At the center of this long-running lawsuit is Fortnite, a popular video game produced by Epic that was removed from Apple’s App Store last summer for violating Apple’s rules on technical billing. due to have arbitrarily established a payment system of their own. Apple takes 30% of the value of in-app purchases on iOS devices and does not allow the use of alternative payment systems. Fortnite’s removal from the App Store prompted Epic to file a lawsuit against Apple. Squeeze the developer Epic accuses Apple of having monopolistic control over the “ecosystem” of the iOS operating system, with app makers forced to abide by its strict restrictions if they want access to hundreds of thousands of users. million iPhone and iPad users, Apple also countered that there are several other places where users can buy apps and their commissions help the company make its devices better and more secure. The CEO has his first court appearance since taking power at Apple. Photo: Getty. Several executives from both sides also testified, including Craig Federighi, Apple’s senior vice president of software engineering, and Phil Schiller, Apple’s former chief marketing officer, now serving as Apple’s senior vice president of software engineering. new role as Apple Fellow. Both were subpoenaed by the court earlier this week. Epic Games CEO Tim Sweeney is the first witness in the nearly three-week trial and is expected to end on Monday. Tim Cook and Apple are facing many dangers, not only this cult lawsuit. Cook’s testimony on Friday is likely to spark a battle against the growing antitrust pressure it is facing. Other “Frenemy” (meaning both friends and enemies) like Spotify and Match Group, the owner of Tinder, have all accused Apple of anti-competitive behavior. Even legal authorities in some countries including the US and UK have launched investigations into Apple’s regulations. Despite numerous defenses before Congress and numerous public appearances and interviews, Mr Cook appears to be preparing for his day in court. According to a report from Wall Street Journal , he spent many hours mock interrogation with former prosecutors to simulate what he might face during the trial. “The scary thing for Epic is that Tim Cook is such a compelling witness,” said Herbert Hovenkap, professor of legal studies and business ethics at the Wharton School of Business at the University of Pennsylvania. He’s doing what he’s been paid to do, which is bringing Apple’s lawsuit to the public.” According to the list of witnesses presented to the court, Mr. Cook will speak about “Corporate Values; Apple’s business operations and the development and launch of the App Store; the competition that Apple faces.” An Apple representative said Mr. Cook is likely to share more from his personal perspective on security and privacy issues – issues he has often criticized companies in the past – and the importance of them to Apple’s product philosophy. Roses come with quality Mr. Cook is expected to synthesize and strengthen the arguments that other Apple lawyers, experts and executives have made during the trial – that the iPhone’s App Store is not a proprietary trademark. The company argues that the 30% commission it receives through in-app purchases is not an illegal gain, but rather to make Apple devices better, more secure like their strict management of applications on Apple devices. In his testimony, Schiller highlighted the amount of money Apple has spent on research and development — an estimated $100 billion over the past 15 years — to make product improvements that developers are benefiting from. it. He also sought to counter Epic’s efforts to accuse Apple of being a monopolist. The lawsuit between Apple and Epic will determine the future of the relationship between app developers and Apple. Photo: Cnet. Epic Games company says Apple is forcing developers to play by its draconian rules such as only using the App Store and means of paying for in-app purchases if it wants to gain access to a market of more than a billion dollars. iPhone and iPad users. (Michael Schmid, Apple’s head of game business development for the App Store, revealed during the trial that Apple made more than $100 million in commissions from Fortnite.) Schiller also listed a range of Apple competitors: Google, Samsung, Motorola, Huawei and even game consoles like Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s Switch. Apple claims that many of these companies also take 30% commissions and have similar restrictions on outside apps. “There are still a lot of other competitors in the distribution of applications, not just Apple,” he added. Federighi, the company’s chief software officer, further emphasized the importance of Apple’s security measures for the iOS operating system on its mobile devices. He even heavily criticized the company’s MacOS computer operating system during the trial. Unlike iPhones, Macbook laptops allow the use and download of applications from outside, a process known as “side-loading”. Epic has repeatedly pointed out and called on Apple to emulate this approach with its mobile devices. However, Apple’s lawyers and executives argue that the iPhone needs to be more secure because the risk of the device being exposed to security holes and exploitation is great, especially when smartphones are used. often contain more sensitive personal data of users than other devices such as computers, laptops… “If you take Mac security techniques and apply them to the iOS ecosystem, with so many devices and value for it, things are going to be a lot worse than they already are. on Mac,” said Mr. Federighi. “We now have a bunch of malware on Mac, which is much worse than iOS. It’s not acceptable!”. Florian Ederer, an economics professor at the Yale School of Management, thinks Cook will stick to his earlier arguments. “It is very difficult to get any new information or arguments from this CEO’s testimony that have not yet been brought to the attention of the judge,” he said. “Basically, having Cook in court is Apple’s best move to show the judge that they are taking this matter completely seriously. If there is any other purpose, perhaps it is the respect of Cook in particular and Apple in general for this lengthy litigation process,” Ederer added.

