[reissbaker]

This seems like the predictable outcome. Epic knew Fortnite would get banned when they started this; Apple is innocent until proven guilty, so no court will force Apple to reinstate Fortnite unless Epic wins its antitrust suit. But similarly, Apple's subsequent, second threat to ban Epic from doing other lines of business via macOS tools (e.g. Unreal Engine development) seemed excessive compared to other app bans, and seemed clearly an attempt to use their power to shake down Unreal customers as retaliation for the dispute.

I'm not surprised that Epic started this: they want their game store on iOS, and the only way that happens is via an antitrust lawsuit — and you can't bring an antitrust lawsuit unless you show evidence of harm (aka, lost Fortnite sales). Epic wanted Fortnite to be banned so that they could sue Apple.

I'm curious why Apple escalated, though. It seemed to me like they were playing into Epic's hand: they're currently under multiple antitrust investigations by the US and the EU, and using their market power on iOS to corral developers on macOS seems like a pretty obvious violation, and a novel one: when they banned XCloud from iOS, for example, they didn't also ban MS Office from running on Macs. Why would they try to do it now? When I first saw it I wondered if Apple knew something we didn't (since Epic would pretty obviously attempt to contest this in court), and that Apple was playing its own 4D chess game against Epic, secure in the knowledge that the court wouldn't grant the injunction on the macOS tools. But... Now it just looks like a fit of pique? Apple had already banned Fortnite when it issued the second threat to ban Unreal; the second threat ended with them getting nothing (the court prevented them from following through) and left looking like monopolists during the antitrust investigations. I don't get it.

[giovannibajo1]

I think they just went through applying the agreement, which says that the account will be terminated in the specific case of willingful infringement/circumvention. If they had not tried to apply it, it would have been hard to prove to the judge that they always apply the agreement to the letter, which is an important part of this lawsuit (they need to prove that the rules are clear and equally enforced — something that they know it’s not always happened).

Since Epic has 2 different accounts, Apple could have terminated only one of them, leaving Unreal Engine intact. But Schiller’s declaration says that in these cases they have always terminated all accounts that are owned by the same company / conglomerate (I can easily see this is useful in some cases). So again I feel they were in a corner: they had to follow what they have always done, so that other companies couldn’t prove a ad-hoc enforcement of rules (termination rules, in this case).

[Hamuko]

>you can't bring an antitrust lawsuit unless you show evidence of harm (aka, lost Fortnite sales)

I thought the point of antitrust is that it brings harm to the consumers and not just some lesser company?

[reissbaker]

You would think so, but actually a company can't sue another for antitrust violations unless they show evidence that they were injured — and the injury has to pass a two-prong test [1] to be covered.

That being said, the government can investigate without a lawsuit. But just because the government investigates, that doesn't guarantee the government will prosecute; a lawsuit guarantees prosecution, unless it's so baseless it gets thrown out by the court (which Epic's hasn't been).

Hence why Epic took a step that would obviously result in a ban: they needed the correct type of evidence of injury in order to sue.

1: https://www.businessjustice.com/the-elements-of-antitrust-in...

[sgtfrankieboy]

They showed that Apple forcing iOS apps to use their Payment Processor is bad for consumers by providing an alternative that is 20% cheaper. Which is what got them banned.

[rimliu]

Every payment and subscription going through Apple is one of the best features for me. Especially the subscriptions.

[richrichardsson]

So why can't Epic (or any other company) provide you that option with a 42% premium (to cover Apple's 30% cut) and allow users to buy direct from them? Then if you wish to trust Apple more with your card details, you can pay more for the privelege. Or you can save some money, but potentially increase your risk by going direct.

I've always hated that Apple seem to think they know better than anyone else; you can't do as you wish on their platforms because you might be stupid.

[nucleardog]

I mean, that’s exactly why I have an Apple device.

No, wait, not that I’m stupid. Though I’m sure some people would call me that.

It’s that they make the decisions for me. I’m specifically paying a premium to delegate the responsibility for making those decisions to them.

I spent years running Nexus devices (since before they were Nexus... still have my ADP1 in a drawer) on Cyanogenmod and LineageOS. At some point I got busy and didn’t have time for my phone to be a hobby or even a thing I had to think about and chose to delegate those decisions to Apple rather than Google because they generally seem to lean more toward privacy-conscious decisions and making money on hardware and apps rather than decisions to support violating my privacy and making money on advertising.

I already paid more for what I agree is a privilege by buying an expensive Apple phone. If you don’t like the rules, then don’t sell here. I’m cool with that. Leave my walled garden alone. I’m comfortable in here.

[richrichardsson]

But those aren't mutually exclusive. You can stay in the walled garden if you wish, and people who are comfortable with the risk can go outside. Choice; something Apple thinks its users are incapable of making sensibly.

