The Impact of Epic v Apple: A Shift in the Gaming and Payment Industry

She adds a second reason for that decision, which is that Apple is not what's called an essential facility, meaning its function cannot be replaced or replicated by other companies. This is significant because it chokes out competition. Epic tried to say that Apple was an illegal monopoly, but when the market at stake ended up being the digital mobile gaming transaction market, well, there are a lot of competitors in that space, so a big nope from the court on that one. Sorry, Epic.

On a related note, though, it did seem like the judge kind of hinted at Epic potentially winning this argument if it hadn't tried to dismantle the entire app system. Uh, which does leave the door open to another company making a narrower, more refined argument that could in fact sway the Court's opinion in a future case.

In the overall ruling, Judge Gonzalez Rogers only found in favor of Epic on the anti-steering allegations but found in favor of Apple on all the other accounts, including the one where Epic breached its contract with Apple by violating App Store guidelines when it added the Epic pay option to Fortnite over a year ago. So, Epic will have to pay Apple a 30% cut of all the money it made during the time that option was live and available to users, which comes out to a little over $12 million for the three-month period between August and October of 2020 plus 30% of whatever relevant revenue it might have made after that point until now.

The most important question, though, is what does this all mean for you, the consumer, the user, the customer? If everything takes effect without modification or appeal, which is a huge if, iPhone and iPad owners will see some changes in a few areas. The first change is that they'll see advertisements and links for payment options outside the app store within apps. I'm guessing Apple will probably offer a popup or other notification to put the fear of Steve Jobs in you, saying something like "We can't guarantee the security of any payment options outside the app store if you want to proceed."

These payment options will likely be cheaper than paying through the App Store. 30% cheaper, to be exact, if you look at how Epic implemented its Epic pay option on iOS last year they basically said, "Hey, buy V-Bucks from us directly, and we'll lower the cost by exactly the amount of Apple's commission fees." Now, if all of this goes forward according to the Court's decision, Epic will probably reimplement that option when the ruling takes effect, and you can expect other developers to do so as well. Not every developer can build their own payment system, though, so maybe you see links out to pay on their sites via PayPal or another payment option with a smaller discount than 30%.

Developers are absolutely going to test the limits of this injunction. They'll button up a checkout screen that doesn't take you anywhere; that's not out of the realm of possibility. But I couldn't imagine Apple would love that and the ease of use that would provide.

This doesn't mean we'll see the App Store completely dismantled with third-party app stores allowed to run on iOS, though. It's not what this case folks focused on even though that's what Epic was hoping for in the end. Mobile gaming as the courts mentioned is a huge industry, and it would be extremely lucrative for a company like Epic to launch a mobile epic game store on iOS.

Overall, you could generally consider this ruling a slight win for Apple. Like I said, it's not being forced to completely dismantle or open up the ecosystem it built for iOS users. It's not being forced to change its business model or allow other companies to create their own app stores on iOS. This is all the beginning of a post-decision parade of activity, and we'll be keeping an eye on the after-trial actions of both Epic and Apple.

Apple praised the decision, saying "The Court has affirmed what we've known all along: the App Store is not in violation of antitrust law." Epic CEO Tim Sweeney responded to that statement, saying "The ruling wasn't a win for developers or for consumers," and that the company said it would appeal the decision. So, who knows what will actually be implemented in 90 days? Who knows we'll be keeping an eye on the after-trial actions of both Epic and Apple, and letting you know if anything important happens.

The final verdict is still out, but one thing's for sure: this case has set off a chain reaction that will impact the gaming and payment industry as a whole.

