Apple has filed a countersuit against Epic over the latter’s attempt to circumvent App Store rules and avoid paying millions in fees. The lawsuit alleges that Epic is deliberately in breach of contract and asks the court to award damages and prohibit Epic from attempting anything like this again.
A brief refresher: Epic in mid August slipped in a new way to buy in-game currency for Fortnite that skipped giving Apple its 30% cut, while simultaneously launching a PR campaign calling the company a monopoly and the App Store rules unjust. Apple responded by banning Epic’s accounts from the App Store, making it clear that this action could be avoided by Epic simply removing or adjusting the in-game store. Epic sought to have a court reverse its ban as an unfair business practice by a monopoly that would be proved as such, but only succeeded in having accounts unrelated to Fortnite unlocked.
Epic now seeks to show that Apple is a monopoly and its practices should be deemed unlawful, and Apple aims to show that’s untrue — but at the same time, has now filed this suit alleging wrongdoing by Epic.
“Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store,” writes Apple in its suit.
“While Epic and its CEO take issue with the terms on which Apple has since 2008 provided the App Store to all developers, this does not provide cover for Epic to breach binding contracts, dupe a long-time business partner, pocket commissions that rightfully belong to Apple, and then ask this Court to take a judicial sledgehammer to one of the 21st Century’s most innovative business platforms simply because it does not maximize Epic’s revenues.”
It would not be productive to go over the case in detail just yet, as we are still far from the point where all the companies’ various claims and counter-claims can be added up and compared. It will be weeks before even the preliminary injunction against Apple is decided, and much paper will be added to the pile before then.
The argument comes down to whether a company like Apple, which certainly exerts total control over its hardware-software ecosystem, qualifies as a monopoly. If it is, then the business practices Epic defied may be unlawful and therefore its flouting them will have been justified. If it isn’t, the countersuit may put Epic in rather a bad spot — not just owing Apple millions but unable to pull this trick again.
The burden of proof on Epic is quite serious here, and current antitrust doctrine doesn’t seem likely to define Apple’s App Store (and Google’s — which Epic is also suing along the same lines) as the act of a monopolist. But even if it fails to prove it and is handed a setback in court, Apple being publicly dragged as a potential monopoly, and having the claims evaluated by a judge — even skeptically — is not a good look.
Apple’s countersuit was inevitable given Epic’s high-profile and pretty much admitted breach of contract, but it raises the stakes nevertheless. The company has not specified the scale of the damages it seeks, but eight digits is probably a safe bet. You can read Apple’s suit below.