Microsoft Statement in Support of Epic [pdf](cdn.vox-cdn.com)
cdn.vox-cdn.com
Microsoft Statement in Support of Epic [pdf]
https://cdn.vox-cdn.com/uploads/chorus_asset/file/21810025/statement_support_microsoft.pdf
70 comments
> The definition of anti trust is to use your position in one market to gain an unfair advantage in an other market.
Your definition is missing a key point, which is you have to possess sufficient market power in the primary market in order to use to gain an advantage. If you lack market power, it doesn't matter what you do because you lack the ability to coerce consumers. As the Supreme Court put it:
If one of a dozen food stores in a community were to refuse to sell flour unless the buyer also took sugar it would hardly tend to restrain competition in sugar if its competitors were ready and able to sell flour by itself. (Northern Pac. R. Co. v. United States)
> It is shocking to me that Apples lawyers, would allow Apple to so blatantly threaten Epic in this way. They are providing a clear example of anti competitive behavior, for Epic to use in future litigation.
Epic violated the terms of Apple's developer agreement by deliberately hiding their payment processing code to get it past app review. Hiding functionality is considered an egregious violation of the developer program and grounds for termination of your entire account. Apple has the right to terminate their contract for that violation alone, regardless of whether you think the terms relating to in-app purchases are lawful or not.
Framing this as retaliatory or a threat is hyperbole. One party violated the terms of a contract, so the other party is exercising their right to terminate.
> You would think Apple has good enough lawyers to put a stop to this self defeating behavior.
Do you really think you have a better grasp of antitrust law than their legal team?
Your definition is missing a key point, which is you have to possess sufficient market power in the primary market in order to use to gain an advantage. If you lack market power, it doesn't matter what you do because you lack the ability to coerce consumers. As the Supreme Court put it:
If one of a dozen food stores in a community were to refuse to sell flour unless the buyer also took sugar it would hardly tend to restrain competition in sugar if its competitors were ready and able to sell flour by itself. (Northern Pac. R. Co. v. United States)
> It is shocking to me that Apples lawyers, would allow Apple to so blatantly threaten Epic in this way. They are providing a clear example of anti competitive behavior, for Epic to use in future litigation.
Epic violated the terms of Apple's developer agreement by deliberately hiding their payment processing code to get it past app review. Hiding functionality is considered an egregious violation of the developer program and grounds for termination of your entire account. Apple has the right to terminate their contract for that violation alone, regardless of whether you think the terms relating to in-app purchases are lawful or not.
Framing this as retaliatory or a threat is hyperbole. One party violated the terms of a contract, so the other party is exercising their right to terminate.
> You would think Apple has good enough lawyers to put a stop to this self defeating behavior.
Do you really think you have a better grasp of antitrust law than their legal team?
>Do you really think you have a better grasp of antitrust law than their legal team?
Obviously Apple's legal team does not understand antitrust law. It is impossible to get someone to understand something, when their salary depends upon not understanding it.
Obviously Apple's legal team does not understand antitrust law. It is impossible to get someone to understand something, when their salary depends upon not understanding it.
So no, you don't have a better grasp of antitrust law than the Apple legal team. If they thought they were in the wrong they wouldn't do any of this.
It's such a stupid trope in any case.
It's such a stupid trope in any case.
Technically, Apple is completely in the wrong here and in any country with a sane justice system they would lose this case due to blatant anticompetitive behaviour.
However, Apple is also one of the largest companies of USA and a quite successful one. At that size they must have considerably good lobbying efforts, political class might also have connections to Apple through shares etc. They might go and say that enabling third party vendors will cause thousands to lose their jobs at Apple. They basically got a huge amount of political influence and I’m sure they will use it for this case.
How much political influence Epic games have? Zero? Perhaps not zero but definitely not at the level of Apple. Hence, this case might not be a straightforward win for Epic.
It is good though, perhaps some of the fortnite players will understand why antitrust laws are needed and perhaps influence the justice system once they grow up.
However, Apple is also one of the largest companies of USA and a quite successful one. At that size they must have considerably good lobbying efforts, political class might also have connections to Apple through shares etc. They might go and say that enabling third party vendors will cause thousands to lose their jobs at Apple. They basically got a huge amount of political influence and I’m sure they will use it for this case.
How much political influence Epic games have? Zero? Perhaps not zero but definitely not at the level of Apple. Hence, this case might not be a straightforward win for Epic.
It is good though, perhaps some of the fortnite players will understand why antitrust laws are needed and perhaps influence the justice system once they grow up.
