In the latest move in the high-profile legal contest between Epic Games and Apple, the iPhone maker argued Friday that it should be allowed to terminate Epic's developer accounts, a move that could devastate the company's Unreal Engine business.
The argument comes after Epic asked a California judge earlier this week to prevent Apple from terminating the company's developer accounts for iOS, which it threatened to do by Aug. 28 if Epic doesn't yield.
Last week, Apple removed Epic's popular game Fortnite from its App Store after Epic tried to circumvent Apple's 30% fee on in-app purchases. Epic then immediately sued Apple (as well as Google), alleging that the fee was a monopolistic abuse of its platform. At the same time, Epic released a parody video that depicted Apple as "Big Brother," the oppressive tyrannical government from the George Orwell novel "1984."
In return, Apple moved to end the company's larger developer accounts. While Fornite is the company cash cow, Epic makes a lot of money from licensing Unreal Engine, a visualization platform used by a variety of industries, including motion pictures. It was used, for example, in the most recent Star Wars movies. Epic says Apple's move would be "catastrophic" for its Unreal Engine business.
In a court filing Friday, Apple said the temporary restraining order Epic has requested to block the account termination should not be granted.
Restraining orders "exist to remedy irreparable harm, not easily reparable self-inflicted wounds," Apple's lawyers wrote. " ... Here, Epic executed a carefully orchestrated, multi-faceted campaign, complete with a parody video, merchandise, hashtag, belligerent tweets and now a pre-packaged TRO."
Further, Apple said, the issue could be totally avoided if Epic Games had just filed its lawsuit without running afoul of the App Store policies.
"Apple has offered Epic the opportunity to cure, to go back to the status quo before Epic installed its 'hotfix' that turned into its hot mess, and to be welcomed back into the App Store," the filing said. "All of this can happen without any intervention of the Court or expenditure of judicial resources. And Epic would be free to pursue its primary lawsuit."
Even more to the point, Apple argues in its filing that removing Epic's overall developer accounts _ and not just Fortnite _ is legal conduct. Businesses are free to choose the parties with whom they deal, including setting the prices, terms and conditions of that dealing, Apple said, citing the 2009 U.S. Supreme Court ruling in Pacific Bell Telephone Co. V. LinkLine Communications.
A judge is expected to hold a hearing on the temporary restraining order on Monday, according to the court docket.
Apple also disputed that Epic is likely to succeed on the merits of its "novel" antitrust claims _ something Epic had argued when it asked for the restraining order.
The App Store, Apple noted, has exponentially increased output, reduced prices and dramatically improved consumer choice.
Apple chided Epic for failing to enlist any economist to support its antitrust suit, and noted it "conveniently ignores that Fortnite can be played on numerous platforms with or without support from Apple."
Epic has said its lawsuit is not about monetary compensation _ rather about seeing fair competition in the ways apps can be distributed on Apple and Android phones. But in its response to the TRO request, Apple said Epic's lawsuit can instead be read as an attempt to enjoy the App Store without following the guidelines that make it successful.
In a Twitter post Friday afternoon, Epic CEO Tim Sweeney said Apple's response was "misleading," pointing out that he had asked Apple to change its policies not just for Epic but for all developers.
The filings show that Apple is ready to battle Epic over its antitrust claims. The lawsuit could be one of the most significant antitrust cases in years, and be an early indicator of how regulators might go after Big Tech's market power.
Along with filing a lawsuit against Apple last week, Epic also released a flashy marketing campaign, called #FreeFortnite, to its hundreds of millions of users. That campaign included the parody video of Apple.
In its Friday filing, Apple referred to the campaign as a "smear."
Because antitrust cases are open-textured, meaning judges get to interpret how to apply the law in each case, public perception of Big Tech's power could play a key role in the outcome of Epic Games' lawsuit versus Apple and Google, which has removed Fortnite from its Play Store.
"You have got to be worried, if you are Apple, about shifting public perception trickling down into the interpretation of laws," Rebecca Haw Allensworth, a professor of antitrust at Vanderbilt Law School, said last week.
When it asked for the restraining order, Epic compared Apple to a bully that was retaliating.
Sandeep Vaheesan, the legal director at the Open Markets Institute, said he believes Epic is currently winning the battle over public perception, and moves by Apple to hurt Epic could further that.
"It certainly could push public opinion further against Apple and might further persuade the judge that, wow, Apple can make or break even pretty large businesses. That lends further credibility to Epic's lawsuit," Vaheesan said in an interview.
"That underscores that Epic has gone out on a limb and taken real risk here by bringing the suit," Vaheesan said. "Whereas Apple _ even relatively big apps are not that important to their business."
Also potentially hurting Apple's public perception, Vaheesan noted: It just reached a market cap of an astonishing $2 trillion. Epic meanwhile has a valuation of $17.3 billion.
