[Update: Apple restrained] Epic alleges Apple is threatening to cut off iOS support from Unreal Engine, while Microsoft endorses Epic’s motion
Epic recently decided to challenge the distribution monopolies of both Apple and Google when it recently incorporated its own direct payment system into the popular game Fortnite. This brazen challenge was bound to have repercussions, and Epic was all prepared for it. Both Apple and Google promptly removed Fortnite from the App Store and Play Store respectively, which Epic then greeted with legal suits against the companies. This saga has now seen two crucial developments, as Apple has now threatened to cut off support for Unreal Engine from its ecosystem unless Epic complies, a move that then prompted Microsoft to endorse Epic’s motion for an injunction against Apple.
It is no secret that both Apple and Google run monopolies when it comes to software distribution systems on their respective platforms. Apple’s walled garden approach to software makes the Apple App Store an absolute monopoly, while Google’s CTS and GMS requirements for Google Play Store make it a monopoly in practice even though secondary distribution is possible. These monopolies allow the platform owners to attach a substantial 30% cut from every single purchase made through these stores, and at the same time, discourage competition. Epic decided to challenge this situation by circumventing the fees with its own direct payment system. The reaction from the platform owners was expected, frankly speaking, and Epic’s consequent legal cases were also foreseeable to an extent.
What wasn’t entirely foreseeable is Apple threatening to revoke not only Epic’s developer account that distributes Fortnite, but also extend the action to Epic-affiliated accounts that are responsible for the development and distribution of Epic’s Unreal Engine.
Apple removed Fortnite from the App Store and has informed Epic that on Friday, August 28 Apple will terminate all our developer accounts and cut Epic off from iOS and Mac development tools. We are asking the court to stop this retaliation. Details here: https://t.co/3br1EHmyd8
— Epic Games Newsroom (@EpicNewsroom) August 17, 2020
On August 18, Epic shared that Apple has put forth a deadline of August 28 to “cure breaches to the agreement” before it goes ahead and terminates all of Epic’s developer accounts and removes access to iOS and Mac development tools. Apple will terminate Epic’s inclusion in the Apple Developer Program, which would restrict the ability to distribute apps on iOS or use Apple developer tools. Epic also will not be able to notarize Mac apps either, which would make them impossible to run on newer versions of macOS even if they are distributed outside the App Store. These actions would escalate the Epic-Apple battle to beyond Fortnite and bring in the Unreal Engine as collateral damage.
Unreal Engine is a popular free-to-start game engine that many developers around the world use to make games for different platforms, amongst other uses. Even games within Apple’s own Apple Arcade subscription service rely on Unreal Engine. If Apple reacts against Unreal Engine, these developers would struggle to build new iOS games or create updates. The damage would extend beyond Apple’s ecosystem, as part of Unreal Engine’s popularity comes from its support for multiple platforms, which would no longer remain as lucrative and would turn customers towards other competing solutions.
Epic contends that Apple is attacking the company’s entire business in unrelated areas even though they are governed by separate agreements and are operated by separate legal entities.
Apple argues that its actions with respect to the Unreal Engine and its revocation of access to all developer tools and developer accounts are authorized by contract. They are not. That argument fails to acknowledge the multiple contracts between Apple and Epic affiliates and programmers. Apple has alleged a breach of only one such agreement, and that agreement does not govern Epic’s access to developer tools for the Unreal Engine, the distribution of apps that are used for development purposes by Unreal Engine licensees or various other Epic Developer Program accounts. Even if those contracts did not violate the antitrust laws, an alleged breach of the specific Developer Program License Agreement governing Fortnite would not justify Apple’s actions with respect to other Developer Program accounts (including the account related to the Unreal Engine) or to the revocation of developer tools, all of which are governed by separate agreements. Instead, the breadth of Apple’s retaliation is itself an unlawful effort to maintain its monopoly and chill any action by others who might dare oppose Apple.
Epic mentions that Apple has alleged a breach of only the agreement under which Fortnite was added to the Apple App Store. That agreement apparently does not govern access to the developer tools used to create the Unreal Engine, nor does it govern the accounts used to distribute many of Epic’s other apps, including those related to the Unreal Engine.
