Apple vs. Epic starts May 3

According to court documents, Fortnite’s growth was slowing when Tim Sweeney decided to goad Tim Cook into a fight to the finish.

From the Wall Street Journal’s “Fortnite’s Mastermind Goes to Battle With Apple” ($) posted Saturday:

By early 2020, “Fortnite” was showing signs of aging, although popularity for online games can sometimes ebb and flow due to new seasons or features. The privately held company doesn’t disclose financial records but app-analytics firm Sensor Tower Inc. estimates global consumer spending within “Fortnite” on Apple devices had fallen in the first quarter of last year to $70 million from a peak of almost $180 million in the third quarter of 2018. Epic Chief Financial Officer Joe Babcock, who departed the company in early 2020, said it expected the trend to continue, according to a deposition he gave cited by Apple…

Epic hatched a plan, according to court records citing a board presentation, to revive interest in “Fortnite” beyond its seasonal updates and occasional music performances and movie screenings that people experience together in a virtual setting. Epic would turn to third-party developers to create new content for “Fortnite,” essentially turning it into an open platform unto itself.

But for this new plan to work, the company needed to find a way it could afford to compensate its would-be partners. Apple’s 30% share, the presentation concluded, was an “existential issue” for its plan and needed to be cut so Epic could share a majority of the profit with creators…

Last spring Epic began sharpening its plan to wrest itself from Apple’s fees and control. Its team investigated ways to surreptitiously add an alternative payment system to the versions of “Fortnite” on Apple and Google’s app stores, according to court records. By May Epic decided it would deploy the new system through a so-called hotfix, an important software update usually reserved for security bugs, records show, and do so just before the debut of the game’s new season…

Epic co-founder Mark Rein predicted there was a greater than 50% chance Apple would immediately remove “Fortnite” from its platforms, according to an Epic employee deposition cited in court records. “They may also sue us to make an example.” Mr. Rein declined to comment.

The Epic team concluded that Apple could be thin skinned when it came to its public image. “Nothing moves Apple to change other than notable consumer pressure,” an Epic memo noted.

My take: The risk in taking an “existential issue” to court is that you might lose.

8 Comments

  1. Romeo A Esparrago Jr said:
    Speaking of existentialism, Carl G. Jung to Sweeney :

    “ People will do anything, no matter how absurd, to avoid facing their own souls. “

    28
    April 24, 2021
  2. Fred Stein said:
    On April 13, Verge reports that Epic raised $1B increasing its valuation to $28.7B. Sony invested $200M. Apple devices present a threat to Sony devices for market share and mindshare of gamers.

    Sweeney retains controlling interest.

    23
    April 24, 2021
    • Gregg Thurman said:
      Verge reports that Epic raised $1B increasing its valuation to $28.7B. Sony invested $200M.

      Dead money. Epic’s revenue had started to decline long before it attacked Apple.

      What I find seriously strange about Epic’s claims against Apple, is that Epic was trying to start its own, Epic only, Store platform for Epic developers (charging them 30% of gross revenue) within Apple’s proprietary App Store.

      27
      April 24, 2021
  3. Thomas Larkin said:
    Yeah click baiters, haters and politicians, maybe let’s just see how the facts play out in court before speculating, trash talking or bloviating?

    12
    April 24, 2021
  4. Michael Goldfeder said:
    As they say in the legal world: When you have the law on your side you argue the law. When the facts are on your side you argue the facts. When nothing is on your side you make lots of noise. Maybe even a parody commercial.

    Epic will look stupid and lose this case. The question is whether after this nonsense Apple will let them back onto the App Store?

    16
    April 24, 2021
  5. Kirk DeBernardi said:
    — quote —

    “…the company needed to find a way it could afford to compensate its would-be partners. Apple’s 30% share, the presentation concluded, was an “existential issue” for its plan and needed to be cut…”

    Then hopefully pose yourself in court as a “victim” of your own scheme.

    Nothing like integrity, eh?

    I’ve said it before and I’ll say it again:

    Apple creates a store on its iPhone platform that everyone (users AND developers) celebrate for actually creating, initially concerned they might only operate their platform with their own apps.

    Following the rules and guidelines of said store, developers develop millions of apps all the way from great to terrible — a veritable Come One/Come All.

    It’s a success and quickly becomes a part of most people’s lives.

    Money to be had — all around.

    Some get restless with Apple’s cut, even construing it as a tax.

    Apple cuts its rate.

    Because of it’s size and influence, it starts to smell of antitrust from those with noses powerful enough to make it so by fiat.

    …and Apple’s the bad guy!?

    16
    April 24, 2021
  6. Bart Yee said:
    “…the company needed to find a way it could afford to compensate its would-be partners. Apple’s 30% share, the presentation concluded, was an “existential issue” for its plan and needed to be cut…”

    So Epic could not create a business plan that would compensate its partners? That’s not Apple’s problem. It’s not Google’s problem. It’s an Epic problem. Build your own hardware platform, console, smartphone, etc. and then you can keep all the revenue, charge what you want (and you will charge a fee, nothing is free, is it??) while having expenses like curating your own App Store, assuming you care to do curation. Good luck with 10’s to maybe a few hundred titles. Vastly different from Apple’s 14 year iPhone hardware history and 13 years of the App Store with millions of Apps to curate.

    11
    April 25, 2021
  7. Ken Cheng said:
    So, it’s the story of the goose that laid the golden eggs. The golden eggs were getting a progressively smaller, so Epic dreamed up a risky scheme to not just get bigger golden eggs, but to get more of them. As a result, they killed the goose. Sounds like a smart plan.

    10
    April 25, 2021

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