Thread by @nickstatt

Epic Games v Apple kicks off this morning at 11:15AM ET. Here’s a guide on all the context surrounding Fortntie’s removal, the key witnesses in play, and core arguments you need to understand what’s at stake here. protocol.com/apple-epic-tri…

Maybe I’ll learn how to spell Fortnite correctly the first time by the end of this trial.

Epic v Apple Day 1 kicks off shortly. Today will mostly be opening arguments and then testimony from @TimSweeneyEpic, with some potnetial further witnesses after. But more or less a setting of the stage from both sides.

This is hilarious. It sounds like a bunch of very young gaming/Fortnite fans are on the courtroom access phone line just shouting at each other, like it’s a live Discord channel. The listen-only mode does not appear to be working.

The biggest thing these kids seem to care about is whether Fortnite is coming back to the iPhone. “Tim Sweeney better know what he’s doing,” one said.

Seems like they could care less about the App Store or antitrust issues. Go figure.

"The trial is supposed to start in three minutes. Why haven’t they figured this out yet?”

"Bruh bring mobile back.”

"That’s all we want man, bring back mobile.”

“Can you hear us judge?"

Not sure why the court has not muted everyone but I’m enjoying this.

Shoutout to Justin XL, who’s getting a lot of free advertising for his YouTube channel right now by just shouting “subscribe to Justin XL” into the Epic v Apple courtroom access line

Okay, we’re finally underway here in Epic v Apple Day 1 after a pretty chaotic 45 minutes of audio issues. Epic’s lawyers are givin their opening argument, hammering hard Apple’s walled garden approach to iOS and the App Store.

Epic’s lawyers laying out early evolution of the App Store: "When the App Store launched in 2008, Apple did not require a particular payment processing solution. It obtained value from the sheer number of apps entering the store. More apps meant more reasons to buy an iPhone."

"But an opportunity to make even more money in the App Store became clear. Developers could enable in-app purchasing opportunities, and Apple wanted a piece.”

The secret to doing so? Mandatory use of IAP, Apple’s exclusive payment processing system, Epci says.

Epic lawyer hitting Apple for the industry standard argument. says "the evidence the court will hear… will demonstrate otherwise” on the 70-30% split.

"Among other reasons, unlike Apple, other platform owners engage in negotiation.”

"Apple has started to tell the world… that it doesn’t know what the App Store’s rate of return is. The evidence will show this is not true. We have documents… that lay out the profitability of the App Store.”

Epic’s lawyer cites the recently revealed 78% profit margin figure.

"The basic security tool Apple designed for macOS can easily be implemented to ensure iOS security in a more open distribution model.”

Epic basically argunig the security justification for the 30% cut is nonsense, and that it was a purely economical/profit-driven move.

"A developer like Epic could not leave the iOS platform even in the face of a price increase without suffering a loss of a profit.”

Epic now moving onto its core argument: that iOS app distrubition is a relevant market Apple illegally monopolizes using its walled garden.

Epic’s lawyer now digging into the web app vs native app comparison, citing lack of ARKit and push notification support and poor performance. Essentially, if you’re not in the App Store, you’re at a severe disadvantage. There is no alternative.

Epic’s lawyer ends opening arugment. Evidence will show "unambiguously that Apple is a monopolist,” and that "Epic has met its burden on all claims."

Apple’s lawyer comes out swinging in own opening argument.

"This case is a fundamental assault on Apple’s secure and integrated ecosystem."

"Epic, a $28 billion company, has decided it doesn’t want to pay for Apple’s innovations anymore.”

Apple’s lawyer says “since the App Store first opened its doors in 2008, more than 180 billion app downloads. This is kind of output antitrust laws dream about.”

Apple very much trying to combat many of Epic’s claims by reframing them as graver threats to the iPhone.

Apple casting Epic’s campaign against Apple has a way to cut costs so it could become a middleman itself.

"Rather than investing in innovation, Epic invested in lawyers and PR consultants.”

Apple’s lawyer is laying out the facts of Project Liberty, Epic’s multi-stage campaign to stick it to Apple and the App Store.

Apple very much wants this to seem like a big conspiracy Epic conceived to pivot its business and get Apple to pay for it.

This is really key. Apple’s lawyer says "Apple did not establish the 30 percent,” but rather game companies did back around 2003 when digital distrbuition was starting.

“30% was, as Epic’s integrate documents will show, industry standard."

