designed in California
Apple versus epic it's a battle for the
ages or at least this age when we all
have mobile devices running specialized operating systems that can run apps that
read data from Internet connected servers on the other side of the world
imagine explaining that to someone from the olden times you see Demetrius you
can't just go buy an abacus from the Abacus store use it to calculate how
much grain you'll have for the winter and forget about it because the Abacus
is itself a store and 30 from each bead
that you buy goes to the guy that made the Abacus and that's only for the beads
that guy allows you to buy and also uh some of those beads are themselves tiny
abacuses that are also stores
okay fine that was a really dumb analogy but it does show how hard it is to
illustrate the relationship between markets stores and products especially
as those things become less physical and more virtual entities that we access
through the unlimited internet portals we're all carrying in our pockets
but are they really unlimited according to fortnite developer epic
games they're not thanks to Apple and Google's restrictive App Store policies
30 standard Revenue cut and alleged dirty attempts to stifle competition
that's why epic sued both of them in August 2020 and spent months preparing
for a convoluted and hilarious trial with apple that ultimately ended with a
near total loss for epic causing CEO Tim
Sweeney to climb a mountain and think about his life choices but this story is
far from over partly because everyone yes even Apple who won is appealing the
ruling because the Google trial hasn't even begun yet and also because this
fight isn't just about cheaper Ariana Grande skins in fortnite it's about
questions like who controls our devices should phones just be tiny PCS is a
naked banana man not safe for work and it's all part of a larger battle
going on all over the world the battle
for Apple's soul
the Titans epic games and apple went to federal court today epic alleges that
the App Store is a monopoly how much agency do developers have they
don't want to pay 30 Apple could win and the decision could change the entire app
world extremely competitive behavior that is
very successful winds up looking a lot like anti-competitive Behavior I don't
know if you want to think like really really wild worst case scenarios it's
that Apple decides that it doesn't want to allow third-party apps anymore to
truly comprehend this story we first have to understand not only what an
iPhone is but what Apple thinks it is because let me tell you epic thinks it's
something completely different okay they're just on completely different
wavelengths here so this
is an iPhone artisan
handheld Computing device made by friendly hipster savants at Apple it
runs apps which you can download exclusively from Apple's iOS app store
where Apple takes a sizeable cut of all in-app purchases of digital Goods while
there are ways to jailbreak an iPhone so you can get apps directly from the web
or other app stores if you do that Apple will void your warranty because you see
only apple is capable of determining what software is safe or appropriate to
install on their I mean your iPhone compare that to any
other smartphone which could be made by any one of the dozens of companies that
spit these out on a semi-annual basis slapping the Android operating system on
them as they're pushed out the door Google would prefer you get your apps
from their own Play Store where they also take a cut but they don't View
getting apps from Samsung's Galaxy store or Amazon's Android app store or even
directly from the web as an excommunical sin Google has made escalating attempts
to collect licensing fees from Android device makers but at its core Android is
still open source that's why you can find it in Smart TV boxes cameras cars
watches refrigerators and it's relatively easy for tinkerers to tinkle
with any one of them and figure out a way to run Doom
so use this for that but in their tinkle friendliness both iOS and Android pale
in comparison to truly generalized open ecosystem Computing platforms like Linux
Windows and yes even macOS many
enthusiasts want nothing more than for mobile computers to behave just like
desktop ones none more so than Apple and
Google's Public Enemy Number One hey I'm Sweeney tinkerer extraordinaire whether
it's taking apart a lawnmower as a five-year-old
unsupervised or attempting to take apart entire markets the man clearly needs to
get his fingers in there figure out how something works and then build it better
and optimally in a way that Nets him some extra cheddah or at least that's
the cynical view here like obviously epic's lawsuits are at least partially
motivated by the search for more money but I think it's clear Tim isn't just
trying to Jeff bezos's way to space because if he were why would he lead
epic games on this long and perilous Journey taking on the world's largest
tech companies with one of the most Bonkers legal strategies ever seen you
want to make some money all you got to do is buy some nfts and wait in 10 years
