By Sarah E. Needleman
Lawyers for Epic Games Inc., the maker of the popular videogame
"Fortnite," and Apple Inc. presented opening arguments Monday in a
federal trial that could help reshape the multibillion-dollar
market for distributing apps on mobile devices.
U.S. District Judge Yvonne Gonzalez Rogers is presiding over the
planned three-week bench trial in Oakland, Calif., which is slated
to feature testimony from the chief executives of both companies as
well as officials from Microsoft Corp., Nvidia Corp., Match Group
Inc. among others.
Katherine Forrest, a lawyer for Epic, said the videogame company
sued Apple over its App Store policies, describing the iPhone
maker's enforcement of them as monopolistic. She reminded the court
that Epic isn't seeking monetary damages, but rather aims to unlock
Apple's so-called walled garden for itself and all app
"The garden could've had a door. It's artificially walled in,"
said Ms. Forrest, an attorney with Cravath, Swaine & Moore LLP
who is a former New York federal judge. In building its mobile
operating system known as IOS, "Apple's plan was to lock users in
and prevent users from switching away from the Apple ecosystem,"
Karen Dunn, an attorney for Apple, defended the iPhone maker's
App Store policies and the 30% fee the company charges developers
on digital sales.
"Apple did not create a secure and integrated ecosystem to keep
people out," said Ms. Dunn, a partner at Paul Weiss Rifkind Wharton
& Garrison LLP who also represented Apple in its lawsuit
against Qualcomm Inc. over patent-licensing fees. Instead, Apple
did so to "invite developers in without sacrificing the privacy and
liability, security and quality that consumers wanted," she
Ms. Dunn also challenged Epic's definition of a competitive
market, saying its perspective is too narrow because there are many
platforms where consumers and developers engage in transactions,
including personal computers and three major game consoles. She
argued that consumers move fluidly between platforms and can
purchase "Fortnite" and other game currency on one platform and
spend it on another.
Epic sued both Apple and Alphabet Inc.'s Google in August after
the companies removed "Fortnite" from their mobile app stores. They
say their moves were justified because Epic broke their rules by
inserting its own system for processing payments made inside the
game, a move that would potentially circumvent the 30% slice of
revenue that Apple and Google collect from in-app purchases.
Epic, a closely held company valued at nearly $29 billion as of
last month, has asserted that Apple charges exorbitant fees to
mobile software developers and runs the App Store in a way that
stifles smaller businesses and prohibits fair competition. A trial
date hasn't been set in Epic's lawsuit against Google.
Apple has said that Epic's actions were a breach of contract and
that the game company has engaged in a smear campaign. Apple also
said that there are many platforms in which "Fortnite" is
available, asserting that the market is mature and that it doesn't
hold anything close to a monopoly against developers.
Among those expected to take the stand Monday on Epic's behalf
is its co-founder and chief executive, Tim Sweeney, who spent
months plotting his company's attack on Apple with a team of around
200 Epic staffers, outside lawyers and public-relations advisers.
He appeared in the courtroom in a gray-blue suit and wearing a
Mr. Sweeney, 50 years old, is a seasoned programmer who prefers
an office uniform of cargo pants and T-shirts. A Maryland native
with a net worth exceeding $9 billion, according to the Bloomberg
Billionaires Index, he has testified in court before and spoken in
front of crowds at events such as Mobile World Congress and the
Game Developers Conference.
Epic's witness list also includes other company executives,
former Apple employees and employees of other companies including
Microsoft. Apple's witness list includes the company's CEO for the
past decade, Tim Cook, and other executives such as Phil Schiller,
who played a key role in the launches of the iPod, iPhone and iPad
and currently holds the title of Apple Fellow.
Antitrust cases can be difficult for plaintiffs to win, legal
experts say, and Epic's lawsuit may hinge on the court's definition
of a market in the digital age. Epic says Apple has a monopoly in
its App Store, while Apple says it is just one of many distribution
channels in the larger market for videogames and other
Analysts say that an appeal is likely regardless of the trial's
outcome, a possibility the judge outlined last year in
Apple faces scrutiny from regulators elsewhere over its business
practices. The European Union on Friday charged the company with
violating antitrust laws for allegedly abusing its control over the
distribution of music-streaming apps. The case in Europe stems from
a 2019 complaint filed by Spotify Technology SA, which competes
with Apple's music-streaming service. The U.K. is separately
investigating whether Apple imposes anticompetitive conditions on
app developers, and U.S. lawmakers have accused Apple of operating
with "monopoly power."
In response to the EU charges, Apple said Spotify has been
successful even after removing paid subscriptions from its app in
the App Store. Apple also said Spotify's demand to be able to
advertise alternative deals through its App Store is a practice
that no stores allow.
Write to Sarah E. Needleman at firstname.lastname@example.org
(END) Dow Jones Newswires
May 03, 2021 14:43 ET (18:43 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.