It is an extraordinary trial which opens Monday in Oakland, California. By its protagonists first. For three weeks, Epic, the publisher of the video game phenomenon Fortnite, will take legal action against Apple, the world’s largest capitalization. Apple’s own boss, Tim Cook, will be called to the bar, along with Epic’s hot-headed Tim Sweeney.
The stake is enormous. If Epic were successful, the entire integrated business model that made Apple’s success would be called into question. Apple also recognizes that the probability of a financial agreement is almost zero, as the criticism carried by Epic is existential.
Banned from the App Store
At the heart of the dispute, there is the “Apple tax”, the famous 30% commission levied on transactions made through the App Store, the only application store accessible to iPhone users. Epic tried to get around it last summer by offering its own payment system in the iOS version of Fortnite. The maneuver was an obvious violation of App Store rules, and the game was quickly banned from the platform.
Epic then took the case to court, arguing that Apple was abusing its dominant position to restrict competition. Basically, the publisher believes that iPhone users should be able to install whatever software they want on their terminal, just like on a PC.
However, the integration of hardware and software in a closed ecosystem is one of the keys to Apple’s success. The Cupertino group repeats over and over again that this allows it to offer its customers a high-performance and secure environment, largely protected from the malicious programs that abound in the digital world.
What he says less is that this model has also allowed the fabulous growth of its services branch, of which the App Store is the main component. In parallel with the sales of iPhone, iPad or Mac, it is an extraordinary engine of growth, that Tim Cook has endeavored to make roar. With success: In the first three months of 2021, services grossed Apple $ 17 billion, with even juicier margins than hardware sales. No wonder the group is keen on defending its integrated model.
The weight of the consoles
To torpedo this beautiful building, Epic will not have it easy. He will first have to prove that Apple is in a monopoly situation. However, Android, Google’s mobile operating system, is used more than iOS. And Apple intends to argue that, in terms of video games, the range of broadcasters is wide: you can play Fortnite on Android, Xbox, PlayStation, Switch, PC …
According to the documents provided to justice, Epic certainly earned $ 700 million with its iOS app during the two years preceding its exclusion, but Apple’s platform only represents 7% of the publisher’s revenues over the period, very far behind the PS4 (47%) or Xbox One (28%).
However, console manufacturers take the same type of commissions as Apple, without this moving Epic, pleads Apple. Next, Epic will have to prove that Apple has abused its market position by forcing developers to use its app store and payment method. And again, it is not obvious.
Whatever the outcome of the trial, it will fuel reflections on the regulation of Gafa. In Brussels, the recent accusation of abuse of a dominant position against Apple, but also the DSA and DMA projects, shows that the subject is central. In Washington, it is no less. Congress has just approved a report recommending an overhaul of US antitrust legislation to better regulate the digital giants. One thing is certain: Apple is not going to leave the dock anytime soon.