Tag: epic games

Apple Gets Sued by the US DOJ; Accused of Illegal Monopoly in Smartphone Market

The US Department of Justice and 15 states on Thursday sued Apple as the government cracks down on Big Tech, alleging the iPhone maker monopolized the smartphone market, hurt smaller rivals and drove up prices.

Apple joins competitors sued by regulators, including Alphabet’s Google, Meta Platforms and Amazon.com across the administrations of both former President Donald Trump and President Joe Biden.

“Consumers should not have to pay higher prices because companies violate the antitrust laws,” Attorney General Merrick Garland said in a statement. “If left unchallenged, Apple will only continue to strengthen its smartphone monopoly.”

The Justice Department said that Apple charges as much as $1,599 (roughly Rs. 1,33,200) for an iPhone and makes larger profit than any others in the industry. Officials also said Apple charges various business partners – from software developers to credit card companies and even its rivals such as Google – behind the scenes in ways that ultimately raise prices for consumers and drive up Apple’s profit.

Dating back to its time as a marginal player in the personal computer market, Apple’s business model has long been based on charging users a premium for technology products where the company dictates nearly all of the details of how the device works and can be used. The Justice Department seeks to unwind that business model by forcing Apple, which has a market value of $2.7 trillion (roughly Rs. 2,24,98,600 crore), to offer users more choices around how apps can tap in to the hardware that Apple designs.

Shares of the iPhone maker fell 4.1 percent to close at $171.37 (roughly Rs. 14,300) on Thursday.

Changes Sought

Apple denied the allegations made by the government.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect.”

White House assistant press secretary Michael Kikukawa said: “President Biden strongly supports fair and robust enforcement of the antitrust laws.”

The Justice Department, which was also joined by the District of Columbia in the lawsuit, is seeking changes at Apple. An official suggested some form of breakup or reduction of the size of Apple was a possibility when they noted “structural relief is also a form of equitable relief.”

The 88-page lawsuit, filed in US federal court in Newark, New Jersey, said it was focused on “freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future.”

In the lawsuit, the US accused Apple of making it harder for consumers to block competitors and cited five examples where Apple used mechanisms to suppress technologies that would have increased competition among smartphones: so-called super apps, cloud stream game apps, messaging apps, smartwatches and digital wallets.

For example, the US alleges Apple made it more difficult for competing messaging apps and smartwatches to work smoothly on its phones. It also alleges that Apple’s app store policies around streaming services for games have hurt competition.

The Justice Department seeks to define the market as that of smartphones in the United States, where most analysts believe Apple has slightly more than half of the market. Apple representatives said they will try to persuade the court to define the market as the global smartphone market, where the iPhone has only one-fifth of consumers.

The Justice Department quoted an email chain from Steve Jobs, the Apple co-founder who died in 2011, saying that it was “not fun to watch” how easily consumers could switch from iPhones to Android phones and vowing to “force” developers to use its payment systems in an effort to lock in both developers and consumers.

It is unclear what specific changes the Justice Department seeks. The complaint asks a court to prevent Apple from using its control of app distribution, contracts and use of private software interfaces to undermine rivals and to order anything else necessary “to restore competitive conditions in the markets affected by Apple’s unlawful conduct.”

Apple has already been subject to antitrust probes and orders in Europe, Japan and Korea, as well as lawsuits from corporate rivals such as Epic Games.

On Thursday Reuters reported that Apple, Meta Platforms and Alphabet’s Google will be investigated for potential violations of the European Union’s Digital Markets Act that could lead to hefty fines by the end of the year, according to people with direct knowledge of the matter.

In Europe, Apple’s App Store business model has been dismantled by a new law called the Digital Markets Act that went into effect earlier this month. Apple plans to let developers offer their own app stores – and, importantly, pay no commissions – but rivals such as Spotify and Epic argue Apple is still making it too hard to offer alternative app stores.