"WEBVTTKind: captionsLanguage: enwe finally have a decision in the Epic versus Apple trial let's break it down last summer epic games activated a payment option within its super popular game fortnite on the iPhone while that payment option circumvented Apple's 30% commission and epic encouraged people to use it by offering them a discount no surprise that day Apple pulled fortnite from the App Store saying it went against the company's rules epic knew that would happen and it had an Anti-Trust lawsuit and a massive PR campaign ready to launch the second fortnite was yanked and ashree fortnite was trending on Twitter shortly after oh and Google got sued by epic to for pretty much the same thing in what's viewed as a possible peace offering to the developer communities ahead of their respective trials Apple and Google both reduced its commissions to 15% for the first million bucks in Revenue developers make every year so generous the official epic vapple trial kicked off at the beginning of May earlier this year and ended before the month was over the judge in that case US District Court Judge Ivon Gonzalez Rogers said a decision could take months at the heart of the trial were some key questions like what Market exactly was at stake here epic said Apple was a monopoly with no competition since Apple controlled every system in the iOS ecosystem including inapp payments and apple said it was the farthest thing from a monopoly because in this complaint it felt it was competing in the games Market which has tons of competition the next question was Apple's anti- steering rule which bans developers from linking out to or even mentioning other payment methods for apps on the App Store anti-competitive like epic insisted it was and lastly is Apple an illegal monopolist like epic alleged in its filing recently a bipartisan bill called the open app markets Act was introduced in Congress that would Place restrictions on how app stores are run no forcing devs to use an app store owner's payment system no forcing people through a single App Store to install apps on a device no Banning developers from telling users about pricing on other platforms you see how this would be a huge deal if it was passed especially for Apple oh and a couple weeks ago South Korea passed a law with a provision stating App Store operators couldn't Force customers to use their payment systems and had to allow developers the option to implement alternative Payment Systems which all seems to point at Google and Apple's grips on their respective app stores kind of loosening but back to the tribe so what was the relevant Market at stake and was Apple's action anti-competitive so in the finding of facts judge Gonzalez Rogers decided she didn't really agree with either company's definition of the relevant Market in this case now she says that after reviewing the evidence the court landed on the digital Mobile gaming transaction market so specifically the market of all of those purchases customers spend on and in mobile games microtransactions game purchases in-game currency bought with real world money you get the idea in that document she goes on to say that the mobile gaming Market is a massive hundred billion doll industry and that most App Store revenue is generated by Mobile gaming apps so there's the relevant Market defined by the court not the full gaming industry like apple insisted and not the party of one Monopoly IOS app store payment system that epic said it was so what about that whole anti- steering rule well the judge ruled against Apple there finding it in violation of California's unfair competition law which is kind of a big deal in fact the court issued a permanent injunction restraining Apple it won't be able to expressly ban developers from talking about linking to or otherwise alerting customers to alternative ways to pay outside the App Store that will take effect in 90 days so around December 9th of this year that injunction does say though that either party can modify it if it brings good cause to the court but we'll see if either side mostly Apple can figure out a loophole and convince the court to change that injunction in any way so finally is Apple an illegal monopolist this is a massive finding of facts document it's 18 185 pages long it details the evidence testimony and other facts leading up to the Court's ultimate decision in that document judge Gonzalez Rogers says quote the court does not find that it is impossible only that epic games failed in its burden to demonstrate apple is an illegal monopolist later in the document she adds a second reason for that decision that apple is not what's called an essential facility meaning its function can't be replaced or replicated by other companies which chokes out competition epic tried to say I was an illegal Monopoly but when the market at stake ended up being the digital mobile gaming transaction Market well there are a lot of competitors in that space so a big nope from the court on that one sorry Epic on a related note though it did seem like the judge kind of hinted at Epic potentially winning this argument if it hadn't tried to dismantle the entire app system uh which does leave the door open to another company making being a narrower more refined argument that could in fact sway the Court's opinion in a future case in the overall ruling judge Gonzalez Rogers only found in favor of Epic on the anti-steering allegations but found in favor of Apple on all the other accounts including the one where epic breached its contract with Apple by violating App Store guidelines when it added the Epic pay option to fortnite over a year ago so epic will have to pay Apple a 30% cut of all the money it made during the time that option was live and available to users which comes out to a little over 12 million bucks for the three-month period between August and October of 2020 plus 30% of whatever relevant Revenue it might have made after that point until now so here's the most important question though I think which is what does that all mean for you the consumer the user the customer if everything takes effect without modification or appeal which is a huge if iPhone and iPad owners will see some changes in a few areas and I think the most important ones for you are one you'll see advertisements and links for payment options outside