you'll be swimming in offers for the thing you would whatever the that
is hence because of who Tim Sweeney is I
think it's clear that there's also an ideological Factor here A belief that
the iPhone as Apple conceives of it should not even exist
we have to dig deeper it's time to go back to how this all started it's time
to go back to the original tackling set they're kicking us out of here come on I
couldn't have five more minutes you've had six months ah let's take longer baby
all right in the summer of 2020 epic
games set out to trap itself some tech Giants you may be familiar with the
story by now epic added an option in the mobile versions of fortnite to buy
in-game currency V bucks directly from epic at a discount bypassing the 30 cut
in apple and Google's Payment Systems the message to Consumers look that swoop
to whoop dance emote could be cheaper if Apple and Google kept their grubby Paws
to themselves Apple and Google promptly booted fortnite from their app stores
for breaking the terms of service triggering epics epic trap observe now a
dramatic reenactment
they fell victim to one of the classic blunders and it really it hurt them
really bad look oh he's that's not gonna
heal up right away
these lawsuits would be dissected and argued about for months to come but this
is epic's case in a nutshell here is the market for mobile devices okay neither
Apple nor Google have a monopoly here they compete with each other that's fine
okay but epic argues that iPhones and
Android phones aren't just products they're also sub-markets where
developers compete to offer apps that's what those little squares are I can't I
can't draw down here Apple and Google do
have effective monopolies in their respective mobile app sub-markets and
they enforce this duopoly through anti-competitive action on iOS this
means the blocking of side loading and third-party app stores and payment
processors on Android using third-party app stores and side loading are allowed
but it often involves an onerous process full of scary warnings ooh on top of
that Google has been accused of making Shady deals to obstruct anyone trying to
take a shot at the big boss now Epic wants these barriers to competition
removed so they can launch a proper mobile version of the epic game store
which would presumably take the same 12 percent cut that it does on PC if that
route fails then they could settle for the right to use a third-party payment
processor in iOS or Play store apps
something that's actually already allowed if your app sells physical goods
or services like Amazon or Uber either of these options having your own app
store or payment processor would let epic and other developers avoid paying
the 30 cut or so epic thought legally
Apple may still have the right to a commission on in-app purchases as a way
to benefit from their intellectual property if the judge rules that way
so remember epic views an iPhone as
basically a little PC it's Hardware that
happens to run Apple's mobile OS a thought that makes about as much sense
to Apple as a drowning fish because to Apple iPhone is a singular entity
created when a meticulously crafted body is imbued with the breath of life that
is oh
it's iOS ah
what epic criticizes as restrictions are
in actuality features of the iPhone
those strict limits enable the iPhone security ease of use for both developers
and users and tasteful curation of the
vast chaos of Internet content Apple may
have a monopoly on the iOS apps distribution Market but they argue
that's not a valid sub-market when the
App Store is what makes iOS iOS
it epic says Apple's restricting user
Choice Apple says those users have already made the choice to buy an iPhone
you want to sideload get an Android don't buy a blender and complain that it
sucks a grilling steak we got a visual for that
ah gross now back to the story after
epic dropped their declaration of war there were multiple skirmishes epic
tried to mobilize its large mostly young player base against apple with a very
tasteful hashtag free fortnite tournament Apple tried to ban epic's
developer accounts which would have screwed over any game using Unreal
engines okay buddy was big mad and other
big tech companies were subpoenaed for documents leading to a delightful
exchange where Apple asked valve for price and sales data for over 30 000
Steam games and in-game items including every price change since 2015 and valve
was like LOL we don't have that you
think we're keeping track our CEO went full Lebowski and moved to Middle Earth
this isn't JP morganster this is a Wendy's many gamers cheered from the
metaphorical bleachers as one of the pioneers of the PC gaming industry took
on the Californian Tech cult thank you
those who weren't still pissed about epic games snagging exclusive games away
from Steam anyways but even if you think an epic win against Apple would be good
for the mobile industry it's important to note here that epics trap wasn't just
over the top as a legal strategy it was also a questionable move at best here's
what business attorney and my favorite YouTuber while I was researching the
