Apple vs. Epic Games: The biggest secrets revealed so far

The Apple vs. Epic Games trial kicked off this week, and the issue is certain to shake up the tech world.

Apple tree'south App Store concern model is at stake. Epic argues that Apple is breaching antitrust laws past (among other things) not letting developers take in-game payments through iOS apps without giving Apple a thirty% cut of the proceeds.

Apple says that its 30% cut of App Store revenue is in line with standard revenue-sharing arrangements on other digital storefronts, including Steam and the Google Play store.

The iPhone maker is as well pushing dorsum against Epic's claim that Apple has a monopoly on a big portion of smartphone users by arguing that the App Store faces competition from other smartphone and panel platforms.

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Plus: Apple vs Epic Games: What the trial of the century means for you lot

This all started brewing last August, when Epic quietly updated the iOS version of Fortnite with an pick for players to purchase in-game currency directly from Ballsy at a slight discount compared to what it toll to buy the currency through Apple tree'southward payment system.

Apple responded by kicking Fortnite out of the App Shop, and Epic'southward lawyers went to work putting together the lawsuit that's currently playing out.

We'll take to await and see who wins, but in the meantime we stand to acquire a lot about each company'south concern, as Apple and Epic filed pre-trial fact findings in separate documents of more than 300 pages each.

Both documents are now publicly available online — y'all can read Ballsy's hither and Apple tree'south here. To save you fourth dimension, nosotros've pulled together some of the juiciest insights below.

Apple execs saw this coming a decade ago

1 of the documents fabricated public equally part of the pre-trial fact-finding process (and publicized by Bloomberg) is a 2011 email to Steve Jobs and Eddy Cue from App Store head honcho Phil Schiller suggesting that the company plan to reduce its 30% cut in lodge to remain competitive with other markets.

"Do we think our 70/thirty split will last forever? While I am a staunch supporter of the 70/30 split...I don't recall that 70/30 volition last...I recollect anytime we will run into plenty challenge from some other platform or web based solution to want to suit our model," Schiller wrote, appending a link to a Wall Street Journal article outlining how developers could sidestep the App Shop fees.

"Once we are making over $1B a year in profit from the App Shop," he added, "is that plenty to recollect about a model where we ratchet downward from 70/xxx to 75/25 or even 80/20 if nosotros can maintain a $1B a year run rate?"

In the intervening decade, Apple has adapted its take of App Store revenue in isolated areas, virtually notably cutting it to 15% on any apps from devs who have made under $1 million on the App Store, merely the overall 70/30 split has remained unchanged.

Ballsy chief Tim Sweeney emailed Apple CEO Tim Cook about this in 2015

In June of 2015, Epic Games founder and CEO Tim Sweeney sent an electronic mail to Apple tree CEO Tim Cook with "iOS as an open platform" in the subject line.

This was two weeks afterward Apple's WWDC event, during which Ballsy representatives appeared to demo Fortnite (which was still in development at that point) on iOS and talk upwardly how Apple's Metal API had helped make it possible.

"Y'all should call up about separating iOS App Store curation from compliance review and app distribution," Sweeney wrote.

"Compliance review would continue iOS gratis of malware, while open distribution would combine the all-time aspects of the App Shop with the all-time aspects of open platforms," Sweeney added. "It would be extremely positive for Apple to have this approach proactively before the topic is overly complicated past opposing political, regulatory, moral, and competitive forces."

A twenty-four hours after receiving the email, Tim Cook apparently forwarded it to Phil Schiller and Eddy Cue with one sentence: "Is this the guy that was at one of our rehearsals?"

Apple vs. Epic Games — (Image credit: Ballsy Games, Inc. five. Apple Inc. show)

Co-ordinate to The Verge, further emails uncovered during the pre-trial procedure suggest Sweeney didn't give up after nothing (presumably) came of that first email.

In an email dated to Jan 2018, Sweeney asked Ballsy co-founder Mark Rein to gear up a thirty-minute meeting with Apple exec Greg Joswiak in order to talk well-nigh "the potential for iOS and future Apple things to operate equally open platforms."

Rein later replied that he'd talked to Apple's Tim Kirby well-nigh setting upward a meeting, noting that Kirby was "definitely receptive to the thought which doesn't mean it volition get anywhere merely it means he'll line upwardly people who will listen and not shoot information technology down like Phil Schiller would. He says they take had internal discussions about this sort of affair."