the app store within apps I'm guessing Apple will probably offer a popup or other notification to put the fear of Steve Jobs in you saying something like we can't guarantee the security of any payment options outside the app store if you want to proceed or something like that they'll try to toss up some hurdles or caveats in the hopes that you'll find the process just a little too cumbersome and just pay via the App Store Payment Systems number two those payment options will probably be cheaper than paying through the App Store 30% cheaper to be exact if you look at how epic implemented its epic pay option on iOS last year they basically said hey buy v-bucks from us directly and we'll lower the cost by exactly the amount of Apple's commission fees now if all of this goes forward according to the Court's decision epic will probably reimplement that option when the ruling takes effect and you can expect other developers to do so as well not every developer can build their own payment system though so maybe you see links out to pay on their sites via PayPal or another payment option with a smaller discount than 30% developers are absolutely going to test the limits of this injunction from buttons that pull up a checkout screen which would not be out of the realm of possibility though I can't imagine Apple would love that and the ease of use that would provide uh all the way to external links that take you to the developers website where you can then walk through the checkout process and number three this doesn't mean we'll see the App Store completely dismantled with third-party app stores allowed to run on iOS it's not what this case folks focused on even though that's what epic was hoping for in the end Mobile gaming as the courts mentioned is a huge industry and it would be extremely lucrative for a company like epic to launch a mobile epic game store on iOS so I think overall you could generally consider this ruling a slight win in Apple's favor like I said it's not being forced to completely dismantle or open up the ecosystem it's built for iOS users and I think most developers and Tech influencers ERS have argued that Apple's binding non-negotiable 30% commission model was pretty ripe for disruption and the court finally forced it to change of course this is all the beginning of a postdecision parade of activity Apple praised the decision saying quote the court has affirmed what we've known all along the App Store is not in violation of antitrust law and then epic CEO Tim Sweeney responded to that statement saying the ruling wasn't a win for developers or for consumers and the company said it would appeal the decision so who knows what will actually be implemented in 90 days who knows we'll be keeping an eye on the after trial actions of both epic and apple and letting you know if anything important happens so what do you think did the court make the right decision drop your thoughts down in the comments and if you found this video helpful I would love a thumbs up so I can keep feeding my family and if you aren't subscribed to our Channel Channel yet what are you waiting for just click on that subscribe button until next time be good humanswe finally have a decision in the Epic versus Apple trial let's break it down last summer epic games activated a payment option within its super popular game fortnite on the iPhone while that payment option circumvented Apple's 30% commission and epic encouraged people to use it by offering them a discount no surprise that day Apple pulled fortnite from the App Store saying it went against the company's rules epic knew that would happen and it had an Anti-Trust lawsuit and a massive PR campaign ready to launch the second fortnite was yanked and ashree fortnite was trending on Twitter shortly after oh and Google got sued by epic to for pretty much the same thing in what's viewed as a possible peace offering to the developer communities ahead of their respective trials Apple and Google both reduced its commissions to 15% for the first million bucks in Revenue developers make every year so generous the official epic vapple trial kicked off at the beginning of May earlier this year and ended before the month was over the judge in that case US District Court Judge Ivon Gonzalez Rogers said a decision could take months at the heart of the trial were some key questions like what Market exactly was at stake here epic said Apple was a monopoly with no competition since Apple controlled every system in the iOS ecosystem including inapp payments and apple said it was the farthest thing from a monopoly because in this complaint it felt it was competing in the games Market which has tons of competition the next question was Apple's anti- steering rule which bans developers from linking out to or even mentioning other payment methods for apps on the App Store anti-competitive like epic insisted it was and lastly is Apple an illegal monopolist like epic alleged in its filing recently a bipartisan bill called the open app markets Act was introduced in Congress that would Place restrictions on how app stores are run no forcing devs to use an app store owner's payment system no forcing people through a single App Store to install apps on a device no Banning developers from telling users about pricing on other platforms you see how this would be a huge deal if it was passed especially for Apple oh and a couple weeks ago South Korea passed a law with a provision stating App Store operators couldn't Force customers to use their payment systems and had to allow developers the option to implement alternative Payment Systems which all seems to point at Google and Apple's grips on their respective app stores kind of loosening but back to the tribe so what was the relevant Market at stake and was Apple's action anti-competitive so in the finding of facts judge Gonzalez Rogers decided she didn't really agree with either company's definition of the relevant Market in this case now she says that after reviewing the evidence the court landed on the digital Mobile gaming transaction market so specifically the market of all of those purchases customers spend on and in mobile games microtransactions game purchases in-game currency bought with real world money you get the idea in that document she goes on to say that the mobile gaming Market is a