Epic Games brings Apple legal stoush to Australia

A claim has been filed with the Federal Court of Australia against the Silicon Valley giant over its app store practices, which claims the company breaches Australian Consumer Law.
Written by Asha Barbaschow, Contributor

Epic Games has launched legal proceedings in Australia against the local arm of Apple, continuing its fight with the iPhone maker over its app store practices. Epic said it was extending the battle down under to make digital platforms fairer for consumers and developers. 

The claim was filed at the Federal Court of Australia. It states Apple's conduct is unconscionable and breaches Australian Consumer Law as well as various sections of the Competition and Consumer Act 2010.

It alleges Apple's conduct in the Apple App Store is a misuse of market power and substantially lessens competition in app distribution and payment processes.

"Apple's conduct has hindered or prevented, and continues to hinder or prevent, Epic and other app developers and in-app content payment providers from competing or effectively competing in the iOS App Distribution Market and the iOS In-App Payment Processing Market," the claim states.

"Among other things, Apple's conduct has forced Epic and other app developers to pay Apple monopoly prices … in connection with all in-app purchases of their in-app content on iOS devices. This has led to harms including increased prices for in-app content by iOS device users in Australia and lost profits for Epic."

In a statement, the Fortnite publisher accused Apple of locking down and crippling the ecosystem by "imposing an absolute monopoly on distribution and through the restrictions placed on in-app purchases".

Epic claims Apple is preventing entire categories of business and software applications from being developed in its ecosystem. It said such excessive control is bad for competition, choice, and innovation.

See also: Cloud gaming, not Fortnite, poses the longer-term app challenge for Apple

"This is much bigger than Epic versus Apple -- it goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests," Epic founder and CEO Tim Sweeney said.

"Apple were pioneers of the personal computer, and their original products were open platforms. Anyone could write code, anyone could release software, and users could install software from sources of their choosing.

"Today's digital platforms must be similarly open to fair competition."

Epic brought proceedings against Apple in the United States in August, accusing Apple, as well as Google, of being anti-competitive and monopolistic. The accusations arose after both tech giants removed Fortnite from their respective app marketplaces after Epic implemented its own in-app purchase system, which circumvented app store fees.

"Apple has become what it once railed against: The behemoth seeking to control markets, block competition, and stifle innovation. Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear. At a market cap of nearly $2 trillion, Apple's size and reach far exceeds that of any technology monopolist in history," Epic said in the originating claim. 

Apple countersued Epic Games in September, accusing the game developer of attempting to pay nothing for the value it derived from being in the App Store. It also alleged Epic of committing commission theft by deliberately implementing its own in-app payment system, which led to the game designer breaching its App Store contractual obligations.

The iPhone maker also accused Epic of charging others for access to Apple's intellectual property and technologies through the in-app payment system, as well as for preparing a "smear campaign" against the company. 

Apple was seeking damages for any potential injury, goodwill, and product image, and commission earnings it has lost from Epic Games actions. This was until a US court threw out Apple's claims last week.

"This is a high-stakes breach of contract case and an antitrust case and that's all in my view," US District Judge Yvonne Gonzalez Rogers told lawyers.

"You can't just say it's independently wrongful," she told Anna Casey, a lawyer for Apple, referring to Epic's conduct. "You actually have to have facts."

Epic said it is not seeking damages from Apple in Australia or the US but rather, it is "simply seeking fair access and competition that will benefit all consumers".

"Apple forecloses all potential competitors from entering the iOS App Distribution Market, and contractually prohibits app developers such as Epic from distributing iOS-compatible apps to the broad base of iOS device users, including in Australia, other than through the App Store," Epic states in its claim.  

The Australian Competition and Consumer Commission (ACCC) in September announced it would extend its digital platforms battle to the app stores of major providers such as Apple and Google, saying at the time it was concerned mostly with their transparency around data use, competitiveness, and also the type of apps they make available for download.

As part of the probe, the ACCC said it would examine the experiences of consumers, developers, and suppliers, focusing on the use and sharing of data by apps, the extent of competition between Google and Apple's respective stores, and whether more pricing transparency is needed in the local mobile apps market.

The ACCC said it would also be looking into the fee structure of app stores.


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