Skip to Content

Day 3 of Apple-Epic trial: Developers continue to share their travails over App Store

By Jon Swartz

Developers continued to share their travails regarding Apple Inc. in the third day of Epic Games Inc.'s historic antitrust lawsuit against the iPhone maker Wednesday.

Attorneys representing Epic maintained a laser-like focus on the tactics imposed by Apple's (AAPL) App Store -- the crux of their assertion that Apple is a price-gouging monopolist that abuses its dominance for competitive reasons, citing its 30% commission fee.

Lori Wright, vice president of Xbox business development at Microsoft Corp. (MSFT), explained how the App Store rejected Microsoft's cloud-game service xCloud because Apple believed it would need to approve every game streamed on xCloud. This confused Microsoft, she said, when Netflix Inc. (NFLX) and Spotify (SPOT) Technology did not face the same restrictions.

Last week, Microsoft said (link) it would lower its commission fee for developers of PC games sold through the Microsoft Store to 12%, as of Aug. 1, saying it wanted to remain competitive in the market. Epic's Games Store also charges 12% commissions. Wright said there is no plan to change the fees for Xbox consoles.

An Apple attorney, in cross-examination of Wright, noted that Microsoft -- in particular, company president Brad Smith -- has been critical of the App Store. He added that xCloud was not allowed on the App Store for technical and third-party-publishing content reasons, and that the xCloud web browser has been a good option for iPhone users.

Epic attorneys, meanwhile, carefully laid out the difference in gameplay between specialized gaming devices like consoles and more general-purpose electronics like smartphones and laptops. The crux was that those fenced into the iOS platform paid a premium for an inferior, less-satisfying experience.

Andrew Grant, an engineering fellow at Epic who followed Wright's testimony, pointed to "more fluid" graphics and crisper controls on consoles and surround-sound features on personal computers that the iPhone can't match. Earlier, Aashish Patel, director of product management at Nvidia Corp. (NVDA), made similar claims.

In pushing back at Epic's witnesses, Apple's legal team repeatedly highlighted the number of gaming platforms for consumers, and improved gaming functionality on iOS.

The contrasting lines of questioning illustrated what antitrust experts claim is the case's core legal issue: How Judge Yvonne Gonzalez Rogers, who is presiding over the bench trial, defines the relevant market -- which is essential in proving whether a monopoly exists in a market.

Apple contends the apps market for mobile-game distribution is broad, with Android, Xbox and laptops as other options. Epic argues the market for this case should be narrowly defined as only iOS, where Apple has 100% market share. This, experts say, presents a high legal hurdle.

"These cases are often postures in an ongoing trade dispute to move the other side to make concessions," Larry Downes, project director at the Georgetown Center for Business and Public Policy's Evolution of Regulation and Innovation project, told MarketWatch. "The decision will be made based on evidence, not the judge's facial expressions and words. Antitrust law has just not changed in decades."

An expert-heavy portion of the expected three-week trial sparked a brief delay Wednesday when Judge Rogers expressed concern that Apple and Epic were bending the rules with ever-shifting opinions from more than a dozen expert witnesses. Attorneys from both companies engaged in civil minutiae for about 30 minutes to address the issue.

-Jon Swartz; 415-439-6400;


(END) Dow Jones Newswires

05-05-21 1827ET

Copyright (c) 2021 Dow Jones & Company, Inc.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.