They will lose as the TOS clearly indicates the rules and Epic agreed to them. This is basic contract law. Apple has a massive team of experienced lawyers.
The idea that a large platform like iOS can only have apps loaded through a market place controlled by the hardware manufactured is clearly in violation of the spirit of anti-trust laws.
However there's no legal precedent on this because no one with deep enough pockets to fight Apple has been angry enough to do it yet.
Meaning this could be great news for everyone if this goes to court and Apple loses as they should.
I don't think that's true. Almost no one is complaining about Microsoft/Sony/Nintendo's "monopolies" on what software runs on their video game consoles.
The big differentiator is that phones have become the most frequently used personal computing device for many people, and we expect the freedom to use it how we want.
It seems I had swapped Tengen and Accolade in my memory. I am thinking of Sega v. Accolade.
The Ninth Circuit reversed the district court's order and ruled that Accolade's use of reverse engineering to publish Genesis titles was protected under fair use, and that its alleged violation of Sega trademarks was the fault of Sega.
Both of those cases were about whether reverse engineering violates copyright law, they're not really relevant to the antitrust claims Epic is alleging in their lawsuits.
I suspect Apple will argue the oppose. The "freedom" argument has been common in the perennial "iOS v Android" discussions, from which I'd note that iOS appeals to many because it's locked down; it's easy to use and it's not junk. The Play Store was a mess last I remember it. Some consider that freedom, others dislike it. It's a brand perception thing, and I wouldn't be surprised if Apple makes the same point, that an open platform would harm their brand reputation.
Relation between console makers and game studio is too different to directly trigger the same issues (Atlus wouldn’t sue Sony For instance).
But the situation being almost the same, a ruling in one would trigger a tidal wave in the other.
There was a fun moment in last year’s vergecast interview with a lawyer on the App store issue, also related to Epic I think. The case of console stores was brought to the conversation, and the lawyer bailed out of it pretty fast with a “there might be similarities but we need to look deeper before saying anything, let’s put that aside for now” kind of answer.
> Almost no one is complaining about Microsoft/Sony/Nintendo's "monopolies" on what software runs on their video game consoles.
In general, those console platform owners have been much friendlier to publishers than Apple (and maybe Google) since game publishers generally have much more negotiation power against console platform holders. Nintendo's primary weak point has been lack of 3rd-party games. MS and Sony compete with each other to gain more exclusive offers and they even provide substantial subsidiary to developers. If you want to enforce your own arbitrary rule at the cost of losing CoD, I don't think it's going to be a good trade-off. Creative contents are usually not replaceable and publishers don't really have incentives to attack game platform holders in this dynamic.
The same thing doesn't really apply to App stores since 1. the upfront cost for buying a phone compared to usual apps is much higher (>100x), especially for the premium phone comparable to iPhone, while it's <10x for usual consoles 2. Apple (and Google) also has their own alternative services for many popular apps so hurting competitors by setting arbitrary rules is actually beneficial for them. In short, having a monopolistic status itself is not problematic but exercising it is.
So I'm trying to understand your point here. If a console maker charges 10% of revenue it's OK, but if Apple charges 30% it's illegal? And a court should decide the percentage allowed?
I'm no fan of Apple -- they engage in massive tax avoidance, labor arbitrage, and are just too big for my taste. Same criticism of Google. And Facebook. But you don't go from emotion --> must be illegal. There has to be some reasonable standard you can apply that will make sense across time and across companies/industries. What is that standard?
Perhaps congress should legislate the share of revenue that a platform is allowed to take. Not being ironic; if we are going to regulate this, let's do it with lawmakers instead of courts.
> If a console maker charges 10% of revenue it's OK, but if Apple charges 30% it's illegal?
There no such clear cut on what is acceptable or not. In fact, typically console makers charges much more than 10% but not much companies are complaining about that because it's more negotiable compared to the app store situation. The court may decide how to remedy this, but the decision won't be made simply based on the app store cut but take care of other contexts as well.
The real issue is, Apple has designed their product in order to retain complete control on potential customer facing interactions and is blatantly exercising their market power. The game platforms are usually not in a position to do so. Android might be slightly better but IMO this also needs to be addressed.
> There has to be some reasonable standard you can apply that will make sense across time and across companies/industries. What is that standard?