massive hundred billion doll industry and that most App Store revenue is generated by Mobile gaming apps so there's the relevant Market defined by the court not the full gaming industry like apple insisted and not the party of one Monopoly IOS app store payment system that epic said it was so what about that whole anti- steering rule well the judge ruled against Apple there finding it in violation of California's unfair competition law which is kind of a big deal in fact the court issued a permanent injunction restraining Apple it won't be able to expressly ban developers from talking about linking to or otherwise alerting customers to alternative ways to pay outside the App Store that will take effect in 90 days so around December 9th of this year that injunction does say though that either party can modify it if it brings good cause to the court but we'll see if either side mostly Apple can figure out a loophole and convince the court to change that injunction in any way so finally is Apple an illegal monopolist this is a massive finding of facts document it's 18 185 pages long it details the evidence testimony and other facts leading up to the Court's ultimate decision in that document judge Gonzalez Rogers says quote the court does not find that it is impossible only that epic games failed in its burden to demonstrate apple is an illegal monopolist later in the document she adds a second reason for that decision that apple is not what's called an essential facility meaning its function can't be replaced or replicated by other companies which chokes out competition epic tried to say I was an illegal Monopoly but when the market at stake ended up being the digital mobile gaming transaction Market well there are a lot of competitors in that space so a big nope from the court on that one sorry Epic on a related note though it did seem like the judge kind of hinted at Epic potentially winning this argument if it hadn't tried to dismantle the entire app system uh which does leave the door open to another company making being a narrower more refined argument that could in fact sway the Court's opinion in a future case in the overall ruling judge Gonzalez Rogers only found in favor of Epic on the anti-steering allegations but found in favor of Apple on all the other accounts including the one where epic breached its contract with Apple by violating App Store guidelines when it added the Epic pay option to fortnite over a year ago so epic will have to pay Apple a 30% cut of all the money it made during the time that option was live and available to users which comes out to a little over 12 million bucks for the three-month period between August and October of 2020 plus 30% of whatever relevant Revenue it might have made after that point until now so here's the most important question though I think which is what does that all mean for you the consumer the user the customer if everything takes effect without modification or appeal which is a huge if iPhone and iPad owners will see some changes in a few areas and I think the most important ones for you are one you'll see advertisements and links for payment options outside the app store within apps I'm guessing Apple will probably offer a popup or other notification to put the fear of Steve Jobs in you saying something like we can't guarantee the security of any payment options outside the app store if you want to proceed or something like that they'll try to toss up some hurdles or caveats in the hopes that you'll find the process just a little too cumbersome and just pay via the App Store Payment Systems number two those payment options will probably be cheaper than paying through the App Store 30% cheaper to be exact if you look at how epic implemented its epic pay option on iOS last year they basically said hey buy v-bucks from us directly and we'll lower the cost by exactly the amount of Apple's commission fees now if all of this goes forward according to the Court's decision epic will probably reimplement that option when the ruling takes effect and you can expect other developers to do so as well not every developer can build their own payment system though so maybe you see links out to pay on their sites via PayPal or another payment option with a smaller discount than 30% developers are absolutely going to test the limits of this injunction from buttons that pull up a checkout screen which would not be out of the realm of possibility though I can't imagine Apple would love that and the ease of use that would provide uh all the way to external links that take you to the developers website where you can then walk through the checkout process and number three this doesn't mean we'll see the App Store completely dismantled with third-party app stores allowed to run on iOS it's not what this case folks focused on even though that's what epic was hoping for in the end Mobile gaming as the courts mentioned is a huge industry and it would be extremely lucrative for a company like epic to launch a mobile epic game store on iOS so I think overall you could generally consider this ruling a slight win in Apple's favor like I said it's not being forced to completely dismantle or open up the ecosystem it's built for iOS users and I think most developers and Tech influencers ERS have argued that Apple's binding non-negotiable 30% commission model was pretty ripe for disruption and the court finally forced it to change of course this is all the beginning of a postdecision parade of activity Apple praised the decision saying quote the court has affirmed what we've known all along the App Store is not in violation of antitrust law and then epic CEO Tim Sweeney responded to that statement saying the ruling wasn't a win for developers or for consumers and the company said it would appeal the decision so who knows what will actually be implemented in 90 days who knows we'll be keeping an eye on the after trial actions of both epic and apple and letting you know if anything important happens so what do you think did the court make the right decision drop your thoughts down in the comments and if you found this video helpful I would love a thumbs up so I can keep feeding my family and if you aren't subscribed to our Channel Channel yet what are you waiting for just click on that subscribe button until next time be good humans\n"