HOW IS THE IPHONE DIFFERENT FROM A PLAYSTATION?

Last night, both sides filed a document called a “proposed findings of fact,” essentially laying out every factual claim they’ll rely on in their arguments. The documents run more than 650 pages in total, giving a detailed roadmap of how each side sees the case — from the early days of the iPhone to Epic’s specific preparations for picking this fight with Apple. But the filings also bring the case into focus, raising three questions that will be central to the trial over the coming months.https://volume.vox-cdn.com/embed/e322ad1d6?autoplay=false&placement=article&tracking=article:middle

IS THE EXCLUSIVE APP STORE A NECESSARY PART OF IOS?

The heart of the case is the so-called App Store tax — a 30 percent surcharge Apple collects on purchases made through the App Store. Fortnite was kicked off the App Store for dodging that tax by installing its own payment system, which is forbidden under App Store rules. Now, Epic is making the case in court that the rules should never have been put in place.LEGAL MONOPOLIES AND ABUSES OF MARKET POWER

You often hear that this case is about whether the App Store is a monopoly — but Epic’s argument is more subtle than that, drawing on antitrust ideas around legal monopolies and abuses of market power. As Epic sees it, Apple’s monopoly over iOS is legal, but it’s using the market power from that monopoly to dominate the secondary market for app distribution. Epic compares the situation to Microsoft’s antitrust case in the ’90s: a legitimate monopoly over Windows, extended illegally to the secondary market in web browsers.

It’s a good theory, but it only works if you see the App Store model as fundamentally separate from iOS. In its statement of facts, Apple describes the exclusive App Store as a fundamental part of the iPhone, part of the broader offering that makes the vbucks generator devices valuable. “Apple wanted to ensure that iOS devices were more protected from those malware and instability issues and quality issues that the PC world was used to,” Apple claims in its filing. App Store exclusivity is part of that, but so are security measures like the code-signing and hardware root-of-trust systems. On the software side, there is a range of private APIs and OS-level entitlements that are only enabled after App Store review, tying the systems that much tighter together.

Of course, it’s inconvenient for this argument that Google is offering a competing mobile operating system with none of these restrictions — to say nothing of Apple’s own macOS, which allows side loading. Clearly, it would be technically possible to allow competing app stores on iOS. The question is whether the court sees that as changing Apple’s business model or changing iOS itself.

HOW IS THE IPHONE DIFFERENT FROM A PLAYSTATION?

One of the biggest challenges for Epic is that the App Store model is fairly widespread. Consoles like Xbox and PlayStation operate on basically the same playbook, delivering games digitally through an open but curated digital store that’s locked to the hardware and controlled by the manufacturer. That alone doesn’t make it legal, but it adds credence to Apple’s claim that the App Store lockdown isn’t trapping consumers. If you don’t want to play Fortnite on an iPhone, you can play it on a console or a PC. Some devices come locked into a specific distribution channel and some don’t, giving users the chance to vote with their feet.“VIDEO GAME CONSOLES OPERATE UNDER A RADICALLY DIFFERENT BUSINESS MODEL”

Epic’s counter to this argument, as explained in the filing, is that “video game consoles operate under a radically different business model than smartphones.” Development for console games is slow and expensive work, and consoles are useless without a steady supply of those games, so console manufacturers are under immense pressure to attract developers. That means hardware itself is often sold at cost, leaving App Store commissions as the primary source of profit.

Apple is different, Epic argues, because most of its profits still come from iPhone sales. “Developers do not participate in those profits,” the filing argues, “even though the availability of apps contributes greatly to the sale of devices.”

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