The stunning details of internal emails recently released in court, the fact that EPIC seems to be pinning their dreams on an outdated law from the 1890s, and rising threats to the independence of social media.
Last week The City Voice brought you the story of Epic Games’ calculated siege against the Apple App Store, but we only scratched the surface. In this week’s edition we will be covering the arguments Epic and Apple have leveled against each other, and why almost all of those arguments are hypocritical, as well as the stunning details of internal emails recently released in court, the fact that Epic seems to be pinning their dreams on an outdated law from the 1890s, and rising threats to the independence of social media.
Apple, Google, and Epic all have their own policies and justifications for their actions. Here’s a breakdown of what each side believes and why they are sticking to it. For the purposes of this article we will consider Apple and Google as one entity from now on, referred to collectively as “App Stores”. This is an oversimplification but an analysis of the differences between Apple and Google policies is not feasible here.
The distribution of mobile apps is a “market” and the App Stores maintain a monopoly on that market by limiting what developers are allowed to do with their apps, such as banning direct payments, and by preventing competing app vendors from selling their content to mobile users directly. Access to iOS or Android customers is an “essential facility” and any attempt to deny that access by either company is a monopoly.
The developer guidelines are not anti-competitive or monopolistic in nature because they are applied equally to all developers and are intended only to “level the playing field” among programmers in the mobile market. App Stores are not an empty marketplace but a service that the companies provide to developers, charging the 30% cut in exchange for features like beta-testing, analytics, and algorithms that recommend developers’ products to potential users.
Needless to say, there are a lot of problems with both of those arguments. To keep things short and simple here are all the possible challenges in list form:
- Monopoly might be good this time. Most anti-monopoly law is built on the idea that competition in the free market always leads to better products, but even if the app stores are practicing some monopolistic policies it may have had some benefits for users. Most people would never consider downloading random games from self-hosted internet sites because the risk of getting a virus would be too high, but iPhone and Android users can download games from the App Stores while remaining totally assured of their safety. The App Stores’ policies might be controlling, but they also guarantee secure and reliable software to all users. To compare this situation to Standard Oil, one of the biggest anti-monopoly cases, one would have to imagine a world in which most of Rockefeller’s competitors produced oil that made drivers’ cars explode.
- Apple does not actually apply the guidelines fairly. In April 2020 it was revealed that Apple had given Amazon, another tech giant, a special deal: Apple would only take 15% of the money generated by user subscriptions to the Amazon Prime Video app instead of the usual 30%. Critics at the time theorized that Apple was essentially bribing Amazon to bring their massive TV business to the App Store instead of elsewhere.
- It is hard to make the argument that phones are a “facility”. Epic is arguing that mobile app stores are a “space” that they are blocked from entering, but it is not accurate to describe the internet as any kind of physical space. The closest historical equivalent to this kind of trust case is the famous Hudson River Bridge incident, when railroad tycoon Cornelius Vanderbilt closed the only rail bridge into New York City, which he owned, to all of his competitors’ shipping companies. The problem is that in this case Apple and Google own not only the app stores where apps are sold but also the devices themselves, including the hardware and the proprietary languages used to write apps. A closer metaphor would be to imagine Vanderbilt owning not only the bridge but the entire city, including every building, street, car, paving stone, and the patents on all of the above.
- 30% is a lot. Even if the App Stores successfully argue for the right to charge a service fee, 30% is a big cut, and perhaps more than the services they provide are worth. Apple and Google may decide to take the easy way out and appease Epic by dropping the fee to something smaller like 10% in exchange for the cessation of the lawsuit.
- Epic does (almost) the same thing. It’s important not to forget that Epic also runs an app store, and their store takes 12% of all developer revenue for Epic Games. Granted, a 12% cut is more palatable than 30%, but it is hard to see how Epic can argue their service fee is legal while the App Stores’ is not. A “victory” for Epic in this case may ricochet back to their own disadvantage.
- Apple cracked down on WordPress. Apple’s main defense in this case is that the 30% cut is universal and applied to all developers, but that is not exactly true. A few weeks after the initial Apple v. Epic showdown, Apple set their sights on a different developer, WordPress. The WordPress corporation does have a free app on the App Store but, unlike some other site development platforms, the app does not offer any site development features. It allows users to write blog posts, view site statistics, and not much else. WordPress makes all of its money from plans sold online through web browsers, and Apple wanted a slice of that revenue. They began insisting that WordPress offer a plan purchase option from within the app purely so that it would fall under the 30% cut, and threatening to ban WordPress if they did not comply. However, after outcry from journalists and bloggers alike, Apple backed down and did not pursue further.
- Epic is asking for special treatment. In early court filings, Apple entered into evidence a series of emails between the two companies on the day of the showdown. The emails are both fascinating and genuinely entertaining, with Epic CEO Tim Sweeney leveling personal insults against Apple and repeatedly emailing top execs directly despite their insistence that he hold the discussion with their legal team. More importantly, however, Sweeney’s first email specifically requests that Epic be allowed to release an Apple app for their own app store, the Epic Games store, with the petition to have the 30% cut lowered tacked on to the end of the message as an afterthought. This likely means that Epic’s public displeasure with the cut is smoke and mirrors and their real suit is seeking to release their own store, in order to take its own 12% cut, which explains the use of the monopoly argument.
