By Sarah E. Needleman
The chief of "Fortnite" maker Epic Games Inc. testified Monday
in a federal antitrust trial that his company deliberately violated
Apple Inc.'s app-marketplace rules to "show the world" the power
that the tech giant wields and the unfair share of money it takes
from software developers.
"Apple was making more profit from selling developer apps in the
App Store than developers," said Tim Sweeney, whose company's
global hit videogame "Fortnite" was removed from Apple's app
platform last August.
The statements from Mr. Sweeney, a 50-year-old programmer who
founded Epic in 1991, in an Oakland, Calif., courtroom helped kick
off the first day of a planned three-week bench trial, one that
could help reshape the multibillion-dollar market for distributing
apps on mobile devices.
Mr. Sweeney, who donned a blue suit instead of his usual attire
of cargo pants and a T-shirt, had been plotting the moment for
months. His closely held company in August inserted its own,
unauthorized payment system into the versions of "Fortnite" on the
app stores that Apple and Alphabet Inc.'s Google control, aiming to
potentially circumvent the 30% fee the companies collect from
Both companies yanked the combat game from their app stores in
response, as Epic expected, prompting it to file lawsuits against
them, as well as launch a public-relations campaign critical of
Apple to draw support from consumers and other app developers. A
trial date for Epic's suit against Google hasn't been set.
Mr. Sweeney spent more than two hours on the stand, fielding
questions from a range of trial participants including Epic
attorney Katherine Forrest, U.S. District Judge Yvonne Gonzalez
Rogers and Apple lawyer Richard Doren.
He said his company, now valued at nearly $29 billion, had been
happily contributing to Apple's app ecosystem since 2010 but that
relationship changed over the years as the iPhone maker's policies
grew more restrictive -- a claim Apple denied. Attorneys for Apple
defended its policies as critical for its App Store's viability and
Epic worked to cast Apple as a monopolist in how it operates the
App Store, which was created in 2008. Users of Apple's iPhone and
iPads can only download software from its App Store and the company
requires purchases of digital goods and services in apps to be
processed through its own payment system. Ms. Forrest told 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 game currency for "Fortnite" on one platform and spend it
In addition to Mr. Sweeney, Epic's witness list includes other
company executives, former Apple employees and employees of
companies including Microsoft Corp. 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 whatever 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 18:41 ET (22:41 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.