Judge says Apple can’t retaliate against Epic Games, but OK’s Fortnite ban from app store
Epic Games won a partial victory in the earliest battles of its antitrust lawsuit against tech giant Apple’s App Store.
A California judge ruled Monday that Apple will not be allowed to retaliate against the Cary, N.C.-based Epic Games by terminating its developer accounts for its popular visualization tool, Unreal Engine.
However, Judge Yvonne Gonzalez Rogers, of California’s Northern District Court, ruled that Apple does not have to allow the popular video game Fortnite back to the App Store.
The decision follows a whirlwind back-and-forth between Epic and Apple, after the video game maker attempted to get around Apple’s mandatory 30% in-app purchase fee in its most recent Fortnite update and filed an antitrust lawsuit against the tech giant.
That led to Apple kicking the popular game off the App Store, and then moving to terminate the company’s larger developer accounts. The court moved quickly as Apple said it would terminate the company’s accounts by Aug. 28.
Before the hearing, a member of Microsoft’s gaming developer services team filed a statement in support of Epic Game’s restraining order. In the filing, Kevin Gammill, of Microsoft, wrote that Unreal Engine is a critical tool for many game developers and the termination of Epic’s developer accounts would place many of them at a disadvantage.
Microsoft, for its part, could stand to benefit from a larger ruling against Apple in the antitrust lawsuit. Apple recently denied several cloud gaming platforms, including Microsoft’s. from being part of the App Store, saying it couldn’t review individual games that were part of a cloud gaming platform.
During a Monday hearing, Judge Gonzalez Rogers called Apple’s retaliation “an overreach,” and noted that Epic Games and its Unreal Engine subsidiary had two different contracts with Apple.
Her decision seemed to be influenced by the damage that blocking Unreal Engine’s accounts would have on third parties. Many video game makers, movie makers and other design-based industries use Unreal Engine to make 3-D visuals.
The ruling prevents what would have been a harmful blow against Epic.
While Fortnite is the company cash cow, Epic makes a lot of money from licensing Unreal Engine, a visualization platform used by the movie industry and others. It was used, for example, in the most recent Star Wars movies.
A lawyer for Epic, Katherine Forrest, said that eliminating Unreal Engine’s developer accounts would destroy it, as it would make multi-platform development on the engine impossible.
“Unreal Engine will cease to exist” without a restraining order, Forrest told the judge. “We are receiving information from developers saying they are fleeing the Unreal Engine now. It’s happening now; it’s not speculative.”
In one back-and-forth with Apple lawyer Richard Doren, Gonzalez Rogers forced the lawyer to answer a yes-or-no question about whether blocking Unreal Engine would hurt third parties.
“May it at some point in the future? Of course it may,” Doren responded. “That is why Epic should cure its breach.”
In her opinion, Gonzalez Rogers wrote that this lawsuit should not cause harm to other parties.
“Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders,” Gonzalez Rogers wrote. “Certainly, during the period of a temporary restraining order, the status quo in this regard should be maintained.”
However, Gonzalez Rogers noted she did not believe Epic has proven irreparable harm in regard to its popular Fortnite game. She noted that Epic “strategically chose to breach its agreements with Apple.”
“The Court finds that with respect to Epic Games’ motion as to its games, including Fortnite, Epic Games has not yet demonstrated irreparable harm,” she wrote.
Epic plans to release a new season of Fortnite on Aug. 27, a move that will require players to update their version of the game. As long as Epic is in breach of the App Store’s policies, Fortnite players on Apple products will not be able to update the game and play the new season.
The temporary restraining order against Apple will remain in force until the court makes a decision on a preliminary injunction, which if upheld would preserve the status quo between Apple and Epic until there is a ruling in the case.
The court is expected to hold a hearing on a preliminary injunction on Sept. 28.
In a sign of where this court battle will eventually be played out, Gonzalez Rogers engaged briefly with lawyers on Apple’s App Store monopoly.
She remarked that it is true that Apple does not allow any other form of app distribution or payment systems on its iPhones, which Epic argues is a monopolistic act.
According to documents provided by Apple in the lawsuit, Epic Games CEO Tim Sweeney wrote a letter to Apple CEO Tim Cook earlier this year, in which he asked to be allowed to offer a competing app store on the iPhone. His request was denied.
During Monday’s hearing, Gonzalez Rogers said: “If you have an iPhone ... you are limited to buying (apps) from Apple. I can’t buy it from Google. I can’t buy it from Amazon.”
“There is no competition, and so the question is without competition where does that 30% come from?” she added. “Why isn’t it 10, 15, 20? How is the consumer at all benefiting from the fact that you get to say what you want it to be, and if it’s not that you pull the rug.”
Doren, the Apple lawyer, responded that competition exists before people use the App Store, when they decide which type of phone to buy.
Gonzalez Rogers responded by noting that there are very high costs to switching between iOS and Android, for example.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published August 25, 2020 at 9:44 AM.
