Epic Games v. Apple: Key Arguments Ahead of Trial

The legal battle between Epic Games and Apple, centered around allegations of monopolistic practices, is set to commence next month. Preliminary arguments from both companies have now been released, following some refinement by the court. With foundational facts largely agreed upon, the core dispute revolves around their interpretation, and the CEOs of both firms are anticipated to testify.

Epic’s Core Claim: Anti-Competitive Behavior

Epic’s central argument asserts that Apple’s control over the app marketplace, coupled with the standard 30% fee, constitutes anti-competitive conduct requiring regulation under antitrust legislation. This contention arose from Epic’s deliberate introduction of its own in-game currency store within Fortnite, bypassing Apple’s established payment systems.

CEO Tim Sweeney previously likened this action to resisting unjust laws during the civil rights movement, a comparison that proved controversial.

Apple’s Response: Competition and Fee Adjustments

Apple refutes the monopoly claim, emphasizing the significant competition it faces across various markets, even outside of its App Store. Regarding the fee structure, the company acknowledges potential for adjustments – evidenced by the reduction to 15% for the first million dollars in developer revenue following 2020 criticism – but maintains it doesn’t represent unlawful behavior.

Allegations of a PR Campaign: “Project Liberty”

Apple alleges that Epic’s legal challenge is largely a public relations maneuver, supported by documented evidence.

Specifically, Apple points to “Project Liberty,” a pre-planned initiative within Epic designed to bolster Fortnite revenues. Internal records indicate Epic allocated approximately $300,000 to a PR firm for a “two-phase communications plan.”

This plan involved a coordinated campaign against Apple and Google, spearheaded by the “Coalition for App Fairness.”

Strategic Circumvention and Planned Legal Battles

According to Apple’s filing, Project Liberty aimed to instigate legal disputes with both Apple and Google by intentionally violating their app store payment policies. Epic’s internal communications reportedly detail a strategy to “draw Google into a legal battle over anti-trust.”

Epic acknowledges Project Liberty but maintains its secrecy was necessary to avoid Apple rejecting the updated Fortnite version containing the alternative payment system.

Antitrust Law and the Burden of Proof

Regardless of the fairness of Apple’s fees or Epic’s motivations, the case will be decided based on established antitrust law. Currently, the legal landscape doesn’t appear overwhelmingly favorable to Epic.

The Core of the Dispute

Epic’s central claim, as stated in its filing, is that “This case is about Apple’s conduct to monopolize two markets within its iOS ecosystem.”

The question is whether Apple can be considered a monopolist within an ecosystem it created and manages, despite facing competition in the broader digital distribution and gaming sectors. Successfully applying antitrust law in this context requires Epic to meet a substantial burden of proof.

Upcoming Trial and Key Witnesses

The trial is scheduled to begin on May 3 and is expected to last approximately three weeks. Key witnesses will include Apple CEO Tim Cook, Epic CEO Tim Sweeney, and Apple’s former head of marketing, Phil Schiller.

The specific order and nature of testimony remain to be determined, but potentially revealing interactions are anticipated.

Related Lawsuits and Potential Outcomes

Several related lawsuits are pending, including Apple’s countersuit against Epic for breach of contract. The resolution of these cases will likely hinge on the outcome of the primary antitrust dispute.

For example, a finding that Apple’s terms are unlawful would invalidate the contract, while a ruling upholding the terms would likely result in a swift victory for Apple.

The complete “proposed findings of fact” documents from both parties are available on RECAP (case number 4:20-cv-05640).