© Thomson Reuters 2024

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Apple Changes Decision, to Allow Epic Games Store in iPhones, iPads in EU

Under pressure from European regulators, Apple took a step back in its feud with Epic Games on Friday, clearing the way for Epic to put its own game store on iPhones and iPads in Europe.

Earlier this week, Apple had taken steps to block Epic from starting up a store and bringing back the popular game Fortnite, which Apple removed from its App Store in 2020 after Epic broke the iPhone maker’s in-app payment rules in protest.

Apple’s decision to open its door to Epic follows the European Union’s Thursday deadline for Big Tech companies to comply with the Digital Markets Act (DMA), a set of rules that bans Apple and Google from controlling which apps are distributed on devices with the iOS and Android operating systems.

Thierry Breton, the EU’s industry chief, said regulators had warned Apple about the iPhone maker’s move earlier this week to block Epic’s potential return.

“I take note with satisfaction that following our contacts Apple decided to backtrack its decision on Epic exclusion. From Day 2, #DMA is already showing very concrete results!” Breton said on the X social media platform.

Epic and Apple have been in a legal battle since 2020, when the gaming firm alleged that Apple’s practice of charging up to 30 percent commissions on in-app payments on its iOS devices violated US antitrust rules. Epic lost its court battle against Apple, and the game maker’s gambit to intentionally break Apple’s rules as a protest got it banned from Apple’s devices.

Epic’s victory on Friday leaves it well short of everything it wants from Apple.

Epic CEO Tim Sweeney has criticized Apple’s plans for complying with the DMA, under which Apple says it still has the right to exclude third-party app marketplaces from its devices under some circumstances. And Fortnite remains unavailable in the App Store in the United States.

For its part, Apple is grappling with an erosion of its App Store business model at the same time it has told investors that iPhone sales this quarter will be billions of dollars lower than what Wall Street expected.

The most recent tangle between Apple and Epic involved Apple’s developer accounts, which are normally a minor but necessary administrative step for developers before selling apps on Apple devices.

Apple on Friday reinstated Epic Games’ developer account two days after it had blocked the company from launching its own online marketplace on iPhones and iPads in Europe.

The game developer said it will move on with its plans to bring the Epic Games Store and Fortnite back to iOS in the continent.

“This sends a strong signal to developers that the European Commission will act swiftly to enforce the Digital Markets Act and hold gatekeepers accountable,” Epic Games added.

Apple earlier this week said it had terminated Epic’s account because the company’s actions made it doubt whether it intended to follow the new rules Apple has set out to comply with the DMA.

“Following conversations with Epic, they have committed to follow the rules, including our DMA policies. As a result, Epic Sweden AB has been permitted to re-sign the developer agreement and accepted into the Apple Developer Program,” Apple said in a statement.

© Thomson Reuters 2024

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Apple Blocks Fortnite Maker Epic Games From Launching Its Own iOS Store in EU

Apple escalated its feud with Epic Games on Wednesday, blocking the Fortnite video-game maker from launching its own online marketplace on iPhones and iPads in Europe.

The two companies have been in a legal battle since 2020, when the gaming firm alleged that Apple’s practice of charging up to 30 percent commissions on in-app payments on its iPhone Operating System (iOS) devices violated US antitrust rules.

The latest challenge from Epic comes as Apple struggles with concerns about tepid demand for its iPhones in China, and its stock has tumbled 12 percent so far this year, underperforming its big tech peers in the US Its shares were largely unchanged on Wednesday.

Attempts by regulators and competitors such as Epic to pave the way for rival marketplaces on Apple’s devices are a major threat to the Silicon Valley heavyweight’s profits and control of its own ecosystem.

European lawmakers are forcing Apple to allow those third-party marketplaces with a law called the Digital Markets Act (DMA) that takes effect this week.