Apple says “devs used to pay 70% for shrink-wrapped boxes that sat on shelves,” and that when Mr. Sweeney “distributed games in the 1990s... he charged 60%,” which he described as a "fair royalty.”

The 70-30 history is relevant because Apple needs to show it wasn’t arbitrary.

"Some of the world’s most sophisticated companies are launching their newest and most sophisticated products through the web browsers,” Apple’s lawyer says, citing Stadia, Amazon Luna, and GeForce Now.

Uhhh not sure that’s a slam dunk. They all would prefer a native iOS app.

"In real life… Epic has recognized that consumers do substitute across game platforms.”

Apple trying to poke holes in the switching cost argument, saying palyers can easily migrate to all platforms and that Fortnite in particular makes that easy with cross-play and progression

Apple says you can buy Fortnite v-bucks on the web and can also spend that currency across paltforms, without giving a cut to Apple.

But leaving out of course App Store rules that prohobit advertising alternative purchase options.

Apple’s laywer has resumed its opening argument after the courtroom pause. Now arguing the complexity and cost of licesning Apple IP.

“Third-party apps, app stores, and payment systems can only exist on iOS with Apple’s IP, so Apple would be forced to license to this IP.”

Apple now tackling the security justification and the comparison to macOS.

"Why can’t you just protect the iPhone like you protect the Mac?”

The iPhone is not a Mac, Apple argues, adding “the bad actors are going to have a field day” if iOS is opening up.

"Not only is IAP not a product, it’s often not required. It’s the developers choice how to monetize their apps,” Apple’s lawyer says.

"Epic knows this because it monetizes Fortnite outside IAP.” Characterizes Epic’s lawsuit as more purely an “attack” on Apple’s 30% commission.

Apple casting this in apocalyptic terms for platform owners: "If Epic prevails, other ecosystems will fall too."

"Sony, Nintendo and Microsoft all operate similar platform models to Apple,” they add, and “there will be serious ramifications for those businesses as well.”

That wraps Apple’s opening argument. Now @TimSweeneyEpic is called to the stand as the first witness of the trial.

Very difficult to hear Sweeney, as I hear he’s wearing a cloth face mask and also the audio situation in the courtroom is less than ideal. Doing our best to understand what’s being said.

"Apple’s policies harm every facet of our business,” Sweeney says. He says the company’s policies touch “Epic’s ability and access to APIs” for the Unreal Engine, for iOS and macOS development, and a number of other areas.

"Fortnite has a mode called Party Island,” is not a sentence I expected to ever hear in a US courtroom.

Sweeney just asked to define the metaverse.

"The metaverse was defined in early science fiction literature and novels such as Snow Crash.” Sweeney the metaverse is a predominantly social experience.

Sweeney says Fortnite has more than 400 million players. I believe that’s a new figure. Last we heard was 350 million in May 2020. theverge.com/2020/5/6/21249…

An update: Sweeney is currently answering very basic questions about the fundamnetals of Fortnite, Epic, and the App Store prior to cross-examination from Apple counsel. We’re not going to get any blockbuster testimony here, not yet.

Sweeney says Epic made $5.1 gross revenue in 2020, which assuming Fortnite revenue (which totaled $9 billion in ’18 + ’19) fell due to declining popularity and lack of iOS / Android support that means Fortnite is still a huge chunk of Epic’s sales.

.@TimSweeneyEpic’s testimony has resumed after court recess, and now we’re jumping right back into a riveting discussion about native apps and Fortnite’s multi-platform interoperability.

Sweeney now detailing Fortnite cloud streaming via Nvidia’s GeForce Now, the only way to play Fortnite on the iPhone or iPad right now. He essentially says it’s bad due to latency and worse graphical performance.

Sweeney is asked if there’s different between the 30% commission paid to console makers and 30% to Apple?

He goes on to argue that the console business model justifies the cut due to hardware margins and partnerships/negotiations with Microsoft/Sony/etc.

Apple’s counsel laying out the scope of Fortnite’s business on console: $6 billion on PlayStation through the end of 2020, and $3.5 billion on Xbox.

And Apple hammering Sweeney about lack of concern over giving 30% to MSFT and Sony.

Staggering how much more sucessful Fortnite is on PlayStation than Xbox. Explains Sony’s deep investment in Epic and its willingness to bend on things like cross-platform.

Fortnite has been a multi-billion dollar business for Sony just through its PS Store commission.

"What does it cost Epic to generate a v-buck?”

🤔