We would not be doing our jobs as journalists if we did not provide the email archive from early court filings in full:
- Epic specifically requested the right to distribute a competing Epic Games app store. This request was given far more detail and consideration in the original email than objections to the 30% cut, but that is not being widely admitted.
- Epic Games CEO Tim Sweeney repeatedly emailed top Apple executives directly despite their requests that he follow due process by holding discussions with Apple’s legal team.
- Apple remains civil, but Sweeney calls Apple “a sad state of affairs” and uses the rather poetically insulting phrase “self-righteous and self-serving screed”.
- Overall, the emails are fascinating, eloquent, and at times so dramatic as to seem almost fictitious. They are also relatively short and do a great job of summing up the whole fight so we highly recommend that you check them out for yourself.
Facebook Gets Involved
Obviously the main thrust of Epic’s case is to force Apple and Google to loosen their hold on their respective app stores, but take a moment to think about the wider ramifications. Boiling down the two arguments to the basics reveals that Epic is essentially saying that Apple should be hands off and have no influence on the app store, while Apple responds that the platform they manage is a service and their role is more as curator than simple host. When it comes to big tech, however, control and responsibility often overlap, and it is not that much of a stretch to imagine these arguments being applied to social media.
For years, social media giants like Facebook and Twitter have argued that they are not liable for the content posted on their platform as they serve simply as a medium and not as a curator. Opponents of that view have often argued that Facebook and Twitter do bear responsibility for user content because the companies’ algorithms push extremist views like the debunked QAnon conspiracy theory to the fore, giving them a wider influence. The algorithms that social media companies use to recommend posts to users are very similar in scope and function to the algorithms that Apple and Google use to recommend apps, which means that any ruling in the Epic v. Apple suit has the potential to make or break the long-held independence of social media.
If the courts were to rule in Epic’s favor, concluding that the app stores are just another space and the service fee is unjustified, social media would likely continue as normal. However, if the court rules the other way, deciding that access to Apple’s and Google’s algorithms and the ability to sell to their users is a marketable service, it could be used to argue that access to social media users is also a marketable service and therefore a liability to social media companies. Such a ruling could force Facebook and Twitter to drop the content recommendation algorithm or, in the extreme, vet all user posts with the same lawsuit conscious care as any political campaign.
Given this potential fallout, it is easy to understand why Facebook is also taking careful aim at Apple. On August 14th, Facebook announced that they would be launching a new service intended to help small businesses during the COVID-19 crisis by allowing page owners to create paid digital events within the platform. They made sure to point out, however, that Apple’s 30% fee would mean that only 70% of iOS customers’ money would go to small business owners, even going so far as to add an “Apple takes 30% of this purchase notice” to all payment buttons in the iOS version of the new service. In context, Facebook’s promotion of the new feature only a day after the Epic v. Apple showdown seems an almost embarrassingly blatant attempt to discredit Apple and curry favor with Epic games, perhaps because they, too, believe that this fight might place them in its crosshairs next. Apple, apparently thinking the same thing, later blocked the Facebook update to prevent the backhanded notice from appearing. The new donation feature was allowed, but without the fine print.
EPIC’s Case Seems to Rely on an Outdated 1890s Law
On August 21st, Epic unveiled their official legal arguments for the case, which seem to rely on a 1890’s law that has since become obsolete. The Sherman Act was the original trust-busting law, but it failed to provide a definition of monopoly specific enough to accomplish anything. The vagueness of the act allowed anti-competitive companies to get away with practices that, while not technically monopolistic, were still corrupt.
In 1914, the Sherman Act was updated with the Clayton Act, which specified practices associated with monopolies that should be made illegal. Bizarrely, Epic’s documents specify their belief that Apple is in violation of the Sherman Act, not the Clayton Act. While we can only speculate as to the reason, it seems plausible that Epic is trying to take advantage of the same vagueness that allowed monopolies to walk free, skewering Apple with rhetoric in the absence of actual legal arguments.
What is EPIC Actually Trying to Accomplish?
It seems evident that any ruling in this case, no matter which side the courts favor, has the potential to hurt a lot of big tech companies, including Epic itself. Therefore, it is the belief of this writer that Epic does not actually care about the 30% cut. While it is true that their 12% cut is significantly lower than Apple’s, it makes little sense to wage a war of principle over scale. The email archive released in court strongly suggests that Sweeney and Epic care very little about Apple’s cut, and that their real goal is to launch their own app store that can directly compete with the official Apple App Store.
The only reason Epic is focusing on the cut is that it would be very hard to convince their millions of fans to charge the gates demanding that incomprehensible amounts of money be transferred from one tech giant to a different one high above the level playing field. “Defend the freedoms of small developers” is a much more compelling battle cry, even if the real money will be going straight from Apple’s cash cow to Epic’s.
That is only speculation, however, as all we know for certain is that the stakes in this case are huge and a lot of big tech companies are getting in on the action. It seems likely that big changes will be coming to the digital economy in the coming months, and we will be waiting eagerly for Judge Roger’s ruling on September 28th.