Separately, Brussels antitrust regulators on Monday fined Apple EUR 1.84 billion ($2 billion or roughly Rs. 16,547 crore) for thwarting competition from music streaming rivals via restrictions on its App Store, Apple’s first ever penalty for breaching EU rules.

Epic was working to take advantage of the DMA, but Apple blocked those efforts on Wednesday, citing Epic’s past breaches of contract in the long-running legal dispute.

Apple terminated a new developer account that Epic had created in Sweden. Epic had created the account in an effort to put Fortnite and other games back on iPhones in Europe by running its own game store on Apple’s devices. Apple must allow third-party stores on its devices, under the new European law.

The developer accounts are important because software creators cannot distribute apps to iPhones and iPads without one. Apple had previously terminated some of Epic’s developer accounts in 2020, after Epic purposely broke Apple’s in-app payment rules, using its violation of the rules and subsequent banishment from the App Store as the core of public relations and legal campaign against Apple.

Apple said on Wednesday the court rulings have made clear that it has “sole discretion” to terminate any Epic Games developer account in light of its “egregious” breaches of the company’s developer agreements.

“In light of Epic’s past and ongoing behavior, Apple chose to exercise that right” to terminate Epic Games’ account, Apple said.

Epic alleged that by terminating its account, Apple was removing one of the largest potential competitors to the Apple App Store.

“This is a serious violation of the DMA and shows Apple has no intention of allowing true competition on iOS devices,” Epic Games said.

The European Commission, the executive body of the EU, did not immediately respond to a request for comment.

Apple in January proposed certain changes ahead of a March 7 deadline to comply with certain conditions of the DMA, a legislation meant to make it easier for European users to move between competing services.

The company said it would allow alternative app stores on iPhones and an opt-out from using the in-app payments system, but set a “core technology fee” of 50 euro cents per user account per year for developers who sign up for the new regime.

© Thomson Reuters 2024

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Fortnite Will Return to iOS in Europe as Apple Plans to Allow Third-Party App Stores on iPhone

Fortnite will be making a return to iOS in Europe, Epic Games announced on January 25. The development occurred as Apple is now forced to open iOS to sideloaded apps and third-party app stores to comply with the Digital Markets Act (DMA) and is chasing a deadline of March 7. Reportedly, Apple is already working on making changes to its App Store and will likely make a separate version available in Europe. Epic Games could be one of the many app stores that become available in the region, and iPhone users may finally get to play Fortnite after waiting for four years.

In a post, the official handle of Epic Games Store revealed that Fortnite will make a comeback to iOS in Europe this year. It also added that the popular battle royale game will be added via the Epic Games Store for iOS. The post did not mention a launch date.

In a separate post, the company said, “Stay tuned for details as we figure out the regulatory timeline. We’ll continue to argue to the courts and regulators that Apple is breaking the law.”

Epic Games CEO Tim Sweeney also spoke against how Apple implements the DMA regulations, calling it a “malicious compliance.” In a long post, he said the Cupertino-based tech giant is forcing third-party app stores to accept “junk fees on downloads and new Apple taxes on payments they don’t process.”

Separately, he also said that a monopoly should not be allowed to decide what companies are allowed to compete with it after another user shared a list of agreements Apple sought from third-party app stores before allowing them on iOS.

Fortnite was removed from the App Store in 2020 after the iPhone maker banned Epic for encouraging users to make third-party in-app payments. Subsequently, Epic Games filed an antitrust lawsuit against Apple. Just last week, the US Supreme Court denied the request to hear the dispute, resulting in a win for the tech giant.

The concern for Epic Games comes from its previous issues with the company, and with Apple still holding oversight into third-party apps, the possibility of the Fortnite-maker getting banned again still exists.

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US Supreme Court Rejects Appeals From Apple, Epic Games Over App Store Antitrust Ruling

The US Supreme Court on Tuesday declined to hear a challenge by Apple to a lower court’s decision requiring changes to certain rules in its lucrative App Store, as the justices shunned the lengthy legal battle between the iPhone maker and Epic Games, maker of the popular video game Fortnite.

