‘Fortnite’ may not return to iPhones for up to 5 years, if ever

Fortnite (loot chest)
  • It sounds like “Fortnite” isn’t coming back to the iPhone anytime soon.
  • Epic says it won’t bring the game back to the iPhone unless Apple allows alternate payment forms.
  • Apple says it won’t even consider allowing Epic back until the the companies’ legal spat is over.
  • Visit the Business section of Insider for more stories.

It sounds like “Fortnite” won’t be back on Apple’s iPhone anytime soon.

Based on the most recent exchanges between “Fortnite” maker Epic Games, Apple’s App Store leader Phil Schiller, and a member of Apple’s legal team at Gibson Dunn, relations between the two companies are as icy as ever.

In a letter sent by Epic Games CEO Tim Sweeney to Apple App Store leader Phil Schiller, things start out friendly enough. Sweeney started by asking Schiller to reinstate Epic’s development account, which is needed for “Fortnite” to operate on Apple’s iOS.

“Epic has asked Apple to reactivate our ‘Fortnite’ development account,” Sweeney said to Schiller. “Epic promises that it will adhere to Apple’s guidelines whenever and wherever we release products on Apple platforms.” He added that this “depends on whether and where Apple updates its guidelines to provide for a level playing field between Apple In-App Purchase and other methods of payment.”

In other words, “Fortnite” will only return to iPhones when Apple allows Epic to circumvent Apple’s App Store payment system – an argument that was at the heart of the recent lawsuit between Apple and Epic.

In a response, Apple’s attorney said the company isn’t even considering that reinstatement until the legal spat between the two companies, “becomes final and nonappealable.”

And that may not be for another five years, Sweeney said.

“‘Fortnite’ will be blacklisted from the Apple ecosystem until the exhaustion of all court appeals,” he tweeted on Wednesday, “which could be as long as a 5-year process.”

Fortnite (Epic payment through iOS)
An image of the “Fortnite” update that included the ability to pay Epic Games directly rather than paying through Apple.

Apple has repeatedly refused to allow alternative payment methods on the App Store, citing security concerns, and kicked “Fortnite” off the iPhone last year when Epic quietly added a way to pay Epic directly rather than paying through the App Store.

Subsequently, Epic sued Apple.

The result of that lawsuit, which Epic is appealing, was relatively minimal: In Apple’s case, the App Store is being forced to allow app makers the ability to link out and sell items directly to their users via external payment methods. That means app makers will be allowed to directly link out to alternative ways for purchasing, giving them a new way to avoid App Store commissions.

Apple has charged app makers on its iPhone and iPad App Store a commission for sales, ranging from 15 to 30%, which Epic Games sought to circumvent in an update to its hit game, “Fortnite,” in August 2020.

Epic, meanwhile, was ordered to pay millions in royalties to Apple, and Apple doesn’t have to allow alternative forms of payment on the App Store. Moreover, Epic is missing out on untold millions of dollars from potential “Fortnite” players on iPhone and iPad.

Apple declined to comment for this story, but confirmed the veracity of the letter from its lawyer. Epic Games representatives highlighted a post on Epic’s blog published on Wednesday that built on Sweeney’s tweets.

“Apple lied,” Sweeney said in the blog post. “Apple spent a year telling the world, the court, nd the press they’d ‘welcome Epic’s return to the App Store if they agree to play by the same rules as everyone else.’ Epic agreed, and now Apple has reneged in another abuse of its monopoly power over a billion users.”

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A judge just ruled a massive blow against Apple’s App Store business

Tim Cook Tim Sweeney 2x1
  • The judge in the case between “Fortnite” maker Epic Games and Apple issued a ruling on Friday.
  • Apple must allow app makers the ability to monetize their apps without paying Apple.
  • Epic has to pay Apple over $3.5 million in owed royalties, and still can’t charge users directly in apps.
  • Visit the Business section of Insider for more stories.