Although the legal battle between Epic Games and Apple (US first instance trial) will take place in May, right now the related developments of the case continue to attract attention from the public. .

A few days ago, the Australian trial was postponed for the third time, but the legal documents show interesting information. The Epic Games Store lost approximately $ 181 million in 2019 and nearly $ 273 million in 2020, showing that since its launch in 2018, the company has never been profitable. Also, in 2021, Epic Games’ expected loss is about $ 139 million.

According to Apple forecasts, the business of Epic Games by the end of 2021 has lost $ 600 million after 3 years. To be profitable, Epic Games may have to wait until 2027.

The thing has been predicted from before

In fact, Epic Games has previously confirmed that the Epic Games Store will not be profitable until 2023. On loss information, Tim Sweeney, CEO of Epic Games, is very optimistic: ” Although Apple calls it a loss, in my view it is an investment, which is also the basis for bringing huge profits in the future.

Although the CEO of Epic Games is confident about profitability, it still cannot change the fact that they have “lost”. As a company that owns Unreal Engine tools, the loss of 450 million USD in the past 2 years is beyond the imagination of many people.

In this case, with the backing of the Unreal Engine being used by most of the developers, the Epic Games Store took up to 4 years to be profitable causing people to question whether or not the business strategy is. “Take profit as a profit” of company leaders?

Free business strategy

According to the official data Epic Games published before, the progress of the game store in the past 2 years is very clear. By 2020, the total number of users on the Epic Games Store will reach 160 million, up 56% from 108 million in 2019. Besides, daily active users reach 31.3 million in 2020, increasing 192% and total user time is 5.7 billion hours, up 70%.

But the problem also lies here, in this era, an emerging gaming platform can achieve such a marked growth, spending money is an inevitable option.

According to the New York Times, in 2020 alone, Epic Games has invested about $ 444 million in the monopoly of the game, with Control of 505 Games alone, the amount amounted to 10.45 million USD. Such a huge investment, in exchange for a one-year monopoly of several games, is also Epic’s best weapon for taking the market from Steam.

But Epic’s revenue from these exclusive and third-party games is relatively limited. In 2020, players spent $ 700 million on the Epic Games Store, which is only $ 20 million higher than in 2019. Of which, revenue from third-party titles is $ 265 million, only up $ 14 million compared to 2019. Apple estimates show that if you count transactions in 2019, Epic will lose at least $ 330 million in exclusive expenses.

Of course, in addition to investing money in exclusive content, Epic Games also promotes a free business strategy to attract new users. The $ 450 million loss is mainly due to this business method. According to Epic’s official data, from 2019 to 2020, the platform distributed 180 games for free, with a total value of up to $ 3,862 (US price) with 950 million purchases. This is actually a buy 1 get 1 free, but with a free gift for buyers, Epic Games has to pocket money for the developer.

On the one hand, they’re spending money on game companies and developers for exclusive content, on the other, they’re out-of-pocket attracting players who aren’t willing to pay. After all, in terms of business, Epic Games is the one to lose.

A healthy competition

Indeed, for developers, whether their game has a chance of being included by Epic in the Epic Games Store (471 games in 2020) or directly on Steam, Epic’s arrival makes a difference. special. For the gaming industry, the PC games market is no longer dominant enough and only acts as an incentive for competition. If Epic can gain a foothold, Steam’s upcoming business strategy must also change.

With the strength of the Unreal Engine, Epic Games Store can completely use competitive tactics to disadvantage Steam. However, to challenge Steam’s position is not easy, especially keeping players from paying fees, Epic Games has too many obstacles to overcome before making any profits.

Of course, competition is inevitable and is also a necessary factor for the development of the market. Whether healthy competition can be maintained, that depends pretty much on the final court ruling after the legal battle between Epic Games and Apple is over.