Epic Games vs Apple Justice Trial: Days 3 and 4

May 7, 2021

The third day focused on Lori Wright, Microsoft's vice president of Xbox operations, as a witness, pointing out that Xbox's main competitor is Sony PlayStation, and iOS devices are not regarded as competitors, but only as auxiliary devices, and players usually also play on game consoles. . For example, AAA titles on Xbox often require 150-450 GB of storage, but games on iOS devices typically cannot exceed 3-4 GB.

Wright pointed out that the Xbox console is indeed sold at a loss, and then the profit is made up with a 30% commission on game sales (Editor's Note: As rumored). Therefore, Xbox does not intend to reduce the commission rate, nor does it allow third-party software stores.

(Editor's note: Conversely, Apple has made huge profits selling iOS devices, and the App Store has been accused of making huge profits through its 30% commission.)

However, on the open platform of Windows, Microsoft adopts a completely different policy, and recently announced that it will reduce the 30% commission of the Windows Store to 12% in August to maintain competitiveness. Why are there such two distinct strategies? Wright explained that because the Xbox market is much smaller than Windows, it is an experience that integrates hardware and software, and it is only a special-purpose device (game console), while the open platform compared to Windows is a general-purpose device.

(Editor's note: This reflects the uniqueness of iOS devices, which are also integrated hardware and software, but are general-purpose devices that use closed platforms. However, just as Apple has different policies for macOS and iOS, Microsoft also applies to Windows and Xbox. different policies.)

Wright pointed out in a chart that on a closed platform such as a mobile device, the profit split of the platform business can account for more than 39%, while on an open platform such as a personal computer, the platform business (this should refer to Microsoft) only A profit split of 5% shows that it will be more beneficial to developers and publishers on an open platform.

Microsoft's cloud gaming platform, Xbox Cloud Gaming (xCloud), once spent 3-4 months negotiating with Apple, hoping to launch it as a native app, but Apple changed its mind and instead requires each game to be launched independently. (Editor’s note: Although it is technically feasible, there may be a problem with the authorization of game companies, which makes it extremely difficult to manage hundreds of game apps; in the end, the three major cloud gaming platforms, Nvidia GeForce NOW, Microsoft xCloud, and Google Stadia, only launched Web Apps. )

When asked if Microsoft resisted Apple's commission cut, Wright said it was a minor issue, although it was a challenging one in the long run.

Judge YGR is also puzzled, why does Apple not allow cloud games to be presented in a single app, similar to the subscription model of "Netflix"? (Editor's note: According to Apple's App Store Review Guidelines , it is required that individual games have separate pages on the App Store for search and evaluation, etc.)

Another witness was Epic Games engineer Andrew Grant. Judge YGR was asked to learn that porting Fortnite to iOS was not an easy job, it was a standalone version developed especially for mobile devices, and it was like asking director Steven Spielberg to come. Reshoot a Jurassic Park movie. Of course, some code can be shared, such as simulating the effect of physical gravity, business logic, etc., but it takes a lot of development time to adjust the touch user interface and performance. On the whole, the computer and home game console versions will have better performance, more accurate game operations, and better performance in sound effects, graphics, and network latency.

Grant also stated that they would not make Fortnite as a Web App because it would require a huge amount of work, but it would still be a poor product. Grant details various factors that make web apps inferior to native apps, including:

Unable to send notification
Unable to integrate some system functions (such as ARKit)
Not compiled to optimize performance
Web apps can only take up about 50 MB of storage space, while native apps can be as large as 27 GB with no problem.
The previously mentioned game streaming latency issues, etc.

(Editor's note: Here Epic Games needs to state to the judge in detail that native apps and web apps are completely different levels of development, while Apple's App Store fully controls the channels of native apps, that is, has an unequal advantage.)

During the cross-examination, Apple’s lawyer RD pointed out that Epic Games has similar terms to Apple’s App Store: games using the Epic engine, with a quarterly revenue of more than $3,000, need to pay a 5% commission; cheating “Fortnite” players will be suspended.

The fourth day starts with the payment method. Thomas Ko, who is responsible for building the Epic payment architecture, pointed out that it is safe and reliable (Editor's note: After all, there are many companies in the industry that do online payment services, the competition is fierce, and the commission is usually less than 5%, unlike the App Store IAP, which is exclusively 15- 30%).

The focus turns to Apple's App Store, with its VP Matt Fischer noting that Apple has never studied the average spend per iPhone user in the App Store, but admitting that Apple has done a study that found "developers don't agree that the App Store makes the difference." Their app is monetized." Many developers testified that: there are often various fraudulent apps on the App Store, and the review standards of App Review are often inconsistent and have unequal terms.

For example, the refund mechanism of the App Store is extremely unfriendly, but it is unique that Hulu (a US-based video and audio service) can use the API function of refunding and canceling subscriptions; Apple's Matt Fischer admitted that there is such a developer whitelist, and the special part is approved. function, but explained that this is only an internal small-scale test, and if the effect is good, it will be provided to all developers; in addition, Apple Matt Fischer said that the App Store Review Guidelines do not make special cases, and all apps are treated equally.

Apple claims that third-party payment mechanisms pose security and privacy issues, but Apple's Matt Fischer admits that no such research has ever been done internally.

However, Apple's Matt Fischer is only responsible for the marketing and editorial operations of the App Store. He believes that the App Store "free" provides marketing exposure resources for developers and apps, which is a unique feature that other competitors do not have. (Editor's note: As an Apple developer, you have to pay $99 a year to get listed on the App Store, which is also a rare high fee, but Apple never mentioned this fee in court.)

Apple's Matt Fischer believes that IAP is only a way to sell digital goods, and the App Store will also review to ensure that the purchase process and digital goods are in place. But he and some people feel guilty that IAP and Apple's commission are two different things, but that Apple has tied the two together.

It was Apple's marketing executive Trystan Kosmynka, who was previously the co-founder of TestFlight. He tried to launch a native app but was rejected, so he turned to Web App to develop TestFlight. Later, he accepted Apple's acquisition and is currently in charge of App Review.

According to a 2017 Apple internal letter ( PX-0305 ), the well-known game "Roblox" was once rejected because there was another store for players to make games inside the game, but in the end the App Review Board agreed, Apple Kosmynka said He was also surprised. (Editor's note: According to the letter, this game has implemented IAP, and the developer said that there are 5-6 million self-made games by players every year, which are put on the shelves by streaming, and it is unlikely that they will be built into the App to review them one by one. So the cloud gaming platform with only hundreds of games should be listed one by one for review? This is an obvious double standard.)

Apple's Trystan Kosmynka points out that App Store reviewers are either full-time or hourly paid, working 10 hours a day, but 100 reviewers in Ireland work 8 hours a day; each reviewer reviews 50-hour days per day 100 Apps. (Editor 's note: According to CNBC , there were more than 300 App Store reviewers in 2019, and the total number of known App Store reviewers in this court trial is now nearly 500.)

The trial also revealed Apple's Executive Review Board (ERB) members including Matt Fischer, Phil Schiller, Eddy Cue, Ron Okamoto, Trystan Kosmynka, CK Haun, Ann Thai, Josh Schaffer and Sean Cameron.

Refs:
3rd day

4th day