Apple Vs Microsoft Anti-Trust Business Rivalry

Epic, the developer of the popular game Fortnite, filed a lawsuit against Apple in August 2020 after Apple banned Epic from the App Store. The grounds for the ban were Epic’s launch of its own game store, which included an alternative way to process in-app purchase payments, thereby cutting Apple out of the commissions.

The Epic vs Apple anti-trust battle has given yet another platform for Microsoft’s gripes with Apple’s app store restrictions. With Microsoft President Brad Smith’s public accusations of Apple gatekeeping their app store, it is no surprise that Microsoft was a key witness for Epic’s arguments that restrictions violate anti-trust regulations.

Why Is The Epic vs Apple Trial So Closely Watched?

This trial could completely change the app industry, and the restrictions app stores are able to put on developers. According to FlowPlay’s CEO Derrick Morton, the current system many of these companies use put restrictions on the way companies market and present the games they have developed. He believes the large commissions these app stores charge to allow access to consumers tips the scales in favor of larger development companies who can afford to hand over such a large share.

What Previous Cases May Influence the Outcome of the Trial?

There are a number of big tech anti-trust cases that will impact the proceedings and outcome of the trial.

• US vs Microsoft in 2001 – One of the first big ant-trust cases for tech companies. The initial judgement would have seen Microsoft broken up, but a settlement agreement between Microsoft and Netscape in 2002 walked back that judgement.
• Microsoft’s anti-trust investigation in the 1990s which examined how they packaged Internet Explorer with its Windows operating system.

Apple is currently in legal proceedings with UK, Australian, and EU regulators about its 30% App Store toll.

Another interesting factor that may influence the outcome of the case is attorney Christine Varney who is a member of Epic’s legal team for the trial. Varney represented Netscape in the aforementioned 2001 trial against Microsoft and was part of the 2002 settlement agreement. Varney also served as the DOJ’s Anti-trust Division Assistant Attorney General during the Obama administration. The Wall Street Journal has profiled Varney as wanting to find a middle ground in anti-trust cases and allow fair market competition.

Microsoft’s Accusations for Apple

President Brad Smith publicly slammed the App Store rules and Apple’s obstruction of Microsoft’s new Xbox mobile game streaming service xCloud.

When cross-examined about the statements, Microsoft’s Vice President of Business Development for Xbox, Lori Wright, explained that Apple had been uncooperative for months when negotiating offering xCloud as an iOS app. Microsoft had proposed xCloud as a single app where users can access many games in the app, similar to Netflix, but for games. However, according to Wright, Apple changed its mind during negotiations and would only allow each game as individual apps.

The issue with this solution is that if Microsoft wanted to update its xCloud catalogue, it would result in “dead apps” being on users’ devices when a game was removed from xCloud. Microsoft claim this is an “inelegant solution” that would negatively impact the user experience and, therefore, the reputation of its business.

Apple’s attorney Jay Srinivasan asked Wright about Microsoft’s relationship with developers like Epic. Specifically, in terms of the rules they apply and the commission they collect from in-app purchases. During his cross-examination, Srinivasan proved that Microsoft also collect 30% commission and that they also impose terms upon the developers.

 
Epic’s Arguments

After hearing about Epic and Microsoft’s struggles with Apple App Store restrictions, Judge Yvonne Gonzalez Rogers’ question “why do you want to use Apple if it’s so terrible?” Epic’s attorney Wes Earnhardt and engineer Andrew Grant stated that while consoles offered a more immersive playing experience, the benefit to apps were that they were mobile. That users could continue to play games as they were away from home. This opened up additional revenue for the developers.

During cross-examination engineer Andrew Grant conceded that the restrictions Apple placed on developers were really no different than Android.