PC Gaming Epic Games Vs. Apple

[Husky_Khan]

The Trial of the Century begins!

Analysis: In Apple versus Epic Games, courtroom battle is only half the fight

Epic Games faces an uphill legal battle against Apple Inc (AAPL.O) in an antitrust trial starting Monday, and a defeat for the maker of "Fortnite" could make it harder for U.S. government regulators to pursue a similar case against the iPhone maker, legal experts said.

www.reuters.com

 

[ParadiseLost]

How much Epic paid per free game from 2018 through most of 2019.

 

[Husky_Khan]

Fortnite Kids apparently swarmed into a Court Conference Call which temporarily allowed anyone to speak.

Court accidentally opens Epic v Apple dial-in line to all speakers, Fortnite kids go nuts

Calls to "free Fortnite" were heard by a US district court this morning.

www.pcgamer.com

There were requests for Fortnite on Mobile and for Travis Scott music to be brought back as well as general claims to free Fortnite. At this time it seems unlikely US District Judge Yvonne Gonzalez Rogers will entertain any of these requests.

 

[ParadiseLost]

Epic Spent $1 Billion On PC Exclusives By 2019

As the trawl through Epic’s court documents continues, another figure jumps out: $1 billion—the amount Epic had spent on securing exclusives by 2019.

kotaku.com

Turns out Epic has spent $1 billion on exclusives, and their Optimistic Scenario had them capturing 50% of the PC Gaming Market (LOL) assuming Steam made no serious attempts to fight back, and 35% if Steam did.

Their Worst-Case Scenario had them capturing 20% of the PC Gaming Market and it over time falling to 8% as they were forced to scale back operations. What's funny is that this Worst-Case Scenario is probably optimistic right now.

 

[Bear Ribs]

The Judge has dismissed Apple's two counter-claims and suits that Epic was stealing from them and "has funds that should be in Apple’s possession... Epic has abused funds that should be in Apple’s hands." His reasoning was that Apple had zero proof

I know lawyer speak is different from normal English but their arguments seem like horrifically bad phrasing to me.

"Their reckless behavior made pawns of customers, and we look forward to making it right for them in court next May."
Yeah, Apple would never use customers as pawns.

"funds that should be in Apple's hands"
It just sounds petulant and greedy. I'm not too surprised it got kicked. The statements don't seem legal-ish to me, but rather almost as if the Lawyers were trying to get soundbites that would look good in a twitter feed, emotional snappy one liners instead of the typical solemn and rational (and very, very long-winded because they are paid a lot per hour) way lawyers speak in court.

Judge dismisses Apple’s “theft” claims in Epic Games lawsuit

“You actually have to have facts,” Judge tells lawyers arguing for punitive damages.

arstechnica.com

 

[ParadiseLost]

It just sounds petulant and greedy. I'm not too surprised it got kicked. The statements don't seem legal-ish to me, but rather almost as if the Lawyers were trying to get soundbites that would look good in a twitter feed, emotional snappy one liners instead of the typical solemn and rational (and very, very long-winded because they are paid a lot per hour) way lawyers speak in court.

Nitpick: Lawyers don't get paid per hour, they are salaried. The Law Firms get paid per billable hour.

 

[Bear Ribs]

Nitpick: Lawyers don't get paid per hour, they are salaried. The Law Firms get paid per billable hour.

Hmm, wasn't aware of that distinction. Fair enough then.

 

[S'task]

Man, is it wrong that I kinda hope both somehow lose this case and end up, I dunno, somehow having to pay millions of dollars to Valve?

I know, not actually possible, but in a fight between Epic and Apple I don't actually see a good side...

 

[Husky_Khan]

There are so many interesting things arising out of this trial. I'm going to have to go back and sift through it all.

But here's one example:

Apple chose to hide a mass hack on 128 million iPhone users, back in 2015

In the email showcased by Epic Games, Apple managers discovered some 2,500 malicious apps on September 21, 2015. These were downloaded a total of 203 million times by 128 million users.

tech.hindustantimes.com

So yeah, Apple apparently realized that malicious apps were infesting their users iPhones as far back as 2015.

In the email showcased by Epic Games, Apple managers discovered some 2,500 malicious apps on September 21, 2015. These were downloaded a total of 203 million times by 128 million users. Out of these, 18 million were US customers.

Apple apparently discussed sending out a mass e-mail to warn their consumers... but decided not to. 🤷‍♀️

 

[Husky_Khan]

So here's a catalog of some of the things that came out... not even directly related to the outcome of the case, just interesting business practices by the companies involved.

