- 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.
“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.”
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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