Apple vs Epic Games pregame is a draw: Fortnite removal is reasonable, suspension of developer accounts is unjustified

Whether it's an antitrust violation remains to be judged.

Engadget JP (Translation)
Engadget JP (Translation) , @Engadget_MT
2020年08月26日, 午後 01:15 in egmt
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Fortnite
Epic Games

This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl.


The prelude to the legal battle over the removal of the popular Fortnite game from the App Store began with a painful split for both Epic and Apple.

In response to Epic's request to the court for an order to "vacate Apple's removal of Fortnite and suspending its Unreal Engine development account," the district court judge ruled that:

  • The removal of Fortnite from the App Store is reasonable (there is no urgency for the court to order Apple to undo the removal because Epic can restore its previous status at will).

  • The suspension of developer accounts necessary to maintain the Unreal Engine is close to retaliation that involves a third party more than necessary, and the injunction is ordered.

In any case, this is not a judgment against the "App Store monopoly and terms and conditions themselves are anti-competitive and unfair" as Epic had argued, but rather a judgment on whether there is enough urgency for the judiciary to intervene in response to the forthcoming suspension of Unreal Engine developer accounts that Apple has notified.

For more information on the process so far, see our previous article.

Apple removes 'Fortnite' from their App Store, Epic fights back with lawsuit

Apple threatens to terminate Epic Games' developer accounts

The background and history can be roughly summarized as follows.

  • Apple has been charging 30% of the fee for apps distributed on the App Store as an in-app purchase fee for sales of digital content using the app as well as sales of the app itself. The same goes for V-Bucks, the in-game currency of the game Fortnite.

  • Epic has long complained that this is a violation of antitrust laws and unfair terms that stifle competition and harm consumers' interests, as it is an outrageous profit in a situation where app providers cannot choose a store other than the App Store and can only choose Apple's payment service.

  • Epic updates Fortnite for iOS, adding the option to buy V-Bucks through Apple as before, as well as the option to buy them at a discount through its own direct payment (Epic Direct Payments).

  • Apple removed Fortnite from the App Store, citing this as a clear violation of its terms and conditions

  • At the same time, it notified Epic that it would suspend all Epic developer accounts, including those for the Unreal Engine, which it licenses to other companies if it did not return Fortnite to its previous state.

Fortnite
Epic Games

The Court's decision, in this case, is whether it is necessary to intervene in Epic's motion for a Temporary Restraining Order (TRO) as an urgent and temporary measure before any further litigation.

This is not the main thrust of Epic's or Apple's argument, but rather a simplified judgment for "issue an urgent and temporary court order to stop it now or it may be irreversible even if the case is settled in the future”.

Epic's claims were as follows.

  • If all of our own developer accounts are shut down, we will not be able to verify or support the Unreal Engine, which is also used in third party games and apps, which will have an unpredictable and irreversible negative impact on a wide range of companies and users, including other companies and their users.

  • Regardless of how the judiciary decides on Epic vs. Apple in the future, if developers evade the Unreal Engine, it will have an irreversible and devastating result for Epic. (That's why Apple dares to threaten Epic with account suspension as a retaliatory measure to ruin Epic without waiting for a judicial decision.)

The Unreal Engine is used in Epic's own Fortnite game, as well as by others such as PUBG Mobile, Pro Evolution Soccer, Mortal Kombat, Life is Strange and Microsoft's Forza Street.

It's the largest multi-platform high-end game engine, including PC and home consoles, but it's not that big of a force on mobile.

In contrast, Apple's arguments were as follows.

  • As we've already told Epic, simply removing and restoring the "directory payments" that they added knowingly in clear violation of the terms and conditions will bring Fortnite back to the App Store.

  • This is not a result of pressure from Apple, but rather an action of their own choosing to bring consumers together and give Apple a bad name. It's natural for Unreal Engine developer accounts to be suspended because they violated the terms of the agreement. If it''s expected to cause irreparable damage, they can always avoid it by simply undoing Fortnite on their own.

At the remote hearing using Zoom, representatives of both companies made a variety of arguments, but the conclusion was as follows.

  • The removal of Fortnite from the App Store does not warrant an urgent judicial order to restore it. Apple states that it can easily be restored to the store simply by restoring it to its previous state, as a result of Epic's own confident actions, it does not meet the requirements for an urgent preservation order.

  • The suspension of all developer accounts, including those of Unreal Engine, is partially justified by Epic's argument. The dispute between Apple and Epic should be resolved between the two parties, including the issue of antitrust law, and there is no necessity to involve the game industry, other companies or even ordinary players.

That's a quick summary, but it's a decision based on legal procedural arguments, so read the decision on the motion directly. The judge in charge of the case is Yvonne Gonzaslez Rogers, aka YGR.

Separate developer registrations are in place between Apple and Epic, with Epic Games putting out Fortnite and Epic Games International, S.a.r.l (Epic International), which handles the Unreal Engine and other games. From a contractual standpoint, it appears that Epic Games' breach of the terms of the agreement to affect even Epic International's independent contract was deemed to be an act of retaliation.

Apple, of course, argues that they are, in fact, one and the same Epic, even though they are procedurally separate developer accounts, but this one has been rejected for now.

Epic also claims that the deletion of Fortnite and the suspension of Unreal Engine's development account are both unjustified acts of retaliation, but this one too has not been accepted.

For now, even the Unreal Engine is no longer in jeopardy in August, but the decision is like a prelude to a prelude to the Epic vs. Apple battle before it begins.

Apple's removal of Fortnite from the store also simply didn't recognize the need for an urgent injunction, and it didn't determine whether Apple's developer guidelines and terms and conditions are reasonable, or whether it's also reasonable for Apple to not allow payments other than in-app purchases in the future.

Regardless of whether or not Epic removes direct payments and brings Fortnite for iOS back to the App Store, the antitrust battle is likely to continue for a long time to come.

As an aside, the question of "whether the App Store has an antitrust problem", which was not directly addressed in the decision, has been debated from various aspects of administrative judicial legislation in various countries apart from Epic, and Apple has consistently argued that Apple is subjected to fierce competition from other companies, consumers have the freedom to choose their platforms, and Apple is not a monopoly in any sense.

While Apple's representatives at this hearing repeated the same arguments, the judge said that this is not the place to decide such issues, but nailed it by referring to the "cost to consumers of switching platforms".

Representatives for Epic also cited the new coronavirus epidemic to argue that Fortnite is not just a game, but a public platform that provides the social communication needed in the age of stay-home (so taking it away from consumers, even temporarily, would have a lot of negative consequences), but this too was passed over as no reason to start avoiding fees at this time, or not be rejected.


This article is based on an article from the Japanese edition of Engadget and was created using the translation tool Deepl. The Japanese edition of Engadget does not guarantee the accuracy or reliability of this article.

 
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