From the opening statements:
> Epic advanced the argument that Apple made their store a "walled garden" with monopolistic and anti-competitive practices built into the Apple Store from the beginning and that such a store doesn't benefit app developers or consumers at all. Epic Games cited internal communications from Apple regarding how they were thinking of manipulating the 70/30% ratio (offering more money sharing to apps that surpassed one billion in Apple revenue) if they could keep earning around one billion in revenue. They also pointed out that thousands of scam/suspicious apps still exist on Apple and cite Apple internal communications for that as well.

> Apple meanwhile argued that Epic wants to turn the Apple Store and iOS into Android, giving up its own competitive advantage by allowing third party stores and payment apps onto the Apple Store and Apple provides a benefit to App developers and their consumers.

Apple’s outside legal counsel Dunn reminded the court that Epic Games isn’t a small David fighting a Goliath, as Epic is valued at $28 billion. She also reminded the court that Apple’s App Store has 1.8 million developers who have generated more than 180 billion downloads from the store. Epic pointed out that Apple’s profit margin on the App Store is 78%. Dunn noted that before Apple came along, publishers typically charged a 70% royalty fee for games and apps, while many companies in the industry are now standardized on 30%, while Epic alone and Microsoft (as of last week) charge only 12%.

Apple and Epic go head-to-head in fiery opening remarks of highly-anticipated trial - 9to5Mac

Today marked the beginning of the highly-anticipated Apple vs. Epic trial, and things kicked off with both companies presenting their...

9to5mac.com

>On the Second Day, CEO Tim Sweeney of Epic Games was asked to identify three different video game consoles (The PS5, XboneX and Nintendo Switch) by the Apple Attorney, which he did successfully.

> Epic Game Store has lost about $300 million dollars in investment up to this point. Epic Games is worth about $28 billion according to Apple Attorney's in trial.

The Epic Games Store Has Not Turned A Profit Yet According To Tim Sweeney

Despite the success of Fortnite, the Epic Games Store itself has cost Epic Games millions of dollars.

www.gamespot.com

> Project Storm, Wal-Marts unannounced cloud gaming project, was revealed in the trial as well because Wal-Mart approached Epic Games about promoting Fortnite in this new project. This occurred back in 2019 and according to Epic Senior leadership, the project had a lot of promise but for whatever reason, never seemed to move forward.

Walmart's Project Storm is an Unannounced Cloud Gaming Service

Walmart was trying to get Fortnite onboard for Project Storm, their unannounced cloud gaming service which was revealed n the Epic games vs Apple lawsuit

techraptor.net

> Way back in 2015 CEO Tim Sweeney e-mailed Apple CEO Tim Cook directly, asking him to allow other app stores on iOS. Apple CEO Tim Cook had no idea who Tim Sweeney was and sent out an e-mail asking if he was "at our rehearsal?"

> Microsoft's Lori Wright testified as a friendly witness to Epic Games and was queried about many things Microsoft related. These included:
- Why does xBox, Microsoft responded it sells its hardware such as XBox's at a loss and never made a profit off of them unlike Apple's iPhones and iPads. It then stated the Microsoft Store dropped its commission to 12% because in the Windows Store there's other competitors on Windows.
- Lori Wright also made a distinction between 'General Purpose' and 'Special Purpose' hardware, stating the XBox Console was specialized for console gaming and that's why people buy it. Meanwhile a PC or iPhone is typically used for far, far, far more stuff and preferable to use by consumers for a wide variety of uses.
- Microsoft also brought up how Apple's onerous requirements prevented Microsoft from bringing it's xCloud Streaming Service onto the App Store, saying it was nearly impossible to meet Apple's requirements since each game would need its own app. The Epic Games Attorney then compared this to Netflix requiring a different app for every movie on its service to be on the App Store. Instead it had to be presented on iOS's browser, as opposed to app based streaming.

At trial, Epic and Apple squeeze Microsoft over Xbox, xCloud restrictions

Questions over Xbox restrictions, xCloud's iOS struggles serve as comparison points.

arstechnica.com

> Apple back in 2018 tried to persuade Netflix to keep using Apple Stores 'in app' Payments System by offering Netflix a variety of incentives (such as bundling favorably with Apple TV, offering Netflix data on its app usage, Apple Retail integration and a wide variety of other issues. Apple also floated (internally) the idea of taking punitive actions against Netflix.

Emails reveal Apple's attempts to stop Netflix from dropping App Store In-App Purchase support - 9to5Mac

New internal emails and presentation documents revealed as part of the Epic vs. Apple show how Apple attempted to convince...

9to5mac.com

So much fun and that's just from the first week!