Epic is losing hundreds of millions to build its own store

At the end of 2018, Epic launched its own digital storefront, the Epic Games Shop, on the back of Fortnite's massive success. The visitor has since been trying to expand the store's client base of operations by offer a rotating pick of complimentary games every month to anyone with an Epic Games Store business relationship.

Epic pays the developers of those games a flat fee for the privilege. Now, thank you to the pre-trial documents, we take a sense of how much money Epic is willing to lose to attract customers to its own storefront.

Co-ordinate to Apple'southward pre-trial filings, which aim to support its statement that Ballsy itself is beingness anti-competitive past financing its unprofitable Ballsy Games Store with money from more assisting parts of the business organisation, Epic "lost around $181 million on EGS in 2019" and "projected to lose around $273 1000000 on EGS in 2020."

Furthermore, Apple tree claims "Ballsy projects to lose around $139 meg in 2021" and that "at best, Ballsy does non expect EGS to have a cumulative gross turn a profit before 2027."

If you lot desire a clearer sense of how much Epic is paying per free game it gives out, game manufacture veteran Simon Carless took to Twitter to publish some court documents which break downwardly how much Epic paid for each game, how many copies were claimed, and how many new Epic accounts were created for each.

The incomplete lists shows payments to developers for 38 of the 100+ complimentary games given away on the Epic Games Store so far. They range from over a million dollars ($1.v million to programmer Rocksteady for all three of its Batman Arkham games, $1.4 million to Unknown Worlds Entertainment for its underwater survival game Subnautica) to the tens of thousands ($45k for 6 Foot's game Rime, $50k for Squad Meat's Super Meat Male child) to zero in the case of Koch Media's Metro: 2033 Redux, the PC version of which was exclusively available on the Epic Games Shop for a year.

Epic's Tim Sweeney would have taken a special deal from Apple

Epic has poured a ton of resources into this fight. Information technology's tried to position itself equally a champion of the little guy, about notably by involving the Fortnite fanbase with a bizarre #FreeFortnite marketing campaign.

Company master Tim Sweeney has besides repeatedly taken to Twitter to fence that this fight is primarily about opening upwardly Apple's closed App Store ecosystem for all developers. He's claimed on multiple occasions that "Ballsy won't seek nor accept a special deal just for ourselves."

However, when Sweeney was asked by Apple's lawyers in courtroom this week whether he would have accepted a special deal that would let Ballsy pay Apple tree a smaller cutting than other developers on the App Store, Sweeney said "Yep, I would have."

That suggests most of Epic's pro-developer marketing campaign around this trial was just that: marketing.

Epic wanted Microsoft to make Fortnite multiplayer costless on Xbox final summer

These pre-trial findings make articulate that Epic tried to marshal a multi-pronged campaign against Apple and its 30% App Store cut last year. Information technology near got Xbox maker Microsoft to add together some fuel to the fire.

Microsoft recently fabricated playing gratis-to-play multiplayer Xbox games really gratis, removing the requirement for players to pay for Xbox Live Gilded memberships in order to access multiplayer.

Fortnite is one of the free-to-play games on that list. Thanks to the pre-trial fact-finding procedure, we now know Epic's Tim Sweeney emailed Xbox chief Phil Spencer terminal summer to try and get Microsoft to brand the change but every bit Epic was picking a fight with Apple.

"We talked optimistically about the possibility of subscription-free multiplayer on Xbox...if this is coming, please consider the possibility of timing the program to support Fortnite Flavour 14 launch on viii/27," wrote Sweeney.

"Epic has certain plans for August that volition provide an extraordinary opportunity to highlight the value proposition of consoles and PCs, in contrast to mobile platforms."

Spencer responded the next day by acknowledging Sweeney's arguments on several matters, including "F2P exterior of Gold (nosotros will get at that place and I want to partner with y'all)", but making no promises.

"Totally understood!" Sweeney responded. "I gather there'due south a lot going on at Microsoft nowadays. Anyhow, you'll savor the upcoming fireworks testify."

Epic went on to roll out its own split up payment scheme for the iOS version of Fortnite afterwards that month By Aug. 13, 2020, Apple had removed Fortnite from the App Store, kicking off this whole fight.

At present we can see that Epic was making a concerted endeavour to make Fortnite totally free to play on Xbox (as it was already on PlayStation) just in fourth dimension to selection a fight with Apple.