dropped it's fees voluntarily because they wanted to compete. The penalty for overcharging is that customers move to another platform. If Apple saw a large number of users leaving their platform they would respond. That has not been the case. Yes, they are a closed ecosystem and that's their strength and weakness. Many would argue that open platforms will win in the end and perhaps that's the case. I personally would prefer that Apple screens every app and tosses any that violate any privacy concerns and that they err on the side of caution. If people don't like it then they certainly have choices. No one has to buy an iPhone. Apple has no monopoly on gaming, on phones, or on applications. There are lot's of choices. Each platform should be free to choose what they offer and the price they charge. Epic certainly knew the cost when they come into the platform. There was no bait and switch. Apple hasn't raised the price. Epic is free to leave the platform at any time they want. They can also start making a competing device and load whatever they want on it and charge whatever they want. If Epic simply left iOS and told Apple that they were leaving because the fees were too high I would 100% support that decision. Apple could then choose to lower the fees or do without the business. If Apple is abusing its ecosystem, then why do people continue to stay? If a hundred or so largish developers were to walk out together then that might get some attention. People like to bitch and gripe about the negatives but at the end of the day they are making money there and there are positives for them as well. Why do we want a court to decide what's a fair price? That's something for the market to decide.

      • Avatar

        nbplopes

        In reply to SvenJ:


        This is not for Epic alone. These cases have come to the “public” attention several times. Epic night have been the biggest player that made some actual noise out of this.


        Oh yea I believe totally they would be were they are without Apple but not without Windows. You should learn something about this company history before believing otherwise. By the way, that is kind of irrelevant claim altogether. We can say that Apple would not be were they are without the Internet ... with no prior Art in telecommunications. ... heck without my Bell Labs and Alan Kay ...


        Heck the iPhone without the existing digital business platform and the Internet would be just a brick!!


        In others words your argument is fallacious as a general principle.


        Apple should be the last company on the planet arguing someone else is making money on topmost their efforts without paying!!! They indeed have a gigantic contribution to the mobile computing in particular smartphones. By doing so they got to a Trillion dollar evaluation. No need to go after a share of other enterprises .


        PS: Fortnite in iOS compared with the PC and Consoles is a small slice. They are making a stand because they believe, rightfully, that none of their customers are Apples’s to own or any other competing in the general purpose computing device. Ask any kid how they got into Fortnite on the smartphone. They got it because they play on the PC or they friends did. They want to play with their friends .... Epic is the one that provides the infrastructure. The. App Store happens to be the only means to install the app on their smartphones or tablets.

    • Avatar

      curtisspendlove

      In reply to nbplopes:

      Should remind you that all services except “reader apps” are by policy required to provide in app purchases if they sell elsewhere. Furthermore what are reader apps it’s kind of a fluid thing, by example.


      I think what you’ll find is that Apple will redefine a few things, if they are forced to. And I would expect that they will do a similar thing to Google in separating the “games” category out.


      It is pretty tough to try to argue that games are any form of essential service.


      This means that they can actually lower the revenue split for all non-entertainment services and keep the entertainment ones pretty high.


      It will be pretty tough for Epic to claim they aren’t a “luxury” style service. They can’t really argue that all those kids need the Carlton dance or a Tim Apple costume for their digital characters that shoot each other.

      • Avatar

        nbplopes

        In reply to curtisspendlove:


        This or regulate over general purpose devices and specialty devices.


        General purpose device have the potential to reshape and control the entire digital business market.


        If Microsoft could have done this early in 2000s with the PC, heck in the EU they could not even bake in their web browser, rightly so. There would probably be no Apple. No Chomre ... nothing.


        One needs not to forget that if Apple is allowed to pull this so can anyone in the context of general computing tech. In particular if MS joins in on the shoulders of something like this and Google, good luck big and small digital services.


        Indeed Apple is peeping probably the same thing for macOS on ARM.


        People are focusing this too much on Apple. What is indeed being shaped is policy for the entire US market rearming the right to install an App on a general purpose device.. In the EU this will not pass.

  23. Avatar

    IanYates82

    In reply to Hawaiianteg:

    I saw their action as they'd like to make the apple vig transparent to the user.

    Buy via Apple and pay the extra bit. Buy direct and save. It's how many retailers impose credit card fees vs debit card or cash

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