Epic move: Judge says Apple can't revoke Unreal Engine dev tools, asks 'Where does the 30 per cent come from?'

But no, Fortnite can't come back to the App Store for now either

A federal US judge questioned why Apple takes a 30 per cent slice of developer revenues as she ruled that while Apple cannot cut off Epic's access to iOS Unreal Engine development tools, she would not order the company to allow Fortnite to return to the App Store.

In the eight-page order [PDF], Northern California district judge Yvonne Gonzalez Rogers yesterday said that Unreal – used by hundreds of third-party devs for both console and mobile games inside and out of Apple's App Store and dubbed by Microsoft at the weekend as a "critical technology" – was governed by a separate contract between the parties, the "Xcode and Apple [software development kits] Agreement".

She said it was "relevant" that this was distinct from "Apple's agreements with developers and the App Store guidelines", which do not generally permit third-party developers to circumvent the IAP [in-app purchases] system".

The move on 13 August that kicked this all off – the activation of "allegedly hidden code in Fortnite allowing Epic Games to collect in-app purchases directly" via its "Fortnite Mega Drop" – was described as "calculated" by the Northern California court judge.

Making that move, as we've previously mentioned, precluded Apple from taking its traditional 30 per cent cut and saw the developer booted out of the store, prompting it to fling an almost certainly pre-prepared sueball at Cupertino as the boot hit its face.

Epic's original complaint alleged Apple is abusing its dominant position by seeking to "control markets, block competition, and stifle innovation".

The split order was handed down late last night after some oral wrangling with Apple's counsel over Zoom – dodging an authentication issue on the platform earlier that day.

The judge reportedly asked Apple lawyer Richard Doren at the Zoom hearing yesterday: "The question is, without competition: where does the 30 per cent (App Store commission) come from? Why isn't it 10? 20? How is the consumer benefiting?"

To the last question, Doren, a partner at LA law firm Gibson Dunn & Crutcher LLP, replied that consumers could choose when deciding to buy an Android device or an iPhone.

In the written order filed late yesterday, the judge noted:

While the Court anticipates experts will opine that Apple's 30 percent take is anti-competitive, the Court doubts that an expert would suggest a zero per cent alternative. Not even Epic Games gives away its products for free.

The order will be a relief to Epic in that it won't be cut off from Unreal Engine development on Apple's operating systems; and the judge noted the court had to weigh up whether an "injunction is in the public interest".

She spoke of the "potential significant damage to both the Unreal Engine platform itself, and to the gaming industry generally, including on both third-party developers and gamers", adding that "not only has the underlying [SDK] agreement not been breached, but the economy is in dire need of increasing avenues for creativity and innovation, not eliminating them. Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders."

However, that second part of the order – that Epic may not return to the iOS platform – does mean that locked-down iPhone users won't be able to go to the dev's Fortnite tournament.

The judge had little consolation for afflicted gamers, saying that the court "recognizes that during these coronavirus pandemic (COVID-19) times, virtual escapes may assist in connecting people and providing a space that is otherwise unavailable. However, the showing is not sufficient to conclude that these considerations outweigh the general public interest in requiring private parties to adhere to their contractual agreements."

The judge set the next hearing on the preliminary injunction motion for 29 September 2020 at 9:30 PDT via Zoom. ®

The case is Epic Games Inc vs Apple Inc, 4:20-cv-05640-YGR, in the district court for the Northern district of California.

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