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Next week’s Fortnite trial could upend Apple’s App Store model — even if Epic

In August 2020, mega-publisher Epic Games decided to stop paying what’s dubbed the “Apple tax”: a 30 percent fee on digital purchases made through the iOS App Store. The company added a new feature to its blockbuster game Fortnite, letting users bypass the App Store’s payment system to purchase V-Bucks, Fortnite’s in-game currency. The move violated Apple’s guidelines, and Apple promptly kicked Fortnite off the App Store. Epic sued Apple for antitrust violations, and on Monday, the case will finally go to court.

Epic has a clear grievance against Apple: it’s locked out of the company’s billion-plus iPhone and iPad user base. But US antitrust law focuses on whether a company has hurt consumers by suppressing competition. So over the next three weeks, Apple and Epic will lay out sharply conflicting stories about how a locked-down App Store affects users. Unlike a lot of tech trial arguments, which focus on abstract hypotheticals and metaphors, these are vivid narratives about some of the most central products in our lives — and they play into one of the most important debates in US politics.

In Epic’s telling, Apple is a “uniquely powerful” company that exerts “unique control” over iOS devices. Apple routes all downloads and purchases through the App Store for financial gain, exercising little oversight over the actual quality of apps — contradicting a public commitment to privacy and security. It leverages its power in one market (the overall iOS ecosystem) to dominate another (app distribution and payments). That’s created less competition to deliver better service at cheaper rates, so users get stuck paying more and miss out on innovative new services.

From the other half of the courtroom, Apple claims Epic is threatening what users love about iOS. Creating a single well-vetted app portal produces a “safe, convenient experience” on a device that stores reams of highly personal information, distinguishing the iPhone from competing platforms. Features that limit app distribution were “conscious, reasonable decisions,” Apple says — not attempts to shut down competition. Far from having consumers’ best interests at heart, Epic would simply force Apple to spend money shoring up new privacy and security holes.

Epic is losing out on a significant market with its iOS suspension. Court documents say it earned $700 million over its two years in the App Store, even if PlayStation and Xbox consoles were far bigger moneymakers. Apple plans to argue that iPhone and iPad owners have access to other Fortnite-supporting devices, but Epic counters that most people choose only one platform to play on, so a stymied iOS user won’t necessarily pick up Fortnite elsewhere.

The main impact of the trial, though, won’t be getting one game back on the App Store. A big enough loss for Apple could make the company basically rewrite iOS. “Apple has a lot more at stake here than Epic does, though Apple has the stronger hand,” says Christopher Krohn, adjunct associate marketing professor at the University of Chicago Booth School of Business. Krohn notes that early in the case, Epic worried that Apple might cut off its App Store access altogether, threatening Epic’s ubiquitous Unreal Engine. But Judge Yvonne Gonzalez Rogers blocked that move. Meanwhile, in Apple’s worst-case scenario, the bench could decide that Apple can’t require all iOS developers to use the App Store — striking at a fundamental tenet of the platform.

The bench could also conclude that Apple can maintain App Store exclusivity, but it can’t make developers use its in-app purchase…

Read More:Next week’s Fortnite trial could upend Apple’s App Store model — even if Epic

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