The end of the months-long legal saga between Apple and “Fortnite” maker Epic Games finally came on Friday when Judge Yvonne Gonzalez Rogers issued a ruling with bad news for both parties – and a major blow to Apple’s App Store business.

In Apple’s case, the App Store is being forced to allow app makers the ability to link out and sell items directly to their users via external payment methods. That means app makers will be allowed to directly link out to alternative ways for purchasing, giving them a new way to avoid App Store commissions that can cost as much as 30%.

Apple is, “permanently restrained and enjoined from prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and communicating with customers through points of contact obtained voluntarily from customers through account registration within the app,” the judge wrote in her permanent injunction ruling.

The ruling will go into effect in 90 days unless any motions to delay or reverse the order are successful.

Moreover, the judge chastised Apple for continuing to charge a 30% commission despite years of criticism from app makers. “Unlike those in the computer gaming market,” she wrote, “nothing other than legal action seems to motivate Apple to reconsider pricing and reduce rates.”

While that’s good news for Epic, it wasn’t the total victory Epic was hoping for: The company is being ordered to pay over $3.5 million owed royalties to Apple, and still isn’t able to directly charge “Fortnite” players for items within the game.

Apple charges app makers on its iPhone and iPad App Store a commission for sales, ranging from 15 to 30%, which Epic Games sought to circumvent in an update to its hit game, “Fortnite,” in August 2020.

Fortnite (Epic payment through iOS)
An image of the “Fortnite” update that included the ability to pay Epic Games directly rather than paying through Apple.

A new payment option was introduced in the update that 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. Epic even charged less for the same virtual items.

By doing this, Epic intentionally circumvented paying Apple the cut it takes from app makers for selling through its digital storefronts. It was this move that caused “Fortnite” to be kicked off the App Store last year, and subsequently sparked a lawsuit between Epic and Apple.

In the suit, Epic Games accused Apple of operating a monopoly with its iOS App Store – a charge the judge on Friday disagreed with, ruling that Apple’s practices were not monopolistic.

The smartphone is an “essential computing device,” Epic CEO Tim Sweeney argued in a letter to Apple leadership, 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.”

In a better world, Sweeney argued, iPhone users could choose from a variety of App Stores with competing libraries of content and sales – a world where games like “Fortnite” could offer players the ability to pay less by purchasing stuff directly from Epic, or to download another store entirely (like, say, Epic’s own digital storefront, the Epic Games Store).

In defense, Apple argued 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.

Without Apple vetting each app before publishing, “the health of Apple’s ecosystem” is at risk, Apple Chief Legal Counsel Douglas Vetter argued. Moreover, Apple said that Epic knowingly, intentionally violated developer agreements it signed.

“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law,” Apple said in a statement sent to Insider. “As the Court recognized ‘success is not illegal.’ Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace that supports a thriving developer community and more than 2.1 million US jobs, and where the rules apply equally to everyone.”

Epic Games did not immediately respond to a request for comment, but Epic Games CEO Tim Sweeney took to Twitter to respond.

“Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers,” he wrote. “‘Fortnite’ will return to the iOS App Store when and where Epic can offer in-app payment in fair competition with Apple in-app payment, passing along the savings to consumers.”

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Apple removes anti-vaxx dating app Unjected from the App Store for ‘inappropriately’ referring to the pandemic. The app’s owners say it’s censorship.

Apple store
Apple reportedly removed the app after being contacted by a journalist.

  • Apple on Saturday removed Unjected, a dating app for the unvaccinated, from its App Store.
  • Apple told the app it “inappropriately refers to the COVID-19 pandemic in its concept or theme.”
  • Unjected said on Instagram that the app offered medical autonomy and freedom of choice.
  • See more stories on Insider’s business page.

Apple on Saturday removed Unjected, a dating-and-community app for unvaccinated people, from its App Store, in a move that the app’s owners likened to censorship.