story Richard Hogue had to say that epic had an expert that effectively said
Apple was okay before 2010 and even
though they didn't change their rules at all they didn't change what we're talking about here it became illegal
based on their operating system market share and that's a tough Pace to bring
see apple hadn't significantly changed anything about how the App Store Works
epic seemingly just decided at some
arbitrary point that the rules they had agreed to follow when they signed the
iOS Developer agreement were bad now in fact they were illegal so it's fine to
break them and withhold that 30 of fortnite Revenue however however as epic
was about to find out the law doesn't really care whether you think it should
be illegal to imprison animals in a pet store you can't break in and let them
loose in a shopping mall we talked about this Sarah but there
cute who are these people where do we find
these people
questionable legal strategy or no on May 3rd 2021 the trial of epic games versus
Apple finally commenced presided over by
judge Yvonne Gonzalez Rogers who had also adjudicated a couple previous cases
against Apple but I doubt she was prepared for the hundreds of fortnite
players who spammed the trials call-in line leading to the first 20 minutes of
the trial being dominated by gems like this oh yo we want mobile badge Bros
I don't care if Apple's saying you under the belt I don't care who wins just
bring mobile back oh yeah subscribe to my YouTube Justin XO yes and I subscribe
to you that's my favorite one fortnite battle
royale
yeah if Apple went out
Giovanni Gonzalez mobile I'm gonna play Travis Scott chill
oh those Rascals the call-in incident
was an omen this wasn't going to be some dry corporate litigation this was the
free fortnite lawsuit Addie Robertson who somehow had the mental fortitude to
live tweet almost the entire three-week trial described it thusly it was
complicated you'd have one day where people are talking about the subtleties
of whether the iPhone is like electricity and then another day where
Tim Sweeney just goes off about like the metaverse and his Ambitions for fortnite
we had one morning that was just a very long tutorial for how to use fortnite
from Apple weirdly enough especially in the early trial it was just a really
weird free-for-all but they would just go after completely random directions
like the point where like epic was worried that Apple was saying that one
of its characters was naked if it was a banana that wasn't wearing a suit and
that they were trying to make clear in court the character is not actually
graphically naked the trial also served as a sort of Gossip column for the tech
industry thanks to loads of confidential documents shown as evidence revealing
that Sony wanted money to enable crossplay and Microsoft got PC streaming
apps Shadow suspended from the app store oh honey
tea was spilled but of course there were some developments that were a bit more
on topic and usually made Apple look worse than epic for example epic thinks
Apple can afford to lower the 30 cut which makes sense given that the iOS app
store made an estimated 50 billion dollars in 2019 and 64 billion in 2020
but the reason those are estimates is because Apple lumps its App Store
Revenue in with its services Revenue an apple executive Phil Schiller refused to
get more specific telling the court that neither he nor anyone at Apple knows
whether the App Store is actually profitable although they don't deny that
it likely is okay Phil
testimony seemed even more suspect given internal emails from 2011 where he
predicted App Store competition would eventually make apple lower the default
30 cut and even suggested they lower it to 20 if they can maintain 1 billion in
yearly Revenue well I mean
you made it guys but epic faced scrutiny too like why
didn't they target the makers of gaming consoles which are also closed
ecosystems that take a 30 cut of all transactions and they don't even allow
side loading like Android epic says well consoles often don't actually turn a
profit so that 30 is all they get and they're gaming specific devices while
phones are pretty general purpose what they didn't say is probably closer to
the truth that getting fortnite banned from consoles would massively hurt
epic's bottom line and they have better relationships with those companies
anyways suing your friends usually makes
things pretty awkward just ask Andrew Garfield from The Social Network I was
your only friend get one friend did you see that movie
he was great in Spider-Man one of my favorite parts of the trial
was am I a meme yet Craig federighi's
testimony I don't know anything about what you're talking about epic pointed
out that Apple has no problem allowing side loading on macOS and in response
Craig threw macOS under the bus saying
there's a level of malware on the Mac that we don't find acceptable if you use
the same system on iOS it would get run over even worse than macOS you see
according to federigi the Mac is like a car capable of being safely navigated
through the apocalyptic Wasteland of malware on the Internet by capable
