The federal trial between Apple and Epic Games began on May 3rd, 2021. According to court documents, the businesses will argue over whether Apple’s 15% to 30% commissions for use of in-app payment systems amount to anti-competitive behavior for three weeks. Several fascinating pieces of information have already been revealed in this case.
It was revealed that Xbox consoles have never been profitable for Microsoft. When Microsoft’s VP of Xbox business development Lori Wright was asked on May 5th, “Has Microsoft ever earned a profit on the sale of an Xbox console?” She answered, “no.”
Berkeley Research Group managing director Ned Barnes was one of Epic Games’ expert witnesses. He said Apple enjoyed high margins on the App Store. “In my expert report dated February 16, 2021,” Barnes writes, “using Apple testimony and financial information available to me at that time, I calculated the App Store’s operating margin percentage to be 79.6% for each of FY2019 and FY2018.”
Court filings also showed that at 2 a.m. PST on Thursday, August 13th, 2020, Epic Games CEO Tim Sweeney sent an email to Apple CEO Tim Cook and other Apple executives that detailed a plan to cut Apple out of payments in Fortnite on iPhone and iPad devices. “I’m writing to tell you that Epic will no longer adhere to Apple’s payment processing restrictions,” the email said. “Today, Epic is launching Epic direct payments in Fortnite on iOS, offering customers the choice of paying in-app through Epic direct payments or through Apple payments, and passing on the savings of Epic direct payments to customers in the form of lower prices.”
Apple also tried to use “offensive and sexualized” games offered on Itch.io (through the Epic Games Store) as a weapon against Epic in court. “On the fifth day of court, however, Apple tried to turn Itch.io into a liability,” writes The Verge‘s Adi Robinson, “by telling Epic Games Store general manager Steven Allison about ‘so-called adult games’ that were ‘so offensive we cannot speak about them here.'” Allison responded by saying that “Itch.io is an incredible community for developers that we support fully. They have an open platform, and therefore have different moderation standards than the Epic Games Store.”
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