Steve Jobs was reluctant to allow the apps of third-party developers on the iPhone, according to his biography by Walter Isaacson.
He ultimately caved to pressure with the launch of the App Store in 2008.
But the company wanted strict control over what was allowed on the platform, an email released in 2021 revealed.
Apple’s control over its empire will be front and centre in a case heard over the next five months in Melbourne’s federal court.
At the same time, Google – which has prided itself on having a more open ecosystem than Apple – will have its own practices put to the test.
Two Australian federal court cases were put on hold in April 2021, pending the outcome of similar cases in the US.
Epic Games, maker of the popular game Fortnite, has spent the past three years in a global legal battle against Apple and Google, alleging misuse of market power over the control they wield over their app stores.
Fortnite was kicked off the Google and Apple app stores in 2020 after Epic Games offered its own in-app payment system that bypassed the one used by the platforms, and cut out the fees Apple and Google receive for in-app payments.