The account that submitted Fortnite and certain other apps to the App Store has a “Team ID” number ending in ‘84, and is governed by a PLA (Developer Program License Agreement) between Apple and Epic Games, Inc., a Maryland corporation. The account that submitted certain apps related to Unreal Engine development has a “Team ID” number ending in ‘3Y, and is governed by a PLA between Apple and Epic Games International S.à r.l., a Swiss entity. The remaining accounts are held by other entities and were used by Epic’s affiliates to submit other apps to the App Store, such as the Houseparty app.
Even if the contractual provisions purportedly breached by Fortnite were lawful, Apple’s revocation of all accounts affiliated with Epic and all access to developer tools (including for the Unreal Engine, which is not an App Store app), reaches far beyond the Team ID ‘84 account and the Epic Games, Inc. PLA.
First, the August 14 notice states that Epic “will lose access to . . . . [a]ll Apple software, SDKs, APIs, and developer tools” and “[p]re-release versions of iOS, iPaD OS, macOS, tvOS [and] watchOS”. Revoking access to all of these materials would extend beyond the rights covered by the PLA and sweep in materials to which Epic (and all other developers and programmers) have access under the SDKs Agreement, which Apple has not claimed Epic breached. The PLA applies only to those “additional rights” not covered by the SDKs Agreement and “is not intended to prevent” the exercise of rights provided in the SDKs Agreement.
Second, even if Epic Games, Inc. breached its PLA in connection with Fortnite, that would not establish a breach by Epic Games International S.à r.l. of its separate PLA. Nor would it establish that any of the four other Epic entities identified in Exhibit T to the Byars Declaration breached any of their PLAs, or that Epic Games, Inc. breached its Developer Enterprise Program License Agreement. Apple does not contend that any other Epic app or the Unreal Engine violated any of Apple’s policies. Indeed, the Unreal Engine is far removed from the payment processing issue of which Apple complains; it is not a consumer-facing product and is not distributed through the App Store (though a few optional tools are distributed through the App Store for use by third-party developers). Instead, the Unreal Engine is a tool licensed for use by other software developers and is downloaded directly from its own website.
Dragging in Unreal Engine in the Epic-Apple faceoff has raised the hairs of many developers who rely on the game engine for their own works. Retaliatory action against Unreal Engine would threaten an entire ecosystem of game developers, according to Epic. This is why Epic moved for an injunction to restrain Apple from revoking access during the pendency of legal proceedings in the Fortnite matter.
The filing for injunctive relief came alongside a declaration from Microsoft that endorsed Epic’s motion.
Today we filed a statement in support of Epic’s request to keep access to the Apple SDK for its Unreal Engine. Ensuring that Epic has access to the latest Apple technology is the right thing for gamer developers & gamers https://t.co/72bLdDkvUx
— Phil Spencer (@XboxP3) August 23, 2020
If Apple were to revoke Epic’s access to its developer tools, any developer using the Unreal Engine would be unable to patch security flaws or fix bugs, effectively halting support for a wide range of games on iOS and macOS, including Microsoft’s Forza.
It remains to be seen how the matter further plays out in Court. Remember that these are filings and self-declarations, and not orders and directions from the Court — as such, these statements are yet to be examined for veracity in an open court. How the Court reacts would be the most crucial development in the Epic vs. Apple and Epic vs. Google saga.
Update: Court restrains Apple from acting against Epic’s Unreal Engine, but Fortnite remains suspended
The U.S. District Court in Northern California (Oakland) through Judge Yvonne Gonzalez Rogers ruled that Apple is restrained from acting against Unreal Engine and from limiting Epic’s ability to provide Unreal Engine for other apps. But in the same breath, Apple need not reinstate Epic’s Fortnite onto its App Store either.
According to a report from Bloomberg, the judge mentioned that the case isn’t a “slam dunk” for either side and that her temporary restraining order will not dictate the final outcome of the litigation. Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders. By limiting the Unreal Engine, Apple has chosen to act severely, hurting third-party developers who use Epic’s technology platform. The next hearing is set for September 28 for Epic’s request for a preliminary injunction.