- The trial between Epic Games and Apple continues
- The companies have been pushed to reveal their hands in order to prove their points
- Thanks to that we have gained some interesting insight into the companies’ internal functioning
The Epic Game and Apple lawsuit continues. Here is what it has yielded so far.
The Beginning of an Important Case
Epic Games’ CEO Tim Sweeney is on the front with a barrage of critiques towards Apple. He gave a long testimony between May 3 and 4 that covered his disgruntlement towards the iOS company as well as his desire to break free of the App Store’s unfair grasp.
In return Apple accused Epic of being dishonest.
As Apple is a leading name in the world of technology, many other people from other brands and companies have been involved as well, namely Nvidia GeForce’s director Aashish Patel, Xbox’ general manager Lori Wright and Down Dog’s CEO Benjamin Simon.
Monday, May 3
At the first day of the trial many interesting facts came into light.
1. First of all, according to press-leaked emails between the higher-ups at Epic and Sony, the two companies had quarreled over Fortnite’s cross-platform play for PlayStation 4. Epic wanted to push for the cross-platform play as the PS4 community had grown significantly and the game had turned into the number 1 PS4 game. However Sony representatives weren’t convinced as a cross-console play did little to improve their own business.
With time, Sony started being more open to the idea and allowed crossplay to happen but Epic Games had to pay additional fees to keep their game compatible. Sweeney commented that no other platform Fortnite has been released on has ever required such compensation.
2. Secondly, PlayStation 4 players make for the majority of V-bucks buyers. Comparing fees charged by different platforms, it turned out PlayStation 4 sold the most V-bucks and being the most profitable, despite charging only 12 percent for the sale of goods, compared to the other companies’ 30 percent. PS4 is followed by Xbox in the second place in selling V-bucks and currently Nintendo Switch in the third.
3. Epic Games Store is not profitable at all. On the contrary, according to Sweeney himself the company loses millions just to keep the store open. Moreover merely opening it cost Epic Games $359 million.
Sweeney still predicts the store will eventually start racking profits in three or four years.
4. Epic failed to meet its own monetary expectations for esports. The company had estimated $154 more million for 2019 than it actually earned. Despite having a good year back then, the company seemed to have overestimated its capabilities.
5. Epic scored $15 billion in revenues between 2018 and 2020, mostly from Fortnite. This was revealed in some previously unreleased financial document. About 97% of the 2018 revenues were mainly from Fortnite. It was the same year Ninja rose in popularity. Next, in 2019 88% of the income was thanks to Epic’s magnum opus.
6. According to Epic, Fortnite is not merely a game but a universe. Sweeney gave the Party Royale mode as an example that Fortnite isn’t merely a FPS but a platform for social gatherings. Moreover Sweeney drew attention to the collaborations with celebrities which served to create a whole new culture around Fornite. Moreover the Epic Games Store has non-gaming apps available as well.
Epic Games used that to emphasize that the issue at hand isn’t merely game-related, as Apple implies. The former company invited the Down Dog yoga app to make a testimony about Apple’s 30 percent commission on app sales.
7. Rocket League will receive a big update soon. As Epic acquired Psyonix it also acquired Rocket League. Epic Games revealed their plans for the future. According to an interesting slide, Rocket League “Next” will rework the client for all platforms, starting with mobile in 2021.
Tuesday, May 4
1. Epic insisted Xbox making Fortnite multiplayer free. That happened a week before the former company’s dispute with Apple in August 2020. In a email by Sweeney himself, he urged Xbox’ Phil Spencer to make Fortnite multiplayer free and “enjoy the upcoming fireworks show”. Spencer agreed to work together with Sweeney and Microsoft eventually removed the Gold requirement for Fortnite and Call of Duty: Warzone.
2. Long before the issues between Epic and Apple, Sweeney had suggested Apple’s CEO Tim Cook to make iOS an open platform. That proved Sweeney has been a long-time advocate for making iOS more open. Epic’s CEO then claimed that if the doors to iOS remain closed, Apple will one day find itself under scrutiny by “political, regulatory, moral and competitive forces”.
At that time Fortnite was still in development and Cook didn’t know Sweeney so he didn’t take him very seriously. Yet Sweeney’s predictions turned out true as currently Apple has to simultaneously defend itself against Epic Games and antitrust regulators in both the USA and the European Union.
3. Walmart tried entering the gaming scene with a cloud gaming service. This was revealed in some confidential documents. According to the information, the retail chain planned to release the beta version of this service in summer 2019.
Epic’s co-founder Rein tried out the service and liked it more than playing on Android or iOS. However the development had to stop because of the COVID-19 outbreak.
Wednesday, May 5
1. Shadow was temporarily removed from the App Store by accident. This happened in February 2020 as a byproduct of Microsoft’s attempts to put xCloud on the App Store.
Shadow is an app that allows users to stream PC games to a mobile device.
In emails that got revealed, it turns out Apple didn’t want to approve xCloud because of its sideloading policies regarding applications that access third-party by circumventing the iOS compliance process. However Microsoft representatives argued that Netflix and Shadow are two apps that also don’t fit those policies and are yet available on the store. This led to Shadow being temporarily removed.
An xCloud app still isn’t available on iOS but Phil Spencer confirmed that it’s in the works on April 2.
2. Microsoft sells Xboxes at a loss and compensates with the 30 percent commission on digital games, Nvidia GeForce’s manager Wright revealed. Wright countered Apple’s argument that the 30 percent app sale commission is in line with its competitors by emphasizing that Xboxes are being sold at a loss. According to her, the 30 percent commission on digital video game copies is the only way for Xbox to be profitable.
On the same note, Microsoft will reduce its commission from 30 to 12 percent for PC Games starting August.
Thursday, May 6
1. Epic Games didn’t pay Apple for Fortnite Launch marketing support. Matt Fischer, App Store’s vice president, spoke about his own experience with Epic’s co-founder Rein and continued by elaborating that Apple markets its developers free of charge. According to Fischer, Epic never paid for marketing support for Fortnite’s mobile Launch in 2018 or for any other special occasion.
Fischer claimed that Apple doesn’t play favorites with the developers by providing his relationships with various developers as an example.
2. Epic Games weren’t content by how Apple’s search placement works. Sweeney had complained about that back in 2018. According to Epic’s CEO, he uses 12 apps and none of the times he searched their exact name, were they the first result that pops up.
Sweeney was outraged that when he searched for Dropbox, he was instead offered Google Drive and Files: two of Dropbox’ competitors. On the same note Sweeney accused the App Store of marketing PlayerUnknown’s Battlegrounds as a paid result when someone searches for Fortnite.
And as Fischer explained how the marketplace operated and provided documents to prove his points, some interesting data showed up about how Apple handles paid search placement. Fischer’s colleagues had confirmed in an email that Files’ placement was manual.
This form of favoritism seems to be the main reason why Apple is being criticized.
We have yet to see how the rest of the lawsuit will unfold. It targets some serious issues with the competitive market and the resolution will be important for the future of the digital media market.