Why should a court intervene in the contracting of two private parties? Epic started this fight by intentionally breaching an existing contract with Apple, only so they can get better terms.
Microsoft does the same as Apple, it makes money off micro-transactions and the ability for its competitors to sell on Xbox/Microsoft store, use trade dress, and be included in those hideous green media cases.
Last I checked Epic, Steam, Origin, uPlay, Google, Amazon, SetApp, most retailers, etc... do the same practice to varying degrees. Shrewd business practice != injustice/anticompetitive practices, just because a company has a large market share or is personally abhorrent to you.
Microsoft does the same as Apple, it makes money off micro-transactions and the ability for its competitors to sell on Xbox/Microsoft store, use trade dress, and be included in those hideous green media cases.
Last I checked Epic, Steam, Origin, uPlay, Google, Amazon, SetApp, most retailers, etc... do the same practice to varying degrees. Shrewd business practice != injustice/anticompetitive practices, just because a company has a large market share or is personally abhorrent to you.
The entire purpose of civil courts is to mediate disputes between private parties. Courts are also the mechanism that give private contracts any authority.
Civil suits are also one of the mechanisms by which government regulation is enforced. The alternative to that would be the government inserting itself into private relations even when there is no dispute between the parties; which is even more heavy handed (albeit somewhat justified).
It is a weird quark that you often have to violate the terms of a contract in order to get standing to challenge it; but that is the procedural rules we have.
Civil suits are also one of the mechanisms by which government regulation is enforced. The alternative to that would be the government inserting itself into private relations even when there is no dispute between the parties; which is even more heavy handed (albeit somewhat justified).
It is a weird quark that you often have to violate the terms of a contract in order to get standing to challenge it; but that is the procedural rules we have.
The weird quirks are acerbated by Arbitration clauses designed to keep disagreements from ever going to court and instead being handled by "closed door, opaque third party negotiators". Until Apple closed the contract indicating a breach, Epic would have been forced to go to Arbitration to settle the matter, rather than get their day in court.
Good point, and I assume that mediators probably can’t consider anti-trust matters while courts can.
I understand, but disagree. They didn’t need to violate the contract for creation of a lawsuit. Hell, they could have terminated their agreement and try to contract with apple without accepting the default agreement.
They had standing the whole time, albeit with a limitation to arbitration at first instance for certain claims, which may have been bypassed on certain grounds anyway.
The temporary restraining order (injunction) application claims they want to be able to post Fortnite on the App Store without scrutiny from Apple and lastly that they regain access to a working developer account for unreal engine.
I recommend watching the virtual legality series on this topic which might interest you on the ins and outs of the legal dispute. The latest episode covering Microsoft is here: https://youtu.be/-jXJjllz00I
Edit: spelling.
They had standing the whole time, albeit with a limitation to arbitration at first instance for certain claims, which may have been bypassed on certain grounds anyway.
The temporary restraining order (injunction) application claims they want to be able to post Fortnite on the App Store without scrutiny from Apple and lastly that they regain access to a working developer account for unreal engine.
I recommend watching the virtual legality series on this topic which might interest you on the ins and outs of the legal dispute. The latest episode covering Microsoft is here: https://youtu.be/-jXJjllz00I
Edit: spelling.
I agree. I wrote a long thing about it: https://twitter.com/EskilSteenberg/status/129752027579013939...
I think Epic has been smart to do a lot of PR on this. They need public support since this will become political. I'm surprised that Epic hasn't filed in the EU too.
I think Epic has been smart to do a lot of PR on this. They need public support since this will become political. I'm surprised that Epic hasn't filed in the EU too.
Technically,
You're using this word wrong.
You're using this word wrong.
It’s good for iPhone users though. Hopefully we’ll finally be allowed to compile apps ourselves and install them without approval (and without having to reinstall them every few days.)
> The definition of anti trust is to use your position in one market to gain an unfair advantage in an other market
What is the "other market" in this scenario?
What is the "other market" in this scenario?
I'm extremely glad to see that Microsoft is publicly stating in court what many indie developers already thought: Apple is throwing millions of unrelated game companies under the bus, just to get their revenge on Epic.
In my opinion, it doesn't get any more retaliatory than that, which means Apple is most likely very far down the wrong side of antitrust law.
In my opinion, it doesn't get any more retaliatory than that, which means Apple is most likely very far down the wrong side of antitrust law.
It may be (and, I guess, probably is) written with Microsoft’s help or even be mostly written by them, but I think that’s a personal statement by somebody who claims authority by specifying his job.
I also do not read anything there that will affect this round of this fight, which is about the question whether an urgent ruling has to be made that Apple should _now_ be forced to chance its stance.