drivers who know the risks while the iPhone and iPad are devices children
heck even infants can operate like yes
this is good because it's the phone for infants so capable adults should just
accept that their thousand dollar phone is basically a Fisher-Price toy which is
an argument I feel like it just doesn't make outside this it is more than
willing to talk up the iPhone as being a full-featured work device and it's like
kind of weird to hear it make the argument that the iPhone really should
only be used by people who do not want to think about what they're doing with
their Computing devices stories like this coming out of the trial made Apple
look bad in the public eye but looking bad isn't illegal unless you show up to
my cocktail party in Crocs and a turtleneck I will press charges when
judge Rogers finally handed down her verdict on September 10th 2021 the
ruling was described as either a crushing defeat or a resounding victory
for either side depending on which article you read see apple won on all
counts meaning epic would have to pay millions of dollars for breaching the
App Store rules but Rogers found Apple
in violation of California's unfair competition law for its anti-steering
rules and ordered Apple to allow developers to put buttons external links
or other calls to action directing users to payment methods other than Apple's
in-app purchasing you did it Tim Sweeney
nice one Mr Sweeney you're not happy about this
uh the iPhone isn't a PC
it's still an iPhone as expected both epic and apple appealed the ruling since
a gigachad corporation doesn't just lay down and accept a split decision because
they're not a beta okay okay epic did pay Apple what they owed
but Apple requested a stay on the buttons order which was eventually
granted one day before they would have been forced to make changes to the App
Store meaning as of this moment this
trial has directly changed basically nothing fortnite is still
banned from the App Store and both parties are now waiting for the next
hearing although fortnite is sort of back on iOS right now in the form of a
closed beta for the touch controls version available on the GeForce now web
app it has got to be a frustrating situation for epic but as many legal
experts have pointed out it's not a surprising outcome because epic isn't
defending itself from a bear attack it went up to the bear asleep in its cave
and jabbed it in the eye so epic comes in with a little bit of that baggage
where they say we had to breach this contract in order to bring this case and
the judge tells them three separate times no we've got tons of law that says
you don't have to breach this contract to claim the contract's illegal you can still operate under the contract and
have this case and so when you complain about all these fortnite players that
don't get to play it on iOS and I tell you you don't have to breach this contract you can go back to normal and
also if you're really worried about Apple stealing your money we can put that money in escrow and nobody gets
that money until the court case is settled what do you think epic and epic says no oh okay to contrast my boy Hogue
brought up Microsoft and NVIDIA who had their game streaming apps for iOS
rejected on pretty nebulous grounds apparently it's fine for Netflix to
stream a library of movies and shows but if you're streaming games each one must
be individually listed as App Store titles unless you're streaming those
same games from your own local Xbox console or PC that's that's way
different and totally fine hey have you considered an apple arcade subscription
instead see that wrongful rejection case
would be a solid one to bring to court but why go through the trouble when
you've got an epic games in the mix what we've seen instead is that Microsoft is
writing piggyback on Epic and saying well if epic wins that's fine with us
because we're putting game pass on everything and if they don't win we've got our Xbox and so Microsoft is playing
a very strategic game with what they're doing with respect to Epic and playing
it either way but I think they would have been a stronger plaintiff if they
wanted to be it seems that rather than getting their own hands dirty bigger
companies like my Microsoft and NVIDIA are perfectly happy to let Firebrand Tim
Sweeney try to take the world's most profitable company down a pig which
makes Apple's accusations that Microsoft is the real brains of epics operation
sounds slightly less paranoid but why is
Mr Sweeney such a perfect character to use for this cage match the answer isn't
his Advanced moveset it's his interesting backstory as early as 2017
Tim Sweeney was using his company to criticize the 30 cut taken not just by
Apple and Google's Mobile stores but by other software platforms like steam a
critique that was shared by most game developers and it wasn't all talk either
the epic game store was launched in 2018 with only a fraction of steam's
functionality but with a default 12 Revenue cut in an obvious attempt to
disrupt valve's dominant position in the PC gaming industry angering many gamers