“Apparently, we’re considered ‘too much’ for sharing our medical autonomy and freedom of choice,” the company said in a video posted on Instagram on Saturday. “So, of course, Apple removed us.”

Bloomberg News on Saturday reported that Apple removed the app after being contacted by a reporter.

Unjected posted a screenshot of the Bloomberg News story, saying: “We must use our voices. We are fighting the censorship of our freedoms and we won’t stop.”

Unjected launched in May as a dating app – one Twitter user called it “OK Q-Pid” – but had recently rolled out additional features. One was a list of businesses that “respect our autonomy and promote freedom.”

The company posted a screenshot of Apple’s take-down message, which read in part: “Specifically, your social networking app inappropriately refers to the COVID-19 pandemic in its concept or theme.”

Unjected said on Instagram, where it has about 25,000 followers, that it had deleted features, including a social feed and “blood bank,” in an attempt to stay on the App Store.

“We are looking into ways to get off of Apple and Google,” the company said. “But the easiest transition for us might be to make the website as great as possible since they can’t shut that down like the app.”

Insider has reached out to Unjected, Apple, and Instagram for comment.

The app on Sunday was still available on the Google Play store, where users mostly gave it middling reviews, including: “Amazing concept but holy $%^& this app is practically unusable.”

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Elon Musk calls out Apple’s App Store fees for being a ‘global tax on the internet’

Elon Musk Tim Cook
  • Elon Musk said Apple’s App Store fees are “a de facto global tax on the internet.”
  • He also said “Epic is right” as the “Fortnite” creator remains locked in a legal battle with Apple.
  • Epic argues that the App Store is a monopoly since it takes a cut from all in-app purchases.
  • See more stories on Insider’s business page.

Tesla and SpaceX CEO Elon Musk tweeted Friday that “Epic is right” in its lawsuit alleging Apple’s App Store is anticompetitive.

The executive said that the company’s app store fees “are a de facto global tax on the Internet.”

Gaming giant Epic, the creator of “Fortnite,” is currently embroiled with Apple in a legal battle over the phone maker’s App Store. Apple takes a 15% to 30% cut from all in-app purchases, a practice that developers have long rallied against since they say it gives the company an unfair advantage. Apple’s own apps are exempt from the fee.

Epic kicked off the lawsuit in the summer of 2020 after it skirted Apple’s App Store fee by implementing its own payment system into the “Fortnite” game. Apple booted the app from its store as a result.

Facebook reportedly said in December that it would back Epic in its fight against Apple.

Apple is one of the Big Four tech companies that has faced considerable antitrust scrutiny in recent years, scrutiny that has only mounted since last summer. CEO Tim Cook testified before Congress alongside other executives as part of an ongoing investigation into online market competition.

Lawmakers are cracking down on tech’s biggest players for various reasons. For example, Google has been probed over its search and online ads business, and Apple has been scrutinized over its App Store.

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Apple accepted Amazon’s request to boot an app that spots fake reviews from the App Store. Its owner has accused Amazon of bullying.

Tim Cook and Jeff Bezos
Apple CEO Tim Cook and Amazon chair Jeff Bezos.

  • Apple on Friday removed the app Fakespot from its App Store at Amazon’s request.
  • Amazon complained Fakespot misled customers, broke App Store rules, and posed a security risk.
  • Fakespot’s CEO said he was shocked by the turn of events.
  • See more stories on Insider’s business page.

Amazon got Apple to remove an app called Fakespot from the App Store on Friday, as reported by the Verge and CNBC.

Fakespot is an app that flags when product reviews on shopping apps like Amazon’s are likely to be fake or bot-generated.

According to the Verge, Amazon filed a complaint with Apple on June 8 saying that Fakespot displays Amazon’s website inside its app, which breaks Apple’s rules. The rules in question state that apps displaying third-party content must have permission from that third party.

Amazon also said Fakespot misleads customers and created a security risk with the way it put code into Amazon’s website to display its ratings.

