Epic Games vs Apple Inc.: Why Apple may win this legal skirmish but lose the war

Epic Games vs Apple Inc.: Why Apple may win this legal skirmish but lose the war

September 29, 2020 Off By administrator

Editor’s note: WRAL TechWire asked a number of Triangle area thought leaders to discuss the possible implications of Epic Games’ lawsuit against Apple and the battle over mandatory fees charged by Apple’s app store. Veteran technology focused attorney Jim Verdonik is cofounder of Innovate Capital Law.

RALEIGH – I have represented technology and computer games companies for several decades.  So, like most people in the industry, I’m closely watching while the courts decide the fates of thousands of app developers and tens of millions of consumers around the world.

The next round in that battle will play out this week in the U. S. District Court for the Northern District of California in the case Epic Games vs Apple, Inc.  Epic Games also has a similar lawsuit against Google, but I’ll focus on the Apple law suit.

Background

Since its early days as a pioneering start-up that ended Microsoft’s and IBM’s monopolies, Apple Inc. has transformed itself into a worldwide money maker with its own monopoly pricing that dictates terms and conditions to thousands of app developers around the world who want access to the millions of high end customers who use apple devices and software.

Benji Jones, left, and Jim Verdonik. (Photo courtesy Innovate Capital Law)

If you are a consumer that owns an Apple device, in addition to over paying for the device you use, Apple Inc. owns you, because you are locked into Apple’s proprietary iOS operating system that runs all of Apple’s mobile devices.  Since Apple has the only key to that operating system door, Apple sells access to you and all other Apple device owners to thousands of app developers around the world.

All Apple asks for opening the door is 30% of the revenue the app developers generate from sales to Apple customers.  Google charges the same 30% for apps downloaded into devices that utilize its Android operating system.

Why would an App developer choose to give up 30% of its revenue?  Because Apple and Google design their products so that apps can be downloaded onto their devices only if the app is downloaded through their respective App Stores.

Epic Games vs. Apple: Why this big lawsuit is important to all emerging companies – and us

That’s a lot of money the app developers are giving up for sales made through Apple’s app store.  But it get worse.  Maybe a developer wants to sell some products through Apple’s app store to make an initial sale to Apple customers.  But Apple also requires developers to pay Apple for so called “in-app” sales of products the developers do not want to sell through its app store.  For example, upgrades and access to specific tools and features that make computer games more enjoyable.  Apple claims that this requirement to sell through its app store is to minimize security issues.  Maybe that’s fair.  Maybe consumers want that security.  But did anyone ever ask you as a consumer whether you wanted to pay for that…

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