who actually like having most of their games all in one place thank you very
much but also exerting pressure on valve who lowered their cut of steam revenue
for games already making a lot of money and we've already said epic's double
lawsuit attack was a weird move but it
wasn't actually its first attempt to disrupt Mobile gaming it initially tried
to do the same thing that basically every major game publisher has done on
Windows released their own game launcher as a direct download outside the
official app store should be no problem as long as Android is the open source
tinkle-friendly OS it claims to be right
yeah no according to epic's legal filings
citing Google's internal documents Google was so focused on preventing Epic
from launching fortnite outside the play store that it formed a fortnight task
force that met daily epic says Google
pressured OnePlus LG and Samsung to back
out of deals to pre-install the epic games app on their phones and Google
also publicized a security flaw found in the fortnite Launcher app even though
epic was already rolling out a fix Google even considered buying out the
smaller company epic had had enough in
April 2020 just a few months before the V bucketing they finally gave in and
released fortnite on the Play Store I mean at this point faced with one mobile
app store that made it impossible to compete and another that made it
practically impossible you'd think old Tim would give up
huh yeah right Tim would make the iPhone
into a PC even if it meant embarking on one of the most dangerous missions ever
attempted by man
bam in July 2020 a document is presented to
the epic games board of directors it describes project Liberty a multi-stage
plan to end the anti-competitive 30 tax
on the iOS app store and Google Play Store by embarking on an aggressive and
sustained legal and media campaign until platform fees are lowered apps are
allowed to use their own payment platform or third-party app stores are
allowed on mobile epic acknowledges they might lose revenue and access to their
customers if fortnite is banned from the App Stores and that apple and Google's
retaliatory PR campaigns could turn players against epic but those are all
risks epic was willing to take because the time is now
but why is the time now the thing that
mostly I keep coming back to is that whatever epics motives there are a bunch
of other companies other activists and Regulators that all have really similar
complaints against Apple even if you think that epic is acting completely
cynically it's a case that has relevance to so many parties outside epic that
it's worth paying attention to see the point in time that epic made their move
wasn't arbitrary at all 2020 had seen a
rising wave of antitrust investigations into Google Apple and Facebook and
project Liberty makes it sound like epic wanted to get ahead of the bandwagon and
have a hand in shaping The Narrative rather than being at the mercy of some
eventual government regulation the other thing driving epic to make their move
was the hot buzzword of 2021 the
metaverse what is it even the people riding an
unhealthy amount of articles about it don't know but Tim Sweeney does it's the
future of fortnite and a way for epic to make back some of the ship loads of cash
they invested in their game store oh look I mean they want money like
obviously their company they want money like I don't know I think maybe the most
sort of revealing moment is that they were talking about how they want to
build fortnite into a metaverse and eventually that means they want that
metaverse to involve a whole economy that's like Creator based that people
paying each other and if you think that epic wants to create the social space
that comes after the web or the internet having to give Apple a cut of that is
really not good for them if you're nerdy enough to be watching this far into the
video you probably know that the term metaverse refers to a persistent virtual
Universe with interconnected 3D spaces serving as an analog to the real world
but for everyone else the metaverse is
the internet just deeper in the future
you'll still interact with the internet through web browsers apps and games but
you'll also do it through VR and AR metaverse platforms made by Facebook I
am not calling the meta or apple or if
they get what they want epic games one could argue the closest thing to a
metaverse we have now is the absolute phenomenon Roblox which is made up
entirely of a Marketplace of user generated experiences that they suddenly
stopped calling games during apple and epics trial because under the App Store
rules games like fortnite can't host a
Creator Marketplace leading to a very interesting and very subjective debate
over what a game even is in the year of
Our Lord 2021. under the current App Store Paradigm 30 of every transaction
made by iOS users in epics fortnite metaverse would go to Apple and that
epic games cannot abide seeing just how
much money is on the line for epic here make makes it easier to understand why
they would go to such extreme lengths in a fight against much more powerful