“The app in question provides customers with misleading information about our sellers and their products, harms our sellers’ businesses, and creates potential security risks. We appreciate Apple’s review of this app against its Appstore guidelines,” an Amazon spokesperson told the Verge.

Fakespot’s CEO Saoud Khalifah denied the app has any security vulnerabilities, in an interview with the Verge. He added: “Amazon is willing to bully little companies like ours that showcase the cracks in their company.” He said Fakespot had 150,000 downloads when Apple removed it.

Read more: Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series A

Saoud’s said Apple has given Fakespot little opportunity to fight back since Amazon initiated proceedings on June 8, and he told CNBC the takedown notice was sudden and unexpected. “Imagine going to a tenant and saying you have to take all your stuff, you have to leave right now. That’s how I feel right now,” he said.

Apple disputes this, saying it gave Fakespot “ample time” to resolve the issue with Amazon. Speaking to the Verge, Khalifah said between June 8 and Friday, the process consisted of Fakespot and Amazon arguing against each other with Apple providing no guidance. “I’m shocked Apple decided to side with Amazon without any proof,” he told the Verge.

At time of writing, Fakespot remains on the Google Play Store for Android phones, where it has more than 50,000 downloads.

Fakespot, Amazon, and Apple did not immediately respond when contacted by Insider for comment.

Fake reviews have been a big PR problem for Amazon. The tech giant is facing an investigation in the UK over fake reviews and in June, it issued a statement saying social media companies need to do more to stop the sale of fake reviews on their platforms.

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Microsoft just took a direct shot at Apple’s controversial App Store policy with Windows 11

Apple CEO Tim Cook
Apple CEO Tim Cook.

  • Microsoft unveiled the next version of its major operating system, Windows 11, on Thursday morning.
  • Part of that event was a not-so-thinly veiled shot at Apple.
  • Going forward, app and game makers with their own payment systems can skip using Microsoft’s system.
  • Visit the Business section of Insider for more stories.

Microsoft just took a shot at Apple with a feature in its next major operating system, Windows 11.

Going forward, the Microsoft Store will allow software makers to use their own payment systems – something Apple refuses to allow on its App Store. Rather than paying Microsoft a cut of each transaction, software makers can charge users directly with their own systems.

“If you do bring your own commerce engine, you keep 100% of your revenue,” Microsoft chief product officer Panos Panay said during a Microsoft livestream featuring Windows 11. “We keep zero.”

It’s a major point of contention between Apple and a variety of software makers, and it’s at the heart of ongoing litigation between “Fortnite” maker Epic Games and Apple.

Epic Games filed suit against Apple last summer after its hit game was pulled from Apple’s App Store.

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.

Microsoft previously issued a letter to the court on behalf of Epic Games, and a Microsoft employee appeared as an expert witness during the trial. Arguments have ended for both sides in the ongoing case, and it’s unknown when the judge will issue a ruling.

Windows 11 is a free upgrade for Windows users, and is scheduled to launch “this holiday,” according to Microsoft.

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At its heart, the legal battle between Apple and ‘Fortnite’ maker Epic Games is about whether or not the iPhone is a computer

Fortnite 1984 Apple ad parody
  • Apple and “Fortnite” maker Epic Games are fighting in court over how the App Store works.
  • The three-week trial began wrapping up on Friday, with Apple CEO Tim Cook taking the stand.
  • At the heart of the fight is a fundamental disagreement on whether or not the iPhone is a computer.
  • Visit the Business section of Insider for more stories.

Apple and “Fortnite” maker Epic Games are nearing the end of a protracted legal battle that could have major implications for the future of the App Store.

If Epic were to win the trial, Apple could be forced to allow alternative app stores on the iPhone and iPad – a result that could cost Apple billions of dollars in the long term.

At the heart of the fight is a disagreement on the nature of the iPhone: Epic argues it’s a computer, while Apple argues it’s fundamentally distinct. 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.

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 says it is protecting its users by keeping alternative digital storefronts off the iPhone.

