Apple says Epic is ‘putting the entire App Store model at risk’

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Apple has responded to Epic Games’ antitrust lawsuit over its iOS App Store policies. The filing asks a court not to temporarily reverse an App Store ban while the suit is ongoing. And it accuses Epic of disingenuously creating an “emergency” by accepting direct payments through Fortnite in violation of Apple’s rules.

In a declaration to the court, Apple executive Phil Schiller wrote that Epic CEO Tim Sweeney asked for a “special deal with only Epic” that would “fundamentally change the way in which Epic offers apps on Apple’s iOS platform.” When Apple declined, Epic changed its policies to cut Apple out of in-app purchases. Now, the company argues that Epic’s ban is its own responsibility.

“In the wake of its own voluntary actions, Epic now seeks emergency relief. But the ‘emergency’ is entirely of Epic’s own making,” Apple’s response reads. “Developers who work to deceive Apple, as Epic has done here, are terminated.”

Elsewhere in the filing, Apple laid out a defense of its in-app purchase rules. “If developers can avoid the digital checkout, it is the same as if a customer leaves an Apple retail store without paying for shoplifted product: Apple does not get paid,” it reads.

Epic CEO Tim Sweeney has called Apple’s characterization of the series of events leading up to Fortnite’s removal as “misleading,” as he initially requested in an email that the App Store exemptions Epic sought be made available to all iOS developers.

Epic sued Apple last week in a rapidly escalating fight over mobile app store policies. Apple banned Fortnite after Epic introduced direct payments that bypassed Apple’s in-app purchase system and its 30 percent commission. Epic retaliated with a lawsuit claiming that Apple violates antitrust law by controlling iOS platform access through the App Store and requiring developers to use its payment options.

Apple’s response also contains a trove of emails between Sweeney, Schiller, and other Apple executives, including the on in which Sweeney asks for Apple to extend Epic’s requested changes to all developers. On June 30, Sweeney requested that Apple allow Epic to launch its own app store on iOS and include an alternative payment system in Fortnite and other Epic games that would allow those titles to bypass the App Store’s standard 30 percent cut.

“Apple’s contracts and standards documents contain restrictive provisions that prohibit Epic from offering a competing app store and competing payment processing options to consumer,” Sweeney wrote. “Apple would need to provide a side letter or alter its contracts and standards documents to remove such restrictions.”

Apple refused. “The App Store is not simply a marketplace — it is part of a larger bundle of tools, technologies and services that Apple makes available to developers,” wrote Apple associate general counsel Douglas Vetter in mid-July. “We cannot be confident that Epic or any developer would uphold the same rigorous standards of privacy, security, and content as Apple. Indeed, since Apple treats all developers according to the same terms, Epic is essentially asking Apple to outsource the safety and security of Apple’s users to hundreds of thousands of iOS developers.”

Epic went through with its plans anyway, notifying Apple of its change in an email sent at 2AM on August 13th — just before a sudden update added the new payment options. “We choose to follow this path in the firm belief that history and law are on our side,” wrote Sweeney. “We hope that Apple will reflect on its platform restrictions and begin to make historic changes that bring to the world’s billion iOS consumers the rights and freedoms enjoyed on the world’s leading open computing platforms.”

He also hinted at a legal attack if Apple retaliated — which the phone maker promptly did, banning Epic from its store.

Apple has previously said its locked-down system creates “a safe and trusted place” for users. It repeated similar arguments in this filing. “If every developer is free to breach its contracts with Apple and allowed to circumvent the App review process,” Schiller’s statement reads, “then Apple’s App Store cannot deliver the many benefits to consumers and developers that it currently does…. And if developers can circumvent [in-app purchases] and avoid paying Apple the commissions it is contractually due, Apple will be unable to continue its on-going investment in it.”

“Epic’s actions are putting the entire App Store model at risk,” Schiller concludes.

Meanwhile, Epic has framed its fight around freedom and consumer choice, parodying Apple’s famous “1984” ad to paint the phone maker as a repressive dictatorship. It’s also taken aim at Google after being kicked off Android’s Play Store. While Android users can still install Fortnite, Epic filed a suit claiming Google erects “contractual and technological barriers” that disadvantage non-Play Store apps.

Alongside the Fortnite lawsuit, Apple is facing antitrust scrutiny in Congress. CEO Tim Cook testified at a House Judiciary Committee hearing last month, and questions focused largely on Apple’s App Store policies. The Supreme Court also denied Apple’s request to dismiss a different lawsuit last year, affirming that developers could sue over antitrust concerns.

Apple argues that its App Store practices — including the in-app purchase system — are no different than those of console platforms like Sony’s PlayStation or Microsoft’s Xbox. “Apple needs a way of ensuring that it actually gets paid. [In-app purchasing] is the fundamental mechanism by which Apple, like many other transaction platforms, implements its business model and recoups its substantial investment in the platform,” reads the filing.

Apple has defended its iOS practices for many years, including during the recent hearings. But Epic is mounting one of the most visible challenges yet. For now, Apple is focusing on convincing a court to let its ban stand while the rest of the case progresses — by arguing that Epic’s Fortnite update was part of a deliberate, avoidable plan to antagonize it.

Update August 21st, 5:45PM ET: Added statement from Epic CEO Tim Sweeney.

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