The existing antitrust framework is already capable of handling this app store situation; even assuming Apple is not a dominant player (which is a very optimistic assumption in favor of Apple; app store is likely a monopoly based on hypothetical monopolist test), tying iPhone, App Store and its payment module already brings significant legal risks. Though it still needs to evolve to address other situations such as Amazon or Google.
> The real issue is, Apple has designed their product in order to retain complete control
How has apple done this in a fundamentally different way from sony? I'm not seeing the difference here, which means I'm not seeing what you consider to be the real issue. Care to elaborate?
> The existing antitrust framework is already capable of handling this app store situation;
I think you are going to be dissapointed. Maybe EU antitrust would adopt more of a philosophical criteria for fairness, but US antitrust is unlikely to side with Epic here.
> US antitrust is unlikely to side with Epic here.
Having done a little digging into the relevant case law I agree with your assessment, US courts have generally been very reluctant to find antitrust violations in aftermarket scenarios where the customer was fully aware of aftermarket limitations before purchasing a product, had the opportunity to buy an alternative product without such limitations, and proceeded to buy the original product anyway.
I think the most likely outcome is Epic's case is dismissed based on failure to establish that "iOS app distribution" is a separate and relevant market for antitrust purposes.
I think everyone is just assuming that Epic will win. I don't think that's the most likely scenario. The US is a very different legal and social environment than it was 30 years ago. More likely it's going to set a precedent that device makers can do exactly the things that Apple is doing, and more than that, they'll become the norm and you can kiss any "open" hardware platforms goodbye.
While I agree with Epic's aim with this lawsuit, one should note that this has no basis in anything except wishes:
> The idea that a large platform like iOS can only have apps loaded through a market place controlled by the hardware manufactured is clearly in violation of the spirit of anti-trust laws.
It may go down that way or not. It is unwise to predict the outcomes of lawsuits of this magnitude. Epic is no small insignificant company with a public defender. Also this suit is probably more of a signal that they mean to have a fight. Epic is not without significant extrajudicial leverage in this situation.
It is likely extremely difficult to win such a suit based on challenging the terms of an agreement that you agreed to repeatedly. Every single change to the TOS for a developer account requires acceptance. I doubt there is any part of this agreement that Apple did not write with this exact circumstance in mind. No matter what Epic challenges based on this argument in the end they will give in and look like fools. Maybe if they are lucky Apple will lower the % by a little. This is not cutting edge law here.
I'm not sure why you feel qualified to comment on the legal aspects on this case based on just a primitive understanding of offer and acceptance (which isn't the point of contention here). You can't have an enforceable contractual term that is illegal, even if both parties have agreed to it. The legal issue is whether Apple's ToS contravenes some aspect of competition law.
IANAL but my understanding of antitrust cases is that voluntary consent to a EULA is indeed a relevant factor in determining market power for antitrust claims. See the discussion in Blizzard Entertainment Inc. v. Ceiling Fan Software LLC:
> Blizzard raises this argument in its motion, contending that Defendants cannot establish antitrust claims based on its users' voluntary consent to the EULA and TOU. (Mot. Br. 22–23.) Although Blizzard does not argue this point in the market power analysis, the Court finds that this discussion is applicable to whether the market power requirement is established. Blizzard cites Newcal, Queen City Pizza, Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 441 (3d Cir.1997), and Apple Inc. v. Psystar Corp., 586 F.Supp.2d 1190, 1201 (N.D.Cal.2008), to show that Defendants cannot base its claims on the aftermarket restrictions. ( See Opp'n Br. 17.) These cases explain that the law prohibits an antitrust claimant from asserting an antitrust claim “resting on market power that arises solely from contractual rights that customers knowingly and voluntarily gave to the defendant” when they purchased the initial tying product.
If I give you a contract stating that you allow me to shoot you in the head, you sign it, and I pull the trigger, I still go to prison for murder. Whether or not you "agreed" to something is irrelevant if the contract cannot be legally enforced, which is what Epic is hoping to prove with this lawsuit.
However, the contract is the only thing which allows Epic to publish in the store. So it is not enough for them to simply get terms they don't like to be declared illegal, they still would have to get the terms they like into the contract.
If Apple changed their stance to "all services and digital goods associated with your app must included in the original purchase price", that might meet the court's requirements for legality but it would leave Epic without their current revenue stream.