I also do not read anything there that will affect this round of this fight, which is about the question whether an urgent ruling has to be made that Apple should _now_ be forced to chance its stance.
> I think that’s a personal statement
I doubt that a major company would let someone at this level of management make such a "personal statement" without signing off on it internally. Even as an individual contributor at such a company, you would invite quite a bit of trouble with this.
I doubt that a major company would let someone at this level of management make such a "personal statement" without signing off on it internally. Even as an individual contributor at such a company, you would invite quite a bit of trouble with this.
Yes zero chance. As a lowly developer, even if I get asked a question directly by the media about something the company did I'm not allowed to answer per the stated rules. I have to direct them to the department of spin or whatever it's called.
I still don't understand what "Denying access to the SDK" is supposed to mean. Aren't the iOS and Mac development tools free to download without a developer account? Isn't publishing on the app stores the only thing that not having an active corporate account prevents? Apple haven't said that they'll block anyone using Unreal Engine, right? I thought this was just about signing keys, in which case other people using the engine should be fine...
In fact, does anyone else who deliberately tries to sneak things past the review process get to keep their developer account _and_ the offending version of the app available? Couldn't this just be Apple going "see, we treat them the same as everyone else"?
In fact, does anyone else who deliberately tries to sneak things past the review process get to keep their developer account _and_ the offending version of the app available? Couldn't this just be Apple going "see, we treat them the same as everyone else"?
They're free to download, but IIRC you're still abiding by their EULA. Apple are threatening to revoke Epic's EULA license. If that happens, Epic would be using the SDK "illegally". (This is all speculation, IANAL, feel free to correct me if you have a better legal understanding of this)
If they feel so strongly about it let Epic open a store inside the Xbox.
What? Didn’t think so.
What? Didn’t think so.
The letter is only in regards to the Unreal Engine being blocked. It will directly impact Microsoft and other game developers not directly involved in this fight.
They did not mention Fortnite or alternate stores at all.
They did not mention Fortnite or alternate stores at all.
That's 100% at Epic's fault.
First of all, they willingly put their customers at risk.
Second of all, they could've put the engine business in a different entity, keeping it safe from their games business
They did put the engine business into a separate entity, a Swiss company called Epic Games International S.à r.l. Apple is threatening to cut off access for both entities.
https://cdn2.unrealengine.com/epic-pi-tro-08-23-2020-8198711...
https://cdn2.unrealengine.com/epic-pi-tro-08-23-2020-8198711...
I just read so. In that case, that should be all safe
Even if they did that... Apple would just ban, because they can/want.
I'm not fan of Epic however if the court rules Epic as right, we are about to see an important precedent to a less monopolized market.
I'm not fan of Epic however if the court rules Epic as right, we are about to see an important precedent to a less monopolized market.
That’s Apple’s prerogative after banning a developer who has violated their contract with them. Otherwise you could have shady developers just create numerous of legal entities to effectively brute force their way on to the store, and Apple would be unable to respond.
This case is less about monopolisation and more about inequality between two parties when settling a contract. Nothing stops Epic from making an Epic phone and doing the same.
This case is less about monopolisation and more about inequality between two parties when settling a contract. Nothing stops Epic from making an Epic phone and doing the same.
The Xbox isn’t marketed as a general purpose computer, nor is it integral to the economy.
Everyone making this "general purpose computer" argument is disingenuously taking care to define the term specifically to rule out game consoles while covering the iPhone. The fact is that modern gaming consoles are general purpose computers complete with media center capabilities, operating systems, application stores, multitasking, networking, web browsing, streaming, etc.
Just like the case of the iPhone, the only thing that makes them appear otherwise is what software their respective owner companies choose to allow or disallow.
Just like the case of the iPhone, the only thing that makes them appear otherwise is what software their respective owner companies choose to allow or disallow.
Why do people even feel the need to defend consoles? The fact consoles are also artificially restricted doesn't mean it's okay for the Iphone to be, it means they need to be fixed as well.
While I do want the iOS situation fixed, I don't want the Switch or Playstation platforms to be affected in any way. Sony and Nintendo are the only publishers still making decent AAA games with the patience to sink a crazy amount of money and time into their projects. We'd all be worse off without games like Last of Us or Mario. Changing the status quo could turn them into another Ubisoft (devoid of all risk or creativity, and with a massive emphasis on microstransactions and games as a service).
And frankly, anybody bringing up consoles in this context is arguing in bad faith. The similarities are purely surface level.
