On the first day, Epic and its first witness – the company’s CEO, Tim Sweeney – attempted to determine that Apple’s App Store and refusal to allow other app stores on its platform constituted anti-competitive behavior. The company argued that Apple’s tight control of its iOS ecosystem – known as the “walled garden” – is a monopoly, and urges the iPhone maker to allow alternative app stores and possibly apps on its devices outside of its own and whatever it approves.
“Epic is only looking to change Apple’s future behavior,” and not financial damage, Sweeney said during his testimony.
Apple argues that allowing apps on its devices that are unrestricted would compromise the security and privacy of its ecosystem – features that have been highlighted as selling points. In addition, it is argued that it competes in a massive video game market of which it is only a small part, so it does not have a monopoly and cannot abuse such a position.
Much of the day’s action revolved around both companies trying to define the definition of their business. Sweeney described Fortnite as a “metaverse” and “social experience” – a virtual world of movies, TV shows and concerts that go beyond pure gameplay.
The definition of the market is the key to a possible cartel case. It is not illegal to have a monopoly under US law. It is just illegal to try to maintain a monopoly at the expense of competition. Apple would like to determine that its iOS operating system competes with several other platforms and therefore does not violate antitrust law.
According to Epic, Apple is using iOS to lock users and developers into a restrictive environment where they are charged high fees for additional transactions. An epic one Attorney Katherine Forrest once compared Apple to a car dealership that bills customers every time they fill their cars with gasoline.
Apple pushed back on allegations of anti-competitive behavior by focusing on the games industry, arguing that Fortnite is available on several other major platforms, including PCs, Google’s Android operating system, and even Epic’s own online game store, as well as popular video game consoles like Sony’s PlayStation, Microsoft Xbox and the Nintendo Switch. Users of all of these platforms can play Fortnite against each other and, for the most part, make in-app purchases on one platform to use on another, argued Apple.
“Epic is asking for government intervention to prevent consumers from choosing,” said Karen Dunn, Apple lawyer, during her opening speech.
Another Apple attorney, Richard Doren, pointed out during his cross-examination of Sweeney that Epic pays the console platforms a similar 30% fee, although those platforms also don’t allow third-party apps or alternative payment methods. Sweeney argued that consoles that lose money selling hardware and come up with software have a different business model than Apple’s more profitable App Store.
The judge’s decision – and, of course, the appeals that are almost certain to follow – could have a huge impact not just on Apple and its iOS ecosystem, but potentially other app stores and the entire app economy, which runs into hundreds of billions has grown dollars and supports millions of jobs. This could either change the way many in-app purchases work or anchor the power tech platforms to set the rules of an increasingly digital world.