Oh and finally... Apple tried to get Epic Games to admit in the Court of Law that there's Porn on its Family Friendly service. And no... it's not over a nude Fortnite Banana model... it's about how itch.io can be accessed through the Epic Games and that itch.io may contain offensive or lewd content.

 

[ParadiseLost]

Oh and finally... Apple tried to get Epic Games to admit in the Court of Law that there's Porn on its Family Friendly service. And no... it's not over a nude Fortnite Banana model... it's about how itch.io can be accessed through the Epic Games and that itch.io may contain offensive or lewd content.

Partnering with Itch.io is definitely something Epic will regret in the long run.

 

[Battlegrinder]

Man, is it wrong that I kinda hope both somehow lose this case and end up, I dunno, somehow having to pay millions of dollars to Valve?

I know, not actually possible, but in a fight between Epic and Apple I don't actually see a good side...

I'd phrase it as an evil side and an obnoxiously pretentious hipster side.

> Epic advanced the argument that Apple made their store a "walled garden" with monopolistic and anti-competitive practices built into the Apple Store from the beginning and that such a store doesn't benefit app developers or consumers at all. Epic Games cited internal communications from Apple regarding how they were thinking of manipulating the 70/30% ratio (offering more money sharing to apps that surpassed one billion in Apple revenue) if they could keep earning around one billion in revenue. They also pointed out that thousands of scam/suspicious apps still exist on Apple and cite Apple internal communications for that as well.

Which seems ironic, given that I think the best way for the Epic Store to compete with steam would be do that same kind of walled garden curation, since the number of scammy garbage asset flips that valve allows on steam is the only point of criticism I've seen directed at stream on a consistent basis. There are clearly people that want a more curated store front and would possibly be willing to switch over to a platform that takes steps against tje assets flips that bother them so much for some reason.

> Apple meanwhile argued that Epic wants to turn the Apple Store and iOS into Android, giving up its own competitive advantage by allowing third party stores and payment apps onto the Apple Store and Apple provides a benefit to App developers and their consumers.

I suppose that's more of legally defensible counterclaim, since a more accurate description of Epic would involve a bunch of terms courts don't like it when you use. Stuff like "Cartoonist Supervilliany", "Living caricature of an 80s movie villian", "A company wide Omni Consumer Products LARP taken way too far", etc.

 

[Marduk]

Which seems ironic, given that I think the best way for the Epic Store to compete with steam would be do that same kind of walled garden curation, since the number of scammy garbage asset flips that valve allows on steam is the only point of criticism I've seen directed at stream on a consistent basis. There are clearly people that want a more curated store front and would possibly be willing to switch over to a platform that takes steps against tje assets flips that bother them so much for some reason.

The problem with that point is that in the grand scheme of things its a minor annoyance at most, especially once mediated by Steam's extensive user review and recommendations systems (which is something Epic cannot replicate, nevermind improve upon themselves for political reasons). Meanwhile a hard solution to that problem would unavoidably create worse problems than the one it would solve, as it would necessarily be a bunch of people free to yeet any game from Steam if they think its too crappy, and that's even before a hundred activist groups of all stripes start nagging to get at least a little bit of say over the definition of "crappy" to be used. Now just add politics, publisher dirty competition or other volatile element, and you get a reliable recipe for a storm in a teacup.

 

[Battlegrinder]

The problem with that point is that in the grand scheme of things its a minor annoyance at most, especially once mediated by Steam's extensive user review and recommendations systems (which is something Epic cannot replicate, nevermind improve upon themselves for political reasons). Meanwhile a hard solution to that problem would unavoidably create worse problems than the one it would solve, as it would necessarily be a bunch of people free to yeet any game from Steam if they think its too crappy, and that's even before a hundred activist groups of all stripes start nagging to get at least a little bit of say over the definition of "crappy" to be used. Now just add politics, publisher dirty competition or other volatile element, and you get a reliable recipe for a storm in a teacup.

I'm sure there are issues with it, but Epic needs to do something to differentiate its store from steam, and thier current tack of "We're like Valve, but Evil" is obviously not working.

 

[Marduk]

I'm sure there are issues with it, but Epic needs to do something to differentiate its store from steam, and thier current tack of "We're like Valve, but Evil" is obviously not working.

They don't need to differentiate their store from Steam, they need to differentiate their store from Steam positively, preferably so much to at least make itself a niche regardless of all the features its missing vs Steam. Like, say, GOG does with its no DRM offline installers - there are some scenarios where people may want that specifically, and Steam will not give it to them, so they go to GOG.

Also in terms of more general "game discovery" feature they can hardly make that their main point when they can't even have user reviews and curation, and if someone wanted journo/industry curated games list, well, there are many sites for that.