And frankly, anybody bringing up consoles in this context is arguing in bad faith. The similarities are purely surface level.
> The similarities are purely surface level.
They really aren't. If you'd care to offer some reasoning behind your assertion that they are, I'm listening.
They really aren't. If you'd care to offer some reasoning behind your assertion that they are, I'm listening.
My take on it is that while both are bad, the iOS situation is far worse.
Almost no one would replace a desktop or laptop with an xbox while many people have done just that with an iPhone.
Almost no one would replace a desktop or laptop with an xbox while many people have done just that with an iPhone.
I do agree that the iOS situation is far more important.
iPhone is neither a general purpose computer, nor is it integral to the economy
are you in 2007?
I have always seen iOS devices as consoles, or at least closer to consoles than PCs. Anything with a locked App Store and a locked boot loader is a console by definition. MacOS is a general purpose computer OS.
Considered as a console iOS is actually more open and capable than most.
Considered as a console iOS is actually more open and capable than most.
A console that hosts an app to fight a global pandemic, is used for payment, flight tickets, banking, web browsing (for some people it's their only access to the internet), navigation, taking photos, calling an ambulance. Other than web browsing, none of the things I listed is done on gaming consoles.
You should let Apple in on that definition so they’ll stop marketing and selling the iPad as a general computing device.
Exactly. How many times has Apple said the iPad is a laptop replacement?
> Considered as a console
But it's not just a console.
But it's not just a console.
Locked boot loader, locked App Store. It’s a console.
Apple's misbehavior includes locking out competitors to their own apps. This is as if Microsoft started removing Halo competitors from the Xbox (which they don't do). Just because of that the case is much, much stronger against Apple than it might be against Microsoft.
If a game deliberately bypassed paying Microsoft their cut of the in-game transactions, you think that Microsoft would be fine leaving the game in the store doing this?
Last I knew you could buy games for the Xbox from people other than Microsoft.
Best Buy, for instance
Best Buy, for instance
Except you can't get your game on the shelf without Microsoft's explicit (contractual) approval, and (of course) paying them a royalty for each copy sold.
You can’t even make an app store viewers which just links to the iOS app store but with better search/discovery since that is against app store rules.
Isn't that a different argument?
What argument is that?
If the problem is Apple doesn't allow you to sell apps without going through their approval process, Microsoft does the same.
If the problem is Apple doesn't allow you to sell apps without collecting a commission on each sale, Microsoft does the same.
If the problem is Apple doesn't allow you to sell apps without going through their approval process, Microsoft does the same.
If the problem is Apple doesn't allow you to sell apps without collecting a commission on each sale, Microsoft does the same.
I find shifting arguments fairly repulsive. I'm sorry if that offends you.
8note made the point that you could buy games from other stores. It's a narrow point. Why would you reply to that person (in particular) about a digital protection issue that has been prevalent in consoles since the NES introduced it in 1983? Why not start your own thread about that issue?
Do you expect him to support a point he did not make? Because it sounds like you are assuming his point of view on digital protection would be different than yours.
8note made the point that you could buy games from other stores. It's a narrow point. Why would you reply to that person (in particular) about a digital protection issue that has been prevalent in consoles since the NES introduced it in 1983? Why not start your own thread about that issue?
Do you expect him to support a point he did not make? Because it sounds like you are assuming his point of view on digital protection would be different than yours.
I think you've misunderstood the point. Do you think if Apple permitted apps to be physically sold in stores, but still took their 30% and required apps to be approved, that everyone would be happy?
Is it? You have to pay a Microsoft tax to sell anything that functions on the Microsoft device. Is it different because the fee is structured somewhat differently?
Please see my response to nodamage.
Ah, but Microsoft still takes a cut of that sale, it just happens at a different part of the chain. On top of that, Xbox live takes a 30% cut of all micro transactions, just like Apple.
MS, understandably, feels differently about other companies' anticompetetive behavior than its own.
Does Microsoft get a 30% cut of all subscriptions and items bought via apps on Xbox?
AFAICT yes. From what I could find, it seems they dropped the Microsoft App Store from 30% to 5%, but their % take for games is still 30%, including in-app purchases.
[0] https://9to5mac.com/2019/03/06/microsoft-store-revenue-share...
[1] https://blogs.windows.com/windowsdeveloper/2019/03/06/update...
[2] https://www.ign.com/articles/2019/10/07/report-steams-30-cut...
[3] https://query.prod.cms.rt.microsoft.com/cms/api/am/binary/RE...
[0] https://9to5mac.com/2019/03/06/microsoft-store-revenue-share...
