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'Fortnite' creator Epic Games makes case against Apple at antitrust trial

Stock MarketsMay 03, 2021 04:02PM ET
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3/3 © Reuters. Fortnite graphic and Apple logo displayed in illustration 2/3

By Stephen Nellis

OAKLAND, Calif. (Reuters) -Attorneys for "Fortnite" creator Epic Games on Monday argued at an antitrust trial against Apple Inc (NASDAQ:AAPL) the iPhone maker has turned its App Store into a "walled garden" with a "Venus fly trap" designed to lock in 1 billion iPhone users and the developers who want to reach them.

The three-week trial in Oakland, California, the culmination of a lawsuit Epic brought last year in the U.S. District Court for the Northern District of California, centers on two Apple practices that have become cornerstones of its business: Apple's requirement that virtually all third-party software for the world's 1 billion iPhones be distributed through its App Store, and the requirement that developers use Apple's in-app purchase system, which charges commissions of up to 30%.

Epic broke Apple's rules last year when it introduced its own in-app payment system in "Fortnite" to circumnavigate Apple's commissions. In response, Apple kicked Epic off its App Store.

Epic sued Apple, alleging the iPhone maker is abusing its power over app developers with App Store review rules and payment requirements that hurt competition in the software market. Epic also launched an aggressive public relations campaign to call attention to its allegations just as Apple's practices have come under scrutiny from lawmakers and regulators in the United States and elsewhere.

In opening arguments, Epic attorney Katherine Forrest of Cravath, Swaine & Moore laid out the gaming company's argument that Apple has "brick by brick" built its App Store into a "walled garden" meant to extract fees from developers who want to access Apple's 1 billion iPhone users. Forrest argued that Apple has locked those users into its ecosystem with apps like iMessage, which lets Apple users send messages to other devices but has limited functionality when communicating with Android users.

“The most prevalent flower in the walled garden is the Venus fly trap,” Forrest argued before Judge Yvonne Gonzalez Rogers (NYSE:ROG), who is presiding over the trial in a courtroom in Oakland, California.

Apple has countered Epic's allegations by arguing that its App Store rules have made consumers feel safe and secure in opening up their wallets to unknown developers, helping create a massive market from which all developers have benefited. Apple argues that Epic intentionally broke its contracts with Apple because the game maker wanted a free ride on the iPhone maker's platform.

In opening arguments for Apple, attorney Karen Dunn of Paul, Weiss noted Epic is asking the judge to force Apple to let third-party software be installed on its phones outside the App Store, similar to the "side loading" the Android operating system already allows.

“Epic is asking for government intervention to take away a choice that consumers currently have,” Dunn told the court.

The courtroom was closed to the public, but in the audience as a "corporate witness" for each side were Epic Games Chief Executive Tim Sweeney, who was expected to take the stand later on Monday, and Phil Schiller, Apple's App Store chief.

Both executives are expected to attend the entire trial, which will also feature in-person testimony from Apple Chief Executive Tim Cook and other senior executives at both firms.

Epic is not seeking monetary damages but is asking the court to hand down orders that would end many of Apple's practices.

'Fortnite' creator Epic Games makes case against Apple at antitrust trial
 

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