The justices also turned away Epic’s appeal of the lower court’s ruling that Apple’s App Store policies limiting how software is distributed and paid for do not violate federal antitrust laws. The justices gave no reasons for their decision to deny the appeals.

Apple’s stock fell more than 2 percent in early trading on Tuesday.

In a social media post, Epic CEO Tim Sweeney said, “The court battle to open iOS (Apple’s mobile operating system) to competing stores and payments is lost in the United States. A sad outcome for all developers.”

Apple did not immediately respond to a request for comment.

Epic filed an antitrust lawsuit in 2020, accusing Apple of acting as an illegal monopolist by requiring consumers to get apps through its App Store and buy digital content inside an app using its own system. Apple charges up to a 30 percent commission for in-app purchases.

US District Judge Yvonne Gonzalez Rogers in 2021 rejected Epic’s antitrust claims against Apple. But the judge found that Apple violated California’s unfair competition law by barring developers from “steering” users to make digital purchases that bypass Apple’s in-app system, which Epic contends could save them money with lower commissions.

The San Francisco-based 9th US Circuit Court of Appeals upheld much of Rogers’ decision in 2023, finding that Epic had “failed to prove the existence of substantially less restrictive alternatives” to Apple’s system.

The judge’s injunction requires Apple to let app developers provide links and buttons that direct consumers to other ways to pay for digital content that they use in their apps.

Sweeney wrote on his social media post: “As of today, developers can begin exercising their court-established right to tell US customers about better prices on the web.”

In its appeal to the Supreme Court, Epic had said that the 9th Circuit’s decision “guarantees severe anticompetitive harm and effectively insulates the most monopolistic tech-platform practices from antitrust scrutiny.”

Apple had noted in its appeal that Epic did not file a class-action lawsuit and said the broad injunction imposed by Rogers exceeds the constitutional authority of federal courts, which typically should be limited to providing relief to the parties before them.

© Thomson Reuters 2024

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Spotify Allowed to Sidestep Play Store Fees as Part of Confidential Deal, Google Executive Says

Google allowed Spotify to sidestep the company’s mandatory Play Store fees, a company executive reportedly confirmed while giving testimony during the ongoing Epic vs Google trial. The Verge reports that a confidential deal with the streaming giant has come to light, revealing that Spotify was allowed to process its own payments on the service without paying Google a commission. The search giant previously sought to protect the details of its deal with Spotify under wraps during the ongoing case with Fortnite maker Epic Games.

According to the report, Google’s head of partnership Don Harrison testified during the ongoing Epic vs Google trial that Spotify did not pay the company any fees when it processed customer payments on its own. If customers chose to pay Spotify via Google’s in-app billing service, the platform paid Google a 4 percent commission.

Google charges most publishers on its platform a 15 percent cut of all app purchases and in-app purchases, but this figure can be lowered in South Korea, India, and 35 other countries where the company offers developers an alternative — user choice billing — that reduces the commission by 4 percent.

The report states that aside from the music streaming platform’s popularity on Android, the Google executive also testified that the search giant and Spotify had agreed to a “success fund” that would see each firm commit $50 million (roughly Rs. 410 crore).

It is worth noting that while Spotify might be receiving special treatment from Google, the company is still liable to pay the in-app purchase commission — that can go up to 30 percent of each transaction — on Apple’s App Store. Like Netflix and many other services, the streaming service doesn’t allow users to purchase a subscription via the Spotify app on iOS.

It’s too early to tell whether these revelations will have an impact on Epic Games’ case against Google. The game publisher sued both Apple and Google over their alleged antitrust practices that include preventing the use of alternative billing systems and alternative app stores on iOS and Android, respectively. The trial has revealed a lot of interesting details about Google and other firms — including a multibillion-dollar deal with Samsung to have the Play Store, Assistant, and Search apps as defaults on Galaxy smartphones.