Secondly, do they even have enough of a platform for shovelware to be as much of a problem there as on Steam?

And last but not least, for Epic curation attempts would inevitably collide with their pro-publisher strategy when the question of MtX grab games gets raised, as they are inherently crappy, but some of them make quite a lot of money compared to typical shovelware.

Overall, i think tying a storefront's very availability of games in the store to a bundled review/recommendation system of some variation is a solution looking for a problem, between the multitude of third party routes for people to find games they want to buy, and the near impossibility of creating a review/recommendation system that everyone is going to judge as both reliable and accurate, especially when big money and politics are at stake, which on any major storefront they are bound to eventually be.

Steam has already invented a better and optional system with curators, this solution is basically setting up one, corporate, mandatory curator who then is going to get whined at by everyone because he's the only one, decisive and mandatory, you can guess how that's gonna end. That's just it, there isn't a system that will make everyone happy, period, and anyone who tries is doomed to fail in a more or less spectacular way.

 

[ShadowArxxy]

To the extent that anyone can even stay awake for this, Epic's currently trying to argue that PC and mobile versions of the same game aren't actually the same game, therefore mobile games are a single market space unto themselves as opposed to being part of the larger video game ecosystem. This makes it much easier to argue that Apple is an monopoly, because Apple has a very big share of "mobile game store", but not a very big share of "video game store".

Cue boring expert with a spreadsheet of examples of PC and mobile games that are the same, cue rival expert cherry-picking examples of PC and mobile games where the mobile game is a completely different game based on the same IP despite having the same name, cue boring testimony about licensing, sub-licensing, and such. Yawn. Absolutely riveting legal combat, deserves commemorative pocket protectors.

Source: The Verge

 

[S'task]

To the extent that anyone can even stay awake for this, Epic's currently trying to argue that PC and mobile versions of the same game aren't actually the same game, therefore mobile games are a single market space unto themselves as opposed to being part of the larger video game ecosystem. This makes it much easier to argue that Apple is an monopoly, because Apple has a very big share of "mobile game store", but not a very big share of "video game store".

Cue boring expert with a spreadsheet of examples of PC and mobile games that are the same, cue rival expert cherry-picking examples of PC and mobile games where the mobile game is a completely different game based on the same IP despite having the same name, cue boring testimony about licensing, sub-licensing, and such. Yawn. Absolutely riveting legal combat, deserves commemorative pocket protectors.

Source: The Verge

Huh... in some respects, I agree with Epic. While there are certainly some simpler games that are the same on both PC and mobile, I generally think that they are quite different markets. Different demographics are the main audience, IIRC, and I think the use profile is also quite different. This isn't the same as Consoles vs PCs, where the market demographic and use profile is broadly similar and thus are clearly the same market space.

 

[ShadowArxxy]

Huh... in some respects, I agree with Epic. While there are certainly some simpler games that are the same on both PC and mobile, I generally think that they are quite different markets. Different demographics are the main audience, IIRC, and I think the use profile is also quite different. This isn't the same as Consoles vs PCs, where the market demographic and use profile is broadly similar and thus are clearly the same market space.

I think Epic has a reasonable argument on this particular point, however I absolutely side with Apple on the overall merits of the case.

Apple is a specialized niche product which does not constitute a "monopoly" by any measure other than the patently absurd one of saying that Apple is a market unto itself, which is an argument as absurd as claiming that "Ford is a monopoly because you can't buy a non-Ford engine for a Ford car." Moreover, the "walled garden" ecosystem is an intentional feature of Apple products which has specific advantages and disadvantages which are known in advance to the customers and actively desired by the customers.

 

[ShadowArxxy]

I would also argue that the political context is *extremely* relevant here: Apple is an industry-leading American company which is being attacked in blatant bad faith by a Chinese-controlled competitor. Whose interests does that serve?

(Epic's attack on Valve, and more broadly its attempts to buy market dominance, should also be seen in this light.)

 

[Marduk]

I would also argue that the political context is *extremely* relevant here: Apple is an industry-leading American company which is being attacked in blatant bad faith by a Chinese-controlled competitor. Whose interests does that serve?

(Epic's attack on Valve, and more broadly its attempts to buy market dominance, should also be seen in this light.)

In this case its a "both sides are terrible for different reasons" situation. Let's remind ourselves where does Apple manufactures their goods...

This makes it much easier to argue that Apple is an monopoly, because Apple has a very big share of "mobile game store", but not a very big share of "video game store".

That's ridiculous.

How can they argue that its a monopoly when it has almost 50% of market share in US and almost 25% worldwide?