Apple and Epic Trial Opens With a Tour of the Fortnite ‘Metaverse’

OAKLAND, Calif. — Cosmetics. Digital dances called “emotes” A currency called V-Bucks. Virtual concerts. Fortnite, the popular gaming platform, is more than just a game. It is a “metaverse,” full of virtual life, said Tim Sweeney, chief executive of Epic Games, the company that created Fortnite.

And Apple, he argued in federal court on Monday, wants an unfair cut of the money to be made in the Fortnite metaverse.

Mr. Sweeney offered a granular explanation of Fortnite to paint an expansive portrait of his company’s world on the first day of what is expected to be a three-week trial, pitting Epic against Apple in a fight over Apple’s App Store fees and other rules that could reshape the $100 billion app economy.

Epic sued Apple in August, arguing that Apple is unfairly leaning on its control of the App Store to extract an unfair cut of the money Epic makes from selling digital goods inside Fortnite.

antitrust claims by state and federal governments in the United States and Europe. Apple is also battling two potential class-action lawsuits from consumers and developers over its App Store fees.

Fortnite, Mr. Sweeney said, “is a phenomenon that transcends gaming,” he said. “Our aim of Fortnite is to build something like a metaverse from science fiction.”

Metaverse? A court reporter needed clarification. It’s a virtual world for socializing and entertainment, Mr. Sweeney said.

The legal arguments in the case center on the boundaries of the market the two companies are fighting over. Apple’s lawyers focused their opening statements on gaming, arguing that people can get access to Fortnite in many places other than the App Store, like gaming consoles.

an interview last year, is “completely unprecedented in human history.”

But Mr. Sweeney was so soft-spoken in his testimony on Monday, a court reporter had to repeatedly ask for clarification on gaming and technology terms. He wore a suit, ditching his usual, T-shirt and cargo shorts. He also wore a clear face shield.

In his testimony, Mr. Sweeney explained Epic’s decision to pursue the lawsuit. “I wanted to show the world through actions exactly what the ramifications of Apple’s policy were,” he said.

In a cross-examination, Richard Doren of Gibson, Dunn & Crutcher hammered at Mr. Sweeney with a rapid series of yes-or-no questions to make the point that Epic also publishes Fortnite on other platforms, like gaming consoles — and that Epic is not complaining about them.

But Mr. Sweeney countered that the gaming consoles, which typically lose money on the hardware they sell and make it up on fees, have different business models from Apple’s and Google’s app stores, which are highly profitable.

Mr. Doren asked Mr. Sweeney if he knew that the actions Epic took last summer would cause Apple to kick his company’s app out of the App Store. He suggested that Mr. Sweeney had hoped Apple would cave in to the pressure because of Fortnite’s popularity.

“I hoped Apple would seriously reconsider its policy then and there,” Mr. Sweeney said. Apple did not, and Epic sued.

In the coming weeks, top Apple executives, including the chief executive, Tim Cook, and executives from Microsoft and Match Group are expected to testify.

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Google reduces some app-store fees amid criticism.

Google is cutting in half its commission on developers’ first $1 million in app sales, following a similar move by Apple that is aimed at appeasing developers and regulators who accuse the companies of abusing their dominance of the smartphone industry.

Google said that starting July 1, it would take 15 percent of the first $1 million developers take in from certain app sales, down from 30 percent. Google will still charge 30 percent after the first $1 million.

Apple last year said it was halving its app-store commission to 15 percent on companies that earn less than $1 million a year in app sales.

The dual actions reverse years of resistance by the companies to change their app-store commissions, which have become important to their growth.

Rivals have intensified their criticism of the rates, saying they are artificially high because the companies have a duopoly on the distribution of mobile apps. Regulators around the world have begun investigating the commissions as part of larger antitrust probes, and lawmakers in several states are considering bills that would make it more difficult for Apple and Google to impose the fees.

Apple has been largely the focus of the criticism because it forces developers to use its app store to reach iPhone users. Google’s Android software allows users to download apps outside of its flagship app store, called the Play Store. Still, Android is the dominant smartphone operating system around the world, underpinning roughly 85 percent of the world’s smartphones, according to IDC, a market research firm.

Google said its change would halve the app-store fees for 99 percent of Android developers. But while Apple’s and Google’s moves have earned them positive headlines, they will likely have little impact on the companies’ bottom lines, because most of their app-store revenues come from larger developers.

Apple’s new policy, for instance, will affect roughly 98 percent of the companies that pay Apple a commission, but those developers accounted for less than 5 percent of App Store revenues last year, according to estimates from Sensor Tower, an app analytics firm.

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