The Epic vs Apple trial ended earlier this year when the Ninth Circuit Court affirmed a 2021 decision that found the iPhone maker’s ban on competing app stores on iOS did not violate US antitrust law. Apple lost only one claim in the trial — the firm would have to allow developers to allow links to external payment systems inside their apps. Epic has appealed the verdict at the US Supreme Court, while Apple has asked the court to strike down the ninth circuit court’s order blocking its anti-steering rules.

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Google Paid Billions to Make Play Store and Assistant Default Apps on Samsung Phones, Google Executive Says

Google paid Samsung billions of dollars in order to make the search giant’s app store, assistant, search engine, and other services the default options on smartphones made by the latter, according to information that has emerged during the ongoing Google vs Epic Games trial. On Monday, Google Vice President for Partnerships James Kolotouros revealed that the company signed deals with various smartphone manufacturers, including the South Korean tech conglomerate, to have the Google Play store installed out-of-the-box on Android phones.

Bloomberg reports that Kolotouros’ testimony during the ongoing Google vs Epic Games trial revealed that around half of Google’s Play Store revenue comes from customers who own Samsung devices. The executive also said that the company planned to create a system to split revenue from the Play Store with smartphone makers in exchange for having the firm’s apps preinstalled on their smartphones.

Under Google’s ‘Project Banyan’ initiative that began in 2019, the company planned to spend $200 million on a deal that would have Samsung distribute its Galaxy Store app via the Play Store, according to the report. While that deal did not work out, the company agreed to pay Samsung $8 billion (roughly Rs. 66,500 crore) over a period of four years to have the Play Store exist on Samsung phones alongside the smartphone maker’s app store.

On Tuesday, Alphabet CEO Sundar Pichai also testified that the search giant pays Apple 36 percent of Safari search revenue in exchange for its service being the default on the company’s smartphones. Epic’s attorney reportedly asked Pichai if the amount paid by Google to Apple was higher than what it paid Samsung, and the CEO stated that it was possible but added that it was like comparing apples and oranges.

The ongoing Google vs Epic trial has seen the latter produce several pieces of evidence as it tries to build a case against the search giant’s app store. Epic alleges that Google made the deals to protect its Play Store operating profit that — estimated by the game publisher to be over $12 billion (roughly Rs. 99,700 crore) in 2021 — by preventing the spread of alternative, or third-party app stores.

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Apple Urges US Court to Undo Antitrust Order on App Store in Epic Games Case

Apple said on Monday it will ask the US Supreme Court to hear its challenge to a judge’s order in an antitrust case brought by Fortnite maker Epic Games that could force the iPhone maker to change payment practices in its App Store.

Apple said in a court filing it will ask the justices to take up its appeal of a ruling on Friday by the San Francisco-based 9th US Circuit Court of Appeals that kept in place most of the order issued in 2021 by US District Judge Yvonne Gonzalez Rogers.

The judge’s order said Apple could not prohibit developers from providing links and buttons to payment options in their apps that take consumers outside of the App Store — a step that could reduce sales commissions paid to Apple.

Epic sued Apple in 2020, challenging the fee Apple imposes on in-app payments. Epic was seeking an injunction to stop Apple’s practice, not monetary damages. Rogers ruled against most of Epic’s claims, though did issue the order that Apple is contesting. 

In appeals to the 9th Circuit, Epic challenged key parts of the judge’s ruling that favored Apple, while Apple challenged the order concerning the App Store. The 9th Circuit in April upheld most of the judge’s action. On Friday, the 9th Circuit rejected petitions from Apple and Epic urging the court to revisit its April decision.

Epic Games also can ask the Supreme Court to hear its appeal.

Epic in its appeal to the 9th Circuit had sought to revive its antitrust claims against Apple over its restrictive app distribution and payment services.

