US tech giants face legal scrutiny now and then. Some think they have a dominant position within the market and enforce rules that distort competition. Recently, Epic Games accused Apple of abusing its monopoly and charging fees that are too high. We will now take a closer look at their arguments and evaluate what could happen if Apple lost the case.
What Are Anti-Trust Laws?
The competition encourages companies to offer consumers goods and services on the most favourable terms. In the US, there are three core federal antitrust laws: The Sherman Act, The Federal Trade Commission Act and The Clayton Act.
Strengthening these rules is always on the agenda, so it is no surprise that tech giants face legal scrutiny now and then. However, this time it seems like there might be real-life consequences for Apple.
Apple And Anti-Trust Disputes
Companies are not allowed to engage in any activity that would artificially distort competition within a market. Apple is not an exception. Recently, the European Commission opened formal antitrust investigations to assess whether Apple’s rules for app developers on the distribution of apps via the App Store violate EU competition rules. At a similar time, in the US, Epic Games accused Apple of abusing its monopoly in the market. With similar issues at stake, we will now take a closer look at the US dispute.
Epic Games vs Apple
Epic Games, the creator behind Fortnite, brought the anti-competition claims against Apple in the US. It is estimated that Apple earned more than $360m from Fortnite in the three years after its release in 2017. Epic Games intentionally broke Apple’s rules by putting its payment processing system in the iPhone version of Fortnite, bypassing Apple’s 30% fee and giving players a V-bucks discount. At that point, App Store removed Fortnite, and the dispute began.
Arguments
There are two main areas of conflict. Firstly, the monopoly in the market. Along with Google, Apple has a duopoly on the US smartphone market. Epic Games argue that Apple has a monopoly based on its operating– iOS. On the other hand, Apple claims the market is much bigger than just smartphones as Fortnite can be played on gaming consoles, PCs and so on.
Therefore, Apple does not have a monopoly that could threaten Epic Games. On a side note, Play Store would be in a similar situation to App Store but, on Android, Fortnite could be downloaded without access to Play Store.
If monopoly was established, Epic Games need to show that Apple abuses its monopoly and violates antitrust laws. For example, US law prohibits monopolies from tying one product or service to the sale of another. Epic Games argue the App Store and the payment system are separate products. Apple says its App Store and its payment processing service are part of a single product.
The Importance Of The Disputes
Interestingly, this week the CEO of Apple, Tim Cook, will speak on behalf of the company in the Epic Games v Apple trial. On the other side of the barricade, Tim Sweeney, CEO of Epic Games, testified at the beginning of the process. Surely, the matter is treated lightly by neither.
It makes one wonder what would happen if Apple lost the case. One potential outcome of the trial is that the judge orders Apple to open up its operating system to allow alternative methods of software distribution and payments.
This would give consumers more freedom and create more opportunities for developers to experiment with new distribution methods and business models. It also means that Apple stands to lose significant revenue and other tech giants might suffer a similar fate in similar cases.
Conclusion
Apple is having a difficult time with two simultaneous disputes in different parts of the globe. However, the issue remains the same – Apple’s overwhelming influence on the market. Whether the court will decide Apple abuses its monopoly or whether stronger regulations will be needed, one thing is sure. Encouraged by Biden’s minimum global tax, the world is ready to face US tech giants.
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