[1] https://blogs.windows.com/windowsdeveloper/2019/03/06/update...
[2] https://www.ign.com/articles/2019/10/07/report-steams-30-cut...
[3] https://query.prod.cms.rt.microsoft.com/cms/api/am/binary/RE...
30% for base level developers with little to no publisher support, anything beyond that is intentionally shrouded in industry secrets.
Rumors are some publishers get the 5% deal (or better?), at least for digital-only sales, as some of those publishers have indirectly mentioned higher profit margins on Xbox versus PlayStation, but who knows how accurate the rumors are (or if there are other confounding factors for higher margins on Xbox such Microsoft subsidies or Microsoft's increasing "economy of scale" with keeping PC and Xbox in closer API sync these days) because Xbox keeps a tight lid on publisher specific deals, unlike the rest of the App Store which tries to be much more transparent. The fact that Epic isn't complaining so much about Xbox sales seems to indicate a favorable position on Xbox as well, but again any such details are probably closed room deals we can only guess at from the outside (and probably in constant flux with Xbox marketing as Microsoft wanders between incentives based on favoring Marketing tools/projects like Xbox Play Anywhere, Xbox Game Pass, xCloud, Xbox Smart Delivery, etc).
Rumors are some publishers get the 5% deal (or better?), at least for digital-only sales, as some of those publishers have indirectly mentioned higher profit margins on Xbox versus PlayStation, but who knows how accurate the rumors are (or if there are other confounding factors for higher margins on Xbox such Microsoft subsidies or Microsoft's increasing "economy of scale" with keeping PC and Xbox in closer API sync these days) because Xbox keeps a tight lid on publisher specific deals, unlike the rest of the App Store which tries to be much more transparent. The fact that Epic isn't complaining so much about Xbox sales seems to indicate a favorable position on Xbox as well, but again any such details are probably closed room deals we can only guess at from the outside (and probably in constant flux with Xbox marketing as Microsoft wanders between incentives based on favoring Marketing tools/projects like Xbox Play Anywhere, Xbox Game Pass, xCloud, Xbox Smart Delivery, etc).
Yes. If iPhone as appliance doesn’t stick, Xbox as appliance shouldn’t either. Both are vertically integrated and curated experiences on digital rights managed “consoles”.
Epic may have thrown Unreal Engine under the bus, but Microsoft needs the law to recognize it and Apple compete as fully integrated experiences not unbundled hardware separate from app stores.
That said, a lot of games money is going to iOS that used to funnel to consoles. So they’re of two minds.
The PR move is support Epic. The business move is keep consoles vertically integrated and own curation.
/2c
Epic may have thrown Unreal Engine under the bus, but Microsoft needs the law to recognize it and Apple compete as fully integrated experiences not unbundled hardware separate from app stores.
That said, a lot of games money is going to iOS that used to funnel to consoles. So they’re of two minds.
The PR move is support Epic. The business move is keep consoles vertically integrated and own curation.
/2c
I'm not sure that Microsoft sees it that way. The direction they're going with XCloud and XBox Game Pass seems to me that they're interested in strongly diversifying on software as a service while selling XBox hardware as commodity priced entrypoints into their software ecosystem. The only reason XCloud isn't launching on iOS is because Apple denied it, not for Microsoft's lack of trying.
If xBox ever gets to the same total market size as the iPhone, in terms of raw numbers, revenue, ect then maybe it should be.
The iPhone is has 10 times a larger market than Internet Explorer did when it lost the anti trust case, for comparison.
The iPhone is has 10 times a larger market than Internet Explorer did when it lost the anti trust case, for comparison.
Apple succeeded in what Google has failed with, namely to put value on quality apps. A few small missteps and it will become like Android or Windows Phone.
Quality and crap can’t coexist?
They should only be vetting the privacy and security of apps, and let users decide what is crap.
They should only be vetting the privacy and security of apps, and let users decide what is crap.
It can’t because marketing lies and flooding the market with semi functional apps is the end result. The app market is spread out economically but neither users (has to buy a lot of apps to try them out, and because it’s a risk will lower the amount willing to pay) nor developers becomes happy (no clear path through the bad apps).
The definition of anti trust is to use your position in one market to gain an unfair advantage in an other market. By denying Epic access in the game engine market, Apple is trying to get Epic to fold in the game distribution market. Thats text book antitrust behavior.
It is shocking to me that Apples lawyers, would allow Apple to so blatantly threaten Epic in this way. They are providing a clear example of anti competitive behavior, for Epic to use in future litigation. You would think Apple has good enough lawyers to put a stop to this self defeating behavior.