opponents but that once again leads us to the question is epic just in this for
the money do you wait to do what you claim to think is the right thing until
it's most advantageous to you I think they are marketing their product and
their services their marketing their personalities and their CEO and they're
also marketing to legislatures to say hey look at how this is going Apple
might win on the law as it stands now it's time to change that law that might
be their end game because you only need to win in a smattering of jurisdictions
to make it very difficult for Apple or Google to operate a unified platform
without taking into account these various jurisdictions like I said in my
deep dive on Star Citizen let's save that one for later if you haven't seen
it no one can truly know anyone else's
real motivations epic may just be trying
to grab all the legendary loot on the map but the fact remains that they
didn't manufacture all all that negative sentiment towards apple and Google's
Mobile payment to wobble both from the public and other companies that have
been burned by Apple's policies email services protonmail and base camp have
criticized Apple's tendency to say they want everyone to play by the same rules
but then make special deals with big companies and block app updates from
smaller developers who are using the same non-apple billing tactics as
Netflix a little company called Floatplane comes to mind you've got companies
like tile and developers like Costa eleftherio who created Innovative
products that were made obsolete when Apple released their own version this
happens so often there's a word for it sherlocking and then you got big boys
like Spotify who filed an Anti-Trust complaint with the EU called Apple's
payment restrictions anti-competitive abuse and made a whole website dedicated
to charting Apple's inability to play fair Microsoft is also clearly an epics
Camp copying their 12 cut in the Microsoft store and suggesting that
governments investigate Apple and Google for antitrust with which is especially
Rich when you remember that Microsoft narrowly avoided being broken up after
it was found guilty of using Monopoly power to suppress competition with
Internet Explorer in 2001. they must have a short memory because a little
while ago they were trying to force Windows users to use Edge once again see
there's no good guys here but with so
many rooting against Apple the End Game Richard was talking about may be on the
horizon because even before this case's verdict was handed down Apple made a
number of incremental changes to its App Store it reduced its App Store cut to 15
for developers making less than one million dollars a year which affects
less than five percent of Apple's App Store Revenue but they like fine a
settlement from a different lawsuit led to Apple allowing developers to email
their users about alternative payment options South Korea passed a law forcing
Tech platforms to allow third-party payment options in their app stores and
apple allowed reader apps like Netflix and Spotify to link directly from their
app to their website to pay for a subscription something that they just
kind of hinted at before like you can't pay here well where should I pay I'm
sure you could figure it out Google has made similar changes before their trial
has even begun they've got their own Small Business program they dropped
Google Play service fees to 15 for all subscriptions and even lower for
developers who optimize their apps for multiple device form factors so that
according to Google 99 of developers qualify for a service fee of 15 or less
Google also complied with South Korea's third party payments law before Apple
did although they still take a cut albeit smaller of Google Play
transactions handled by a third party which is also how apple is expected to
handle it Apple's still taking 27 percent of
third-party payments in the Netherlands meanwhile these slow turning wheels of
government action on antitrust are spinning a bit faster now with
challenges to NVIDIA's acquisition of ARM which actually may have already been
canceled by the time this video comes out there's also challenges to facebook slash meta's acquisition of oculus and
collusion with Google on digital ads popping up alongside proposed bills that
would limit the ways big Tech can give their own Services preferential
treatment so whether or not epic ends up
directly benefiting from this lawsuit the wins are changing and it is still
very much the beginning of this fight will it end with iOS and Android
becoming more like macOS and Windows but squished into a tinier device
I don't know there's still the Epic versus Google trial which honestly epic
probably has a better shot in since Android is at least supposed to be an
open platform so cheer up Tim you might
just destroy the abstract concept of an iPhone yet
keep calm tinkle on
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uh was this one longer I don't know I think it might turn out to be longer
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