Read more: 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.

“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 that – and the antitrust laws do not require it.”

Tim Cook Tim Sweeney 2x1
Both Apple CEO Tim Cook, left, and Epic Games CEO Tim Sweeney, right, will appear as witnesses during the trial.

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%.

Another major point of contention between the two companies: the 30% cut Apple takes from transactions on its App Store.

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.

Apple’s lawyers pointed to other digital storefronts, like the wildly popular Steam, as having established the 30% precedent.

“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.”

With Apple CEO Tim Cook taking the stand on Friday, witness testimonies are officially wrapped up. Lawyers for both companies are expected to deliver closing remarks on Monday.

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Business leaders like Snap’s Evan Spiegel and Barry Diller are conflicted about the App Store as Tim Cook takes the stand

Evan Spiegel
Snap CEO Evan Spiegel.

  • Barry Diller said Apple overcharges “in a disgusting manner” on its App Store.
  • Spiegel said Snap is “happy” to pay the 30% fee and said the firm wouldn’t exist without Apple.
  • The comments come as Apple defends itself in a trial that focuses on if its App Store is a monopoly.
  • See more stories on Insider’s business page.

Business figures are split on Apple as CEO Tim Cook testifies in an antitrust trial focused on the App Store.

In separate interviews with CNBC on Friday, Snap CEO Evan Spiegel and Expedia Chairman Barry Diller came out swinging for and against, respectively, Apple as Cook took the stand.

Diller criticized Apple for using its “quasi-monopoly” to overcharge companies like his in “a disgusting manner” through its App Store commissions. The company requires developers to pay a 30% fee on purchases made in the marketplace, and many have long seen the practice as a way for Apple to obtain an unfair advantage in the market.

“The idea that they actually justify it by saying, ‘We spend all this money protecting our little App Store,'” Diller told CNBC. “I mean, it’s criminal. Well, it will be criminal.”

Spiegel later spoke with the outlet and said Snap is “happy” to pay the 30% commission fee on in-app purchases.

“We really feel like Snapchat wouldn’t exist without the iPhone and without the amazing platform that Apple has created,” Spiegel said. “In that sense, I’m not sure we have a choice about paying the 30% fee, and of course, we’re happy to do it in exchange for all of the amazing technology that they provide to us in terms of the software but also in terms of their hardware advancements.”

Snap and Expedia did not immediately respond to requests for comment.

Read more: The App Store is Apple’s most valuable asset, but also its biggest liability

Cook’s Friday appearance on the stand comes as part of a trial that began earlier this month in California, prompted by a conflict between Apple and “Fortnite” creator Epic Games last summer.

Apple pulled the wildly popular “Fortnite” from its App Store in 2020 after Epic skirted the company’s rules and fees to add its own in-app payment system. Epic has argued that Apple’s App Store is a monopoly, while Apple says Epic simply broke the rules that govern its developers.

The trial is expected to conclude on Monday, and its results could majorly impact Apple’s business.

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Parler is back on the App Store with a ‘PG’ version that only cracks down on hate speech on Apple devices

Parler
This illustration picture shows social media application logo from Parler displayed on a smartphone with its website in the background.

  • Parler returned to the App Store on Monday after it had been kicked off in January.
  • On Apple devices any posts that are identified as hate speech will not be visible.
  • The company’s chief policy officer said it will be like a “PG” version of Parler.
  • See more stories on Insider’s business page.

Parler returned to Apple’s App Store on Monday after it had been kicked off following the January 6 Capitol Siege.

Apple announced last month that it had approved several changes to the app related to hate speech. Upon its return, Parler will look different – at least on Apple devices. While the Parler website allows any legal content to be viewed, the App Store version includes “enhanced threat-and-incitement reporting tools,” according to the listing on the App Store.

That means that posts identified as participating in hate speech will be removed from Apple devices, while the same posts labeled as “hate” will still be visible on Parler’s website.

