Epic vs. Apple – A right Battle Royale pt. VIII.

The outcome is likely to be somewhere in the middle.

• The first stage of this battle is over as the judge has retired to consider her decision, but it looks like neither side is going to like the outcome which I think ends up as a net win for Epic until round 2 when Apple appeals the ruling.
• The problem for Apple is that only a complete victory on all counts will be a win because only a complete victory will allow the current situation to continue as it has been since 2008 when the App Store launched.
• If Epic wins even the smallest concession in the ruling then the situation for Epic will improve creating a win, albeit far smaller than it has been shooting for.
• The judge’s commentary during the trial clearly points to a number of issues where she is uncomfortable with the “competitiveness” of the Apple App Store.
• This includes a compromise situation that the Judge returned to twice during the trial as well as concerns that the Apple App Store does not allow for any “real competition”.
• However, at the same time, some of her other commentary could be interpreted as a view that Epic Games is simply on a money-making exercise which was a fairly widely held view when this whole process started.
• However, there are some indications that Epic is fighting for better terms for all developers and not just Epic which is one reason why I suspect that the judge is going to come down somewhere in the middle on this one.
• Given the judge’s commentary, I suspect that the ruling will allow Apple to maintain complete control of the Apple App Store but will force it to allow links or buttons to 3^rd party payment systems.
• Rival App Stores would still be prohibited but crucially this would introduce competition for the 30% commission that Apple charges developers.
• However, this solution is far from perfect and will need to also reflect the value that Apple brings to the table.
• Allowing 3^rd party payment will allow developers to escape Apple’s fees entirely which is clearly not fair because they are making revenues at least in part because of the ecosystem that Apple has created.
• Hence, there will need to be a balancing element to ensure that Apple receives a contribution from the developer in return for the value that it is providing.
• In the old days, the 30% did just this when volumes were low but now that it is a multi-billion-dollar industry, it is very clear that Apple is making a vast amount of money from the App Store.
• How this balancing element is set will be incredibly difficult and I suspect that this battle is far from over.
• For anything other than a complete victory, Apple is likely to appeal meaning that this will eventually end up at the supreme court where it will be finally decided.
• This will take some years but in the meantime, I suspect that Apple will be forced to let Epic back onto its platform while the situation is resolved.
• I do not expect Epic to win any compensation for the billions of dollars in revenues it has lost as a result of Fortnite being kicked off the iPhone as it is not hard to conclude that Epic knew this would happen but continued in this direction regardless.
• Although neither side will have gotten what it wants, I suspect that this outcome will please Epic far more than Apple simply because it represents an improvement from what it had before.
• This fight is far from over and the ruling will simply usher in round 2 of what has become one of the best spectator sports.