[ThatPlayer]

And that's your choice, but forcing that onto everyone is anti-competitive.

[rimliu]

How is that being forced on everyone? E. g. I do not use Steam, so they can do whatever they want, it would have zero effect on me.

[hnick]

The action that triggered these events is that Epic chose to sell some items at a higher price via the Apple store to cover the 30% "tax" and make it clearer to consumers that they are paying a premium to the middleman, or at a lower price via in-game currency (which could be purchased elsewhere) directly in the game.

Offering this consumer choice is what lead to Fortnite being banned.

[StavrosK]

Steam isn't manufacturing computers. This is about Apple the computer manufacturer. It's unfair for them to lock their computers/phones down so people can't install software without Apple's permission.

The App Store is more or less a red herring here (relevant only to the 30% fee being too much).

[modeless]

The harm to consumers is the higher price that they have to pay. Epic didn't just keep the 30% all for themselves, they lowered prices.

[mythz]

Of course a competing App Store can offer lower prices, they don't bear any of the costs for developing and managing the iOS ecosystem Apple spent billions over a decade building (that many other companies lost fortunes failing to compete against). They can just popup a virtual store in someone else's successful established platform and access a market of 1B+ credit cards they had no hand in creating where they can dictate their own margins for selling virtual goods - somehow feeling entitled to get a free ride on the massive development & maintenance infrastructure costs that is subsidized by the App Store.

Strange most other markets don't just let everyone to sell their products (physical or virtual) on their markets at no cost [1].

[1] https://www.ign.com/articles/2019/10/07/report-steams-30-cut...

[modeless]

Apple profits handsomely from the iOS ecosystem every time someone buys an iPhone to access it, or buys a Mac because Apple won't allow building iOS apps without one, or pays the annual developer program fee. They don't need to triple or quadruple dip to be the most valuable publicly traded company in the world.

[bwilli123]

Apple here is no different than the Telcos wanting to avoid only being paid for just being dumb pipes. If everybody else is making money building on that basic service they want a piece of that pie too.

[mythz]

iOS is a major cost to develop that's given away for free, continually invested in, advanced, developed & updated. Apple is allowed to have more than one business model on the platform they built, which was their primary focus that reshaped the company at a great opportunity cost to their other businesses. Ultimately the Company bet paid off & became successful against a number of incumbents who lost fortunes trying to compete in Mobile OS's. The App Store is now one of their major sources of revenue for having built a successful platform (a category they helped pioneer).

The nominal annual fee is a cost for accessing the dev tools only, it's in no way a royalty-free cost to sell products on one of the most lucrative markets in the world - that's what their standard royalty % (unchanged from the outset) covers.

[sumedh]

> iOS is a major cost to develop that's given away for free

How is it given for free, you pay for it when you buy the phone.

[e12e]

> iOS is a major cost to develop that's given away for free

Are you sure it's free? The only way to buy ios, is to buy a device running it. It would seem reasonable that part of the premium you pay for eg an iPad is equivalent to an oem license for ios?

[threeseed]

Of course they lowered the prices.

It was a PR exercise to show the world the wondrous benefits of a potential Epic Games Store on iPhone/Android.

And of course once they had such a store they pinky promise to never increase the prices in the future.

[reissbaker]

I think the point is that competition will prevent them from doing that. And it worked: in response to Epic's lower rates, Steam also cut their rates. If Epic raises the rate to 30% they'll be more expensive than Steam, and won't be able to compete.

[threeseed]

I just checked and Fornite is not available on Steam.

So all that will happen is that certain games will exist only in one store and not be subject to competition.

Or they will secretly sell your data to third parties which Apple won't do.

[reissbaker]

Fortnite is not required to be on Steam for there to be competition in the game store marketplace. As a game developer on PC, if you don't like Valve, you can switch to Epic, regardless of whether Fortnite is there or not — and Valve has no policies prohibiting you from doing so if you want to (unlike iOS, where Apple prohibits alternate game stores). You might sell fewer games because it's less popular, but that's not due to any anticompetitive action on Valve's part — and it may not matter that you sell fewer games, because Epic may pay you enough for exclusivity that you make up the difference anyway. The "injury" that Epic is trying to prove with Apple is that game developers are injured by lost sales due to Apple's policies, or lost revenue due to Apple's cut, and that this is due to Apple's anticompetitive policies that (literally do) prohibit competing stores from existing and offering developers an alternative. Game developers are not injured — at least, not in the terms usually used in antitrust cases — by Fortnite only existing on the Epic store and not on Steam.

