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At its heart, the legal spat between Apple and 'Fortnite' maker Epic Games is about whether or not the iPhone is a computer (AAPL)

Published by Business Insider on Tue, 04 May 2021


<p><img src="https://static1.businessinsider.com/image/5f359f4db4bb1c001df532cb-1079/Screen Shot 2020-08-13 at 41407 PM.png" border="0" alt="Fortnite 1984 Apple ad parody" data-mce-source="Epic Games" data-link="https://www.youtube.com/watch'v=euiSHuaw6Q4"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Apple and "Fortnite" maker Epic Games just kicked off a legal battle that could have major implications for the future of the App Store.</p><p>Monday was the first day of what's expected to be a weeks-long court battle between the two American companies, and lawyers from Apple and Epic laid out their main arguments through lengthy opening remarks presentations.</p><p>At the heart of the fight is a philosophical disagreement on the nature of the iPhone: Epic argues it's a computer, while Apple argues it's fundamentally distinct.&nbsp;That argument is critical because of how the App Store operates, with Apple acting as the sole arbiter of what can and cannot be published on the iPhone.</p><p>If the iPhone is a computer, then the App Store is a monopoly, Epic's lawyers argued. If it isn't, and it's a distinct category of device, then Apple is protecting its users by keeping alternative digital storefronts off the iPhone.</p><p><em><strong>Read more: </strong><a href="https://www.businessinsider.com/amazon-apple-alphabet-google-microsoft-self-driving-autonomous-vehicles2021-4" data-e2e-name="inline-read-more-link">Big Tech has a new battleground: self-driving cars. Here's how Jeff Bezos, Tim Cook, and Sundar Pichai hope to capture the $290 billion market.</a></em></p><p>"Epic is here, demanding that this court force Apple to let into its App Store untested and untrusted apps and app stores," one of Apple's lawyers, Karen Dunn, said in opening remarks. "Apple's unwavering commitment to safety, security, reliability and quality does not allow thatand the antitrust laws do not require it."</p><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>On the contrary, Epic's lawyer argued, the "walled garden" of the App Store isn't intended for security: "It's about business," Katherine Forrest of law firm Cravath, Swaine, and Moore said. An expert witness interviewed by Forrest estimated Apple's App Store margins in 2018 and 2019 to be around 75%.&nbsp;</p><p>Another major point of contention between the two companies: the 30% cut Apple takes from transactions on the App Store.</p><p>By refusing to open the iPhone to other App Stores, Epic's lawyers argued, the company is engaging in anticompetitive behavior. They compared Apple to a car dealership that takes a cut from gas stations every time you refuel.&nbsp;</p><p>Apple's lawyers pointed to other digital storefronts, like the wildly popular Steam, as having established the 30% precedent.&nbsp;</p><p>"Apple did not establish the 30%," Apple's lawyer Karen Dunn said. "It was Steam, another game platform, that set the 30% in 2003, and by the time Apple entered the market in 2008 the 30% was, as Epic's internal documents will show, industry standard."&nbsp;</p><p>Having asserted their cases, lawyers for both sides also began calling witnesses on Monday afternoon. Epic CEO Tim Sweeney began questioning, and will continue being questioned on Tuesday as the trial continues.</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-legal-case-opening-remarks-2021-5#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/how-parasite-delivered-one-of-the-best-twists-in-cinema-2020-2">What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence</a></p>
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