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Apple and the maker of 'Fortnite' are facing off in an epic legal battle. Here's what the companies are fighting about and what to expect in the courtroom. (AAPL)

Published by Business Insider on Mon, 03 May 2021

<p><img src="https://static4.businessinsider.com/image/602ce7dd5847630018323696-2000/Tim Cook Tim Sweeney 2x1.jpg" border="0" alt="Tim Cook Tim Sweeney 2x1" data-mce-source="Apple/Rachel Luna/Stringer"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Apple and the maker of "Fortnite" are going to battle in a California courtroom beginning Mondaythe culmination of a year-long spat between the two American business giants.</p><p>Epic Games filed suit against Apple last summer after its hit game, "Fortnite," was pulled from Apple's App Store.&nbsp;</p><p>Apple says it pulled the game because Epic violated the terms of its developer agreement when Epic implemented a payment system in the game that enabled players to circumvent Apple's App Store. Epic says the App Store is a monopoly, and argues that iPhones and iPads are no different from computers.</p><p>The in-person trial begins on Monday at the US District Court for the Northern District of California in Oakland, California, and Judge Yvonne Gonzalez Rogers will oversee approximately three weeks of hearings before a verdict is rendered, according to court filings.</p><p>Across those three weeks, Apple CEO Tim Cook and Epic Games CEO Tim Sweeney will both appear on the stand for questioning, as will a smattering of tech execs from companies including Microsoft and Facebook who are set to appear as witnesses.&nbsp;</p><h2>What are Apple and Epic fighting about'</h2><p><img src="https://static4.businessinsider.com/image/5f455af089aff80028ab7d78-1544/epicpayappleios.jpg" border="0" alt="Fortnite (Epic payment through iOS)" data-mce-source="Epic Games"></p><p>On August 13, 2020, "Fortnite" players on iPhone and iPad started seeing a new payment option in the game.&nbsp;</p><p>The new option said "Epic direct payment," which is exactly what it sounds like: Instead of paying Apple, then Apple paying "Fortnite" maker Epic Games, you could pay Epic directly <em>and</em> it cost less for the same thing.</p><p>By doing this, Epic intentionally circumvented paying Apple its cut of goods sold through their digital storefronts: 30%, an industry standard for digital platform holders like Apple, Google, Microsoft, Sony, Nintendo, and others.</p><p>It was this move that is at the heart of the fight between Apple and Epic.&nbsp;</p><p>Some of the biggest app makers for iPhone and iPad's App Store have publicly pushed back on the cut Apple takes from virtually all transactions conducted on its mobile devices. From Spotify to Tinder, <a href="https://www.businessinsider.com/apple-developer-rage-30-percent-app-store-tax-2020-6">app publishers are increasingly critical of Apple's so-called "App Store tax."</a></p><p>With Epic's payment system update to "Fortnite," and the company's <a href="https://www.businessinsider.com/fortnite-epic-games-apple-battle-1984-parody-2020-8">subsequent PR blitz</a> painting Apple as monopolists, Epic made an intentional move to push back on that App Store standard. With its lawsuit, Epic is taking that battle to court.</p><h2>What is Epic Games' argument'</h2><p><img src="https://static6.businessinsider.com/image/5f35abf3b4bb1c001df53312-1925/Screen Shot 2020-08-13 at 20739 PM.png" border="0" alt="Fortnite Apple ad parody" data-mce-source="Epic Games" data-mce-caption="Fortnite parodied Apple's famous 1984 ad"></p><p>In short, Epic Games accuses Apple of operating a monopoly with its iOS App Store.</p><p>The smartphone is an "essential computing device," Epic CEO Tim Sweeney argued <a href="https://www.businessinsider.com/epic-fortnite-ceo-2-am-apple-email-declaring-war-2020-8">in a letter to Apple leadership last summer</a>, and opening up the platform would give iPhone users, "the rights and freedoms enjoyed on the world's leading open computing platforms including Windows and macOS."</p><p>In a better world, Sweeney argues, iPhone users could choose from a variety of App Stores with competing libraries of content and salesa world where games like "Fortnite" could offer players the ability to pay less by purchasing stuff directly from Epic.</p><p>"Ending these restrictions will benefit consumers in the form of lower prices, increased product selection, and business model innovation," Sweeney said.</p><h2>What is Apple's defense'</h2><p><img src="https://static5.businessinsider.com/image/5feb5a5eedf8920018094090-2400/AP19082268576898.jpg" border="0" alt="Apple CEO Tim Cook in China, March 2019" data-mce-source="AP Photo/Ng Han Guan"></p><p>For its part,&nbsp;Apple argues that Epic's foundational assertion is incorrect: The App Store is intentionally operated as a "walled garden," the company says, because it protects users from harm.</p><p>Without Apple vetting each app before publishing, "the health of Apple's ecosystem" is at risk, Apple Chief Legal Counsel Douglas Vetter said last August.</p><p>Moreover, Apple argues that Epic knowingly, intentionally violated developer agreements it signed. As such, pulling "Fortnite" from the App Store is within Apple's contractual rights, the company argues.&nbsp;</p><h2>What could happen'</h2><p>It's unclear what the result of the trial will be, but it's clear that Judge Yvonne Gonzalez Rogers saw enough nuance in the case to send it to a jury trial.</p><p>"Real people" should decide the fate of the game, <a href="https://www.businessinsider.com/judge-apple-legal-fight-with-epic-jury-should-resolve-case-2020-9">Gonzalez Rogers ruled last September</a>. She also said that neither party looked particularly good in this battle. "This is not something that is a slam dunk for Apple or Epic Games," Gonzalez Rogers said.</p><p>Were Epic Games to win the case, "Fortnite" could be available once again on iPhones and iPads, and Apple may have to allow for a more open platforma result that would have myriad impacts on Apple's biggest platform, the iPhone.</p><p>Were Apple to win the case, Epic could be forced to alter how "Fortnite" processes payments or accept that the game isn't able to be played on iOS devices. It's also entirely possible that some claims from each company are accepted, and a compromise of sorts is reached.</p><p><em><strong>Got a tip'</strong>&nbsp;Contact Insider senior correspondent Ben Gilbert via email (<a href="mailto:bgilbert@insider.com" data-analytics-module="body_link" data-analytics-post-depth="100">bgilbert@insider.com</a>),</em><em>&nbsp;or Twitter DM (<a href="https://twitter.com/RealBenGilbert" data-analytics-module="body_link" data-analytics-post-depth="100">@realbengilbert</a>). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.</em></p><p><a href="https://www.businessinsider.com/apple-epic-games-lawsuit-everything-we-know-2021-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/scorpion-venom-most-expensive-liquid-in-the-world-2018-8">Why scorpion venom is the most expensive liquid in the world</a></p>
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