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In its infancy testimony Epic Games Vs. Apple on Friday, Apple CEO Tim Cook described his company’s mission: “to make the best products in the world that truly enrich people’s lives”. For the rest of the day, Epic’s lawyers tried to prove to Apple that what he wanted to enrich the most was to the detriment of consumers.
What does greed prove? In the last three weeks, Epic has doubled his allegations Apple’s power of monopoly over the iOS ecosystem. The Fortnite the publisher is disappointed to show that Apple’s core is corrupt and so are its business practices.
Apple is now worth more than $ 2 trillion, and one reason is the structure of that ecosystem: Apple devices, the iOS operating system, the Apple App Store, and the payment system that consumers use for those apps and own it. In its defense of Epic’s lawsuit, Apple insists iron grip on the iOS market it is not a mere play for great profit; rather, it is in the service of keeping its customers safe, the user experience is easy and the developers are happy. As Apple’s supreme ambassador, Cook had a great job ahead of him.
Cook has spent time in defense today, presenting specific questions from Epic attorneys and U.S. District Judge Yvonne Gonzalez Rogers. The key issue in the case has been the commission Apple receives from the App Store, up to 30 percent on digital in-app purchases. In the lawsuit, Epic describes this 30 percent commission as a “monopoly tax”. Before Cook took a stand, Judge Rogers said, “The lack of competition at 30 percent is worrying.”
Digital markets have taken 30 percent commissions over the decades. Cable companies were charged in the 90s for paid movies. In the mid-2000s, Apple convinced record labels that it was worth a 30% commission on song sales at the iTunes Store. The label, desperate to reduce online music piracy, moved on. Today, Apple makes similar arguments for the App Store commission. Instead of fighting Napster, iOS has a relatively low rate of malware infection.
Commission is also standard in games. When the bulk of video game sales have migrated online, digital gaming markets like Steam, the Nintendo Online store, the Xbox Xbox store and the PlayStation store charge 30 percent on game sales.
Epic has been running against the 30 percent committee for years, as part of its long-running effort paint himself as a good game boy. In 2018, it launched the Epic Games Store, which saw a 12 percent drop in game sales, leaving developers with a larger share of the pie. Microsoft continued this year, but with its PC app. “We want to make sure we are competitive in the market,” said Sarah Bond, vice president of Microsoft at the time.
Epic says gaming companies like Sony and Nintendo are different from Apple, even though they take advantage of hardware, software and market synergy.
“There’s a reasoning on the console where large investments are made in hardware, often sold below cost, and marketing campaigns in broad collaboration with publishers,” said Epic CEO Tim Sweeney in an interview GamesIndustry.biz. In the Epic versus Apple lawsuit, Lori Wright, vice president of Xbox business development, assured that Microsoft is selling its Xbox consoles at a loss. And if he didn’t charge a commission at the Xbox Store, he would lose money on Xbox systems. Sony he sells her PlayStations is also at a loss. Epic has revealed that the Epic Games Store is not yet profitable because it is partly new and, among other things, that the company has paid large sums of money for licenses to offer free games to game developers.
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