Hey everyone, it's Mark. I've been following the trial between Apple Inc. and Epic Games Inc. since Monday, and so far, it looks like Apple is scoring most of the wins. The core issue is very simple: Epic Games is accusing Apple of monopolistic behavior on its App Store. That's because the company requires app developers on the store to also use its payment system, which means Apple takes a 15% to 30% cut. This week, it seems that Epic hasn't been able to prove that the obligatory use of Apple's payment system constitutes an abuse of monopolistic power, and it hasn't shown that Apple is engaging in serious anti-competitive behavior. The testimonies from Epic's side don't appear to have moved the needle. An Apple representative said Epic is spending its time in court on irrelevant issues and continues to call witnesses that are helpful to Apple's story. Epic was always going to be facing difficult fight. The burden of proof is on Epic, as the plaintiff, to show why Apple shouldn't require app makers to use its payment system and demonstrate that the company is hurting developers. Epic has done some of that, roping in representatives from the gaming divisions of Microsoft Corp. and Nvidia Corp. to testify on its behalf. But all their arguments may not be enough to sway the judge, particularly one that has sided with Apple on multiple cases in the past. Even if Epic loses the case, its crusade may still have an impact. The trial, which has been a national story for days, has highlighted several developer concerns with the App Store. The iPhone maker may walk away from the trial freshly motivated to appease developers over the long-term, and avoid future lawsuits that could potentially be even more embarrassing than this one. Here are some changes that Apple could make, even if a judge doesn't force them to: For its gaming apps, the company might loosen its ban on services that allow users to play different games inside a single app, just like they can access several movies inside of a service like Netflix. Apple has said the company bans this type of app because it wants to review each game on its own and not allow remotely enabled content. Cloud gaming has nearly become the industry standard in 2021, and Apple's ban on such content apps is old school and could eventually drive hardcore gamers away from its platform. I also think Apple should consider making more developers eligible for the 15% App Store commission rate. Right now, the only developers who can pay less than 30% are those who generated no more than $1 million in revenue during the previous calendar year. It's easy to imagine the company matching Google and allowing that discount for the first $1 million made in any calendar year for any developer, regardless of how much they made the year prior. Lastly, I do think Apple and Epic could have solved their differences without a trial if Apple simply allowed Epic to advertise to their users that they could go to the Epic website to complete a VBucks purchase—as long as an option to purchase the items in the app remained. Epic would likely get a percentage of users buying from their website, while Apple would get to retain their payment system for consumers who want to use it. That's a potential compromise I could see going a long way to keep the developer ecosystem happy. Apple may win this lawsuit, but its work to make the App Store a happy place for all developers is just beginning. —Mark Gurman |
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