You might argue that consumers are somehow injured by Fortnite existing on the Epic store but not on Steam. But I think that's pretty hard to prove, at least under existing antitrust law: Fortnite is free, and its microtransactions are not particularly more expensive than competitors, and if you don't want to play Fortnite because you don't like the Epic store for some reason, there are dozens of competing battle royale shooters on every platform Fortnite runs on (and, now, even platforms Fortnite doesn't run on). Where is the lack of competition? Or the injury?

Epic's case centers on injury not to consumers, but to developers. That case is easier to make, and it's the case they care about because they operate a game store that doesn't exist on iOS due to Apple's policies — and a game engine business that operates on a 5% revenue share model, which naturally would increase its profits if Apple stopped taking a 30% tithe from developer revenues in the first place. They're perfectly willing to sacrifice Fortnite Mobile, a comparatively small amount of revenue, temporarily if it gets their other business streams more income in the future.

[tech234a]

I think they were referring to the percentage taken when processing sales for other developers on the Epic Games Store and Steam.

[fatbird]

They lowered prices as part of a calculated stunt. If Apple is suddenly turning over 20% of the purchase price to devs, why would the devs lower the price when they're getting an extra 20% at the same price point?

[rbranson]

This is the correct take. Generally speaking, the prices set by Epic before this stunt likely approximated the highest price which didn't reduce aggregate spending.

[tehbeard]

Banning the unreal dev account makes sense when you take it as setting/following precedent of removing access to the legal entity responsible for the breach of contract?

It also follows that Apple could claim that Epic used this unreal dev tooling to break the contract and thus the tooling is "illegal" and subsequently must bear the consequences as well.

I don't think there's anything overtly malicious to the unreal part save for usual corporate lawyering of go big and then back off rather than not reaching far enough and losing.

[reissbaker]

The Unreal account was a separate dev account held by a different legal entity: "Epic Games, Inc." (Fortnite) vs "Epic Games International, S.a.r.l." (Unreal). (Props to @scq who noticed this elsewhere in the discussion.)

It's somewhat unusual for corporate lawyering to go big like this against a well-funded opponent. Apple didn't actually have the legal standing to do it — as evidenced by the court issuing the emergency injunction so quickly — and now there's precedent on the books that this kind of threat won't be enforceable against others. Usually, sadly, corporate lawyering tactics are to go nuclear against someone who can't afford to fight you, and tread more carefully when someone can — lest the court take away your nuclear weapons when the big player lawyers back.

[dgellow]

I agree that seemed to be the predictable outcome. But then I cannot understand what was Apple trying to do. What is their strategy here, why be so agressive toward Epic's Unreal Engine? It feels as if they wanted to be proven wrong, but I don't understand why they would do this. If someone has some insights to share, I would be interested.

[madeofpalk]

I don't believe they were specifically targeting Unreal Engine, it just got caught in the cross fire and Apple didn't really care.

Apple wanted to terminate all the dev accounts belonging to Epic which "just to happens" to include Unreal.

[dgellow]

From a comment by onion2k in the other HN thread:

> This is a quote from the letter that Apple sent to Epic;

>> If your membership is terminated, you may no longer submit apps to the App Store, and your apps still available for distribution will be removed. You will also lose access to the following programs, technologies, and capabilities:"

>> [...]

>> - Engineering efforts to improve hardware and software performance of Unreal Engine on Mac and iOS hardware; optimize Unreal Engine on the Mac for creative workflows, virtual sets and their CI/Build Systems; and adoption and support of ARKit features and future VR features into Unreal Engine by their XR team

> That is a statement that Apple made saying they will stop all help they give to Epic getting UE running on all Apple hardware. With the other stuff in the letter it makes it very clear that the problem is not just one for Epic Games, but all of Epic.

> You can read it yourself - https://cdn2.unrealengine.com/epic-v-apple-8-17-20-768927327.... (Apple's letter starts on page 51 of the PDF)

Source: https://news.ycombinator.com/item?id=24269719

So they seem to be very specific and specifically call out work on the Unreal Engine.

[madeofpalk]

Yes, I've read that.

What they're calling out is that Apple engineers will no longer prioritise improving the performance of Unreal on macOS and iOS. This is kinda outside the developer agreeement.

[hnick]

What is the text in the agreement that blocks developers from building against it though?

If a third party developer uses an open source library instead of Unreal, must that library belong to an entity that signed an agreement with Apple or the whole app is banned by default?

[dep_b]

> ban Epic from doing other lines of business via macOS tools (e.g. Unreal Engine development) seemed excessive compared to other app bans

No, if you try to smuggle forbidden features through the approval process by hiding them and only enabling them after the app is published your developer account will be terminated immediately. This is clearly documented and Epic knew this up front.

Getting the chance to revert the changes before the account is terminated is what sets apart Epic from most other developers, like people that changed their apps to full emulators after it got approved like what looked like a single game.