OAKLAND, Calif (CN) --- Epic Games and Apple squared off for the last time Monday before U.S. District Judge Yvonne Gonzalez Rogers, with Apple predicting “absolute mayhem” if the judge orders it to open up its App Store.
Apple stands accused of abusing its power over developers who rely on its App Store by extracting a 30% cut of all purchases of digital content, and forcing them to only use its in-app payment system for those transactions.
In an act simultaneously portrayed as both deception and protest, Fortnite maker Epic Games decided to bypass those rules last summer by launching its own digital storefront on the App Store that allowed users to pay Epic directly for in-app purchases.
The move got Epic booted from the store, and Epic quickly responded with an antitrust lawsuit that could upend Apple’s business model.
Epic seeks an order requiring Apple to lift its restrictions on third-party storefronts and allow iOS apps that were not downloaded through the App Store on its platform.
Gonzalez Rogers, who has presided over the closely watched antitrust case for the last three weeks, told Epic’s attorney Gary Bornstein that his client seems to want free access to Apple’s intellectual property.
“One of the issues that has concerned me throughout this trial is that your client does not seem to be interested in paying for the access to customers who use iOS,” she said. “And even if he is interested, it's hard to see how we get there because he's attacking the fundamental way in which Apple is generating revenue. I still don't understand where you expect this to go.”
Bornstein said Apple could continue to charge developers a commission, but in a “nondiscriminatory” way.
“There’s no effort there to say Apple must give away all of its stuff for free. But what they are prohibited from doing under antitrust law is structuring their charges in a way that has anticompetitive effects. There are anticompetitive affects in app distribution because that's the only way to get on iPhone, and anticompetitive effects in in-app payments,” he said. “As a remedy we believe the right thing to do is to get rid of those particular anticompetitive restrictions.”
Bornstein said Apple would be forced to improve its service if compelled to open its App Store to third parties. Customers could then choose whether they want to download an app from the App Store, or from Epic Games directly. Those who value Apple’s offerings would continue to buy from the App Store, but the competition would ultimately lead to a better experience for both developers and consumers --- both of which Epic considers to be customers in their proposed two-sided market for app distribution.
But Apple’s attorney Richard Doren painted a vastly different picture of what an App Store would be like without Apple’s tight controls protecting customers from scams, pornography, and malicious apps that encourage teens to kill themselves or commit mass shootings.
"There is no predicting how the network effects work when the iOS environment is polluted by a variety of unpoliced apps from unknown sources,” he said. “It's up to this court to determine where we end up — between absolute mayhem where anything goes and the current business model.”
Gonzalez Rogers remarked that Android seems to do quite well with this model and that its operating system actually enjoys a larger market share than Apple’s. Doren said It comes down to consumer choice.
“Apple's brand and trade is security and privacy. It is niche, if you will," Doren said. If Apple’s model were to change, “It will be turned into an equivalent or perhaps poor imitation of Android,” and customers would be left without an alternative.