Apple’s attorneys in Monday’s filing said the 9th Circuit reached too far in issuing a nationwide injunction against Apple alleging that it violated a California state unfair competition law.

Apple said its petition in the Supreme Court that it will raise “far-reaching and important” questions about the power of judges to issue broad injunctions.

© Thomson Reuters 2023
 

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Apple, Epic Games Request US Appeals Court to Reconsider Its Antitrust Ruling

Apple and Fortnite maker Epic Games on Wednesday both asked a US appeals court to reconsider its April ruling in an antitrust case that could force Apple to change payment practices in its App Store.

Apple and Epic, in separate court filings, mounted challenges to a ruling by a three-judge panel of the San Francisco-based 9th US Circuit Court of Appeals. Lawyers for the two companies said the panel should rehear the case or the court should convene “en banc,” as an 11-judge panel, to reconsider the dispute.

The April three-judge ruling upheld a 2021 order in California federal court in Epic’s lawsuit which accused Apple of unlawfully requiring software developers to pay up to 30 percent in commissions on consumers’ in-app purchases.

The trial judge found that Apple violated a California state unfair competition law, but not US antitrust provisions. Apple’s new filing challenged a nationwide injunction over conduct Apple said was “procompetitive and does not violate the antitrust laws.”

Epic’s 9th Circuit filing argued that its claims against Apple directly implicate the “core purpose” of US antitrust law to foster competition. Epic also argued that the appeals court did not conduct a “rigorous” balancing between asserted asserted consumer benefits and anticompetitive effects of Apple’s practices.

Federal appeals courts do not often grant en banc requests. Last year, the 9th Circuit received 646 petitions asking the court for en banc rehearings. During that period, the court granted 12 requests. In 2021, the court granted en banc review in nine cases.

The US Supreme Court could have the final say on the outcome.

Representatives for Apple and Epic had no immediate comment.

The lower court ruling is on hold pending further appellate proceedings.

US District Judge Yvonne Gonzalez Rogers’ ruling said Apple could not bar App Store developers from providing links and buttons that direct consumers to payment options outside of Apple’s in-app purchase system.

Gonzalez Rogers did not provide any direction on how Apple must allow those links or buttons.

Competition authorities in other countries, including South Korea, the Netherlands and Japan, have taken steps to force Apple to open up its in-app payment systems.

© Thomson Reuters 2023

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Apple vs Epic Games: Fortnite Creator to Fight Against Antitrust Ruling Favouring Tech Giant

Epic Games on Monday will try to overturn portions of a court ruling in an antitrust trial last year that largely favoured Apple.

The “Fortnite” creator sued Apple in 2020 alleging that the iPhone maker’s App Store rules, under which software developers must pay commissions of up to 30 percent on in-app purchases, violated US antitrust law.

After a three-week trial last year, a judge largely sided with Apple, stopping short of dubbing the company an “illegal monopolist” and upholding its right to charge the commissions.

But the judge did find that Apple violated its home state of California’s unfair competition law and ordered the company to let developers tell users how to make app purchases outside of its proprietary payment system.

Apple appealed the order, and Epic appealed the finding that Apple did not violate antitrust laws. The two sides will argue their case before the US Ninth Circuit Court of Appeals in San Francisco on Monday, with representatives from the US Department of Justice and the state of California also making appearances to describe relevant laws.

According to its court filings, Epic plans to argue that the trial judge did not properly interpret US antitrust laws. In particular, the trial judge ruled that Apple’s contracts with developers to use its App Store did not violate antitrust laws because they were non-negotiable agreements — developers either agreed or could not use the App Store. Epic argues that such standard agreements are still subject to antitrust laws.

Other large technology companies use similar agreements to guard access to their systems. The Department of Justice, which has been investigating Apple and other tech companies, asked to join the Epic appeal because it said the lower court ruling could “significantly harm antitrust enforcement beyond the specific context of this case.”

© Thomson Reuters 2022

 

 

 

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