Parler’s interim CEO Mark Meckler told Insider in a statement that the site worked to meet Apple’s standards, while maintaining its focus on free speech.

“The entire Parler team has worked hard to address Apple’s concerns without compromising our core mission,” Meckler said. “Anything allowed on the Parler network but not in the iOS app will remain accessible through our web-based and Android versions. This is a win-win for Parler, its users, and free speech.”

Parler’s chief policy officer, Amy Peikoff, told The Washington Post that the company is pressing Apple to allow the content to remain on the app, but with a warning label. Apple had listed banning the content as one of its conditions for allowing the application back on its store.

Peikoff told The Washington Post the milder version of Parler that is on Apple devices could be called “Parler Lite or Parler PG.”

“Where Parler is different [from Apple], is where content is legal, we prefer to put the tools in the hands of users to decide what ends up in their feeds,” she said.

In the past, the social-media app has avoided censoring its content, identifying itself as a “free speech” alternative to Twitter. The app tried to return to Apple devices in February but was blocked by the company. Apple cited several examples of hate speech, including Nazi symbols, in its decision to not allow the app to return.

Parler was removed from the App Store in January – at the time it was the most downloaded app on the store – after numerous Capitol rioters used the site to organize the insurrection at the Capitol. Following the Capitol insurrection, other web providers including Google Cloud and Amazon Web Services banned Parler.

Parler’s website was restored when SkySilk began hosting it in February, but it has yet to return to the Google Play store. Apple and Google spokespeople were not immediately available to comment.

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Apple and Epic Games are revealing a ton of industry secrets in court filings – from untold billions in ‘Fortnite’ profits to private email exchanges, these are the 5 juiciest bits

Tim Cook Tim Sweeney 2x1
Apple CEO Tim Cook, left, and Epic Games CEO Tim Sweeney, right.

  • “Fortnite” maker Epic Games is suing Apple, and the bench trial started this week in California.
  • Epic says Apple’s App Store is a monopoly. Apple says Epic broke its developer contract.
  • Through court filings, major secrets from Apple, Epic, Microsoft, and more have been revealed.
  • Visit the Business section of Insider for more stories.

Apple and the maker of “Fortnite” are currently at war in a California courtroom – the culmination of a yearlong spat between the two American business giants.

Epic Games filed suit against Apple last summer after its hit game, “Fortnite,” was pulled from Apple’s App Store.

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.

The in-person trial began Monday at the US District Court for the Northern District of California in Oakland, California. Judge Yvonne Gonzalez Rogers is scheduled to oversee approximately three weeks of hearings before a verdict is rendered, according to court filings.

After just one week, we’ve already learned a lot: Between major financial disclosures, company secrets, and private emails between executives made public, evidence in the trial is a treasure trove of information.

1. Xbox console sales aren’t profitable, according to Microsoft, and they never have been.

Xbox Series X and Xbox Series S
The Xbox Series X, left, and the Xbox Series S, right.

After nearly two decades of sales, Xbox consoles have never been a profitable product for Microsoft.

The Washington-based tech giant sells every Xbox at a loss, according to sworn testimony from Microsoft’s VP of Xbox business development Lori Wright.

“Has Microsoft ever earned a profit on the sale of an Xbox console?” she was asked on Wednesday, May 5. “No,” she said.

Wright appeared as a witness in the ongoing trial, where she answered a variety of questions about Microsoft, Xbox, and digital storefronts. Microsoft has openly supported Epic’s suit against Apple.

The subject of Xbox profitability came up in questioning because of how Microsoft’s console business works: Instead of making money on the console itself, the company makes money from games sales through its digital storefront, from subscription services like Xbox Game Pass, and from sales of accessories like gamepads.

Microsoft, like other console makers, takes a cut of every sale on its digital storefront. That cut is usually about 30%, which has become a standard in the video game distribution market. Apple takes a similar cut from games sold on its iOS App Store, which is part of what Epic is contesting in its court case against Apple.

