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Both Apple and Epic lost today




Judge Yvonne Gonzalez Rogers ran into a compromise that neither company had sought on May 11, the seventh day of the Epic v. Apple trial. She said that Epics economist David Evans has a perfectly good external website that allows you to disable the steering prevention rules used by Apple and buy subscriptions rather than inside the app itself. I asked if it was enough not to say. ..

On May 24, the final day of the trial, Judge Rogers hinted that she was still obsessed with the exact kind of compromise.

That’s what happened today. Both sides lost. But Epic definitely lost more.

Although a win for developers, Epic Rogers not only prevents Apple from exposing iPhone users to the dark about other payment methods, but also allows developers to actually stick their purchasing mechanism to their apps. We have decided on a permanent national injunction that will enable us to do so. (It depends a lot on how the court defines the button, so look forward to a lot of friction and experimentation around it.)

It’s not Epic’s victory for two reasons. First, the judge clearly determined that Epics’ injection of its own direct payment scheme into Fortnite on iOS was not a move designed to trigger the entire proceeding. Epic has violated its contract with Apple.

Epic didn’t release Fortnite at all

Second, if Epic wants to insert a PayPal button into Fortnite, for example, it can’t. Apple terminated the Epics developer account when the company broke the contract, and Judge Rogers confirmed that Apple was within the right to keep Epic off. App Store forever.

Apple has a contractual right to terminate DPLA at any time in Apple’s sole discretion with any or all of Epic Games’ wholly owned subsidiaries, affiliates, and / or other entities under Epic Games’ control. Have.

Epic also lost about $ 3.6 million directly to Apple. That’s because Epic’s direct payment mechanism infused into Fortnite, contrary to Apple’s rules, generated about $ 12.2 million in revenue, and Rogers decided that Apple deserved a 30% reduction.

Indirectly, Epic can claim to have lost a significant investment in the success of this proceeding, but it’s not only irreparable legal fees, but also from people who would have been playing Fortnite on iOS. It could be hundreds of millions of dollars. From the App Store. In the first two years, the game earned $ 614 million on iOS alone, according to Epic’s record of $ 52.7 million in the fourth quarter of 2019.

After Fortnite was removed from the App Store, people who may have already installed the game continued to buy, but it’s unlikely that they made a large purchase. Fortnite players on Apple hardware have lost cross-play, access to new events, and new ones to buy. August 2020, when the game was effectively split in two.

And, as Mark Gurman points out, everything Epic has to show for its money is the biggest change in App Store history. (Here’s a freshly published history of major App Store policy changes, so you can see for yourself.) Epic isn’t available at this time.

But those millions, and even hundreds of millions, are inferior to the billions that Apple would lose if the App Store changes were thoroughly adopted and legally enforced. .. Apple earns about $ 19 billion a year from apps, of which $ 6.3 billion is legally important to the decision, and more than Apple loses a few whales to notice the drop in revenue. I argue that my colleague Chaim Gartenberg wouldn’t.

Epic doesn’t even care about spinning today’s decision as a victory. I think it makes sense. Publicly, the goal was #FreeFortnite, but it completely failed. Fortnite on iOS is still under Apple’s locks and keys. So instead of changing songs, Epic simply appeals.

But Apple calls this decision an overwhelming victory. It also makes sense to see that Epics’ original request to call Apple under Sherman Antitrust Act an illegal monopoly was downgraded to a single injunction under California’s Unfair Competition Act. .. The court does not force Apple to allow alternative app stores or sideloading, or change the 30% rate in any way.

But a true win wouldn’t have allowed Apple to monitor billions of dollars in revenue and potentially get out of the door or lose control at all (or, for that matter, Apple’s true true. I regarded the nature as a vicious entity exposed to the world). Apple has volunteered with Japanese regulators to allow certain categories of leader apps to bypass the store for payment, even if they have first and last words about whether the app is eligible as a reader app. As sometimes, I prefer to make much smaller concessions.

I think Jason Schreier understands that exactly. The two companies lost the battle, with millions of dollars and billions of dollars respectively.

As a result, Epic loses in almost every respect and has to pay millions of dollars, but Apple now has to force apps to use external payment processors, potentially costing billions of dollars. Will take.

A big victory that everyone who supported both companies loses

Jason Schreier (@jasonschreier) September 10, 2021




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