2. Apple’s reportedly making huge margins on the App Store.

Tim Cook WWDC 2020
Apple CEO Tim Cook.

One of Epic’s expert witnesses, Berkeley Research Group managing director Ned Barnes, said that Apple is enjoying enormous margins on the App Store: In the high 70s for the last two years at least, according to Barnes.

“In my expert report dated February 16, 2021,” Barnes writes, “using Apple testimony and financial information available to me at that time, I calculated the App Store’s operating margin percentage to be 79.6% for each of FY2019 and FY2018.”

He also said that Apple “produced additional documents” for the trial that demonstrate slightly lower percentages for the two years, but that the numbers are “consistent with and confirm the reasonableness of the calculations presented in my expert report.”

Apple, however, disputes Barnes’ report. “Epic’s experts calculations of the operating margins for the App Store are simply wrong,” an Apple representative told The Verge.

Core to Epic’s argument in the trial is that Apple operates a monopoly with the App Store by refusing to allow competing app stores on the iOS platform, in addition to not allowing third-party payment systems. High profit margins from the App Store, Epic argued, is part of the reason for Apple won’t allow either.

3. “Fortnite” is making Epic billions of dollars every year, especially on the PlayStation 4.

Fortnite (loot chest)

In one of the less surprising secrets unearthed from evidence presented during the trial, “Fortnite” is making a huge amount of money – to the tune of several billion dollars every year for the last several years.

In 2020 alone, Epic made over $5 billion in revenue according to sworn testimony from Epic Games CEO Tim Sweeney. Between 2018 and 2019, “Fortnite” brought in over $9 billion.

Epic makes more than “Fortnite” – the gaming giant produces the Unreal Engine, operates the Epic Games Store, and owns and publishes several other big games (“Rocket League” and “Fall Guys”). Data from Epic presented during the trial shows that those projects, while moneymakers in the hundreds of millions, don’t generate anywhere near as much revenue as “Fortnite.”

4. Epic CEO Tim Sweeney sent Apple CEO Tim Cook a 2 a.m. email declaring war.

tim sweeney epic games fortnite
Epic Games cofounder and CEO Tim Sweeney.

At 2 a.m. PT on August 13, 2020, Epic Games CEO Tim Sweeney sent an email to Apple CEO Tim Cook and several other Apple executives that laid out Epic’s plan to cut Apple out of payments in “Fortnite” on iPhone and iPad.

It was intended as a declaration of war.

“I’m writing to tell you that Epic will no longer adhere to Apple’s payment processing restrictions,” Sweeney wrote. “Today, Epic is launching Epic direct payments in ‘Fortnite’ on iOS, offering customers the choice of paying in-app through Epic direct payments or through Apple payments, and passing on the savings of Epic direct payments to customers in the form of lower prices.”

In response, Apple pulled “Fortnite” from its iPhone and iPad store, and the game has been unplayable on both ever since. Epic sued Apple on the same day, and this email was one of many private messages between the companies that was uncovered as evidence.

5. “Fortnite” was such a big deal on the PlayStation 4 that Epic was able to force Sony to overturn a longstanding precedent in gaming.

Fortnite

In September 2018, after months spent fighting a losing battle in the court of public opinion, Sony gave in: “Fortnite,” the company announced, would be playable on the PlayStation 4 with friends on other platforms.

“Fortnite” was the first-ever game to allow players on all platforms to play together. “This represents a major policy change for Sony Interactive Entertainment,” Sony said in its announcement. It was clear at the time that, with the game playable across all other platforms, Sony was almost certain to give in: Tens of millions of people were playing “Fortnite,” and they were earning the most from players on Sony’s PlayStation 4, according to documents from Epic presented as evidence in the trial.

Between January 2019 and July 2020, just before “Fortnite” was removed from the App Store, Epic was earning just shy of $150 million each month on average from PlayStation players, according to Epic. By comparison, the company was earning about $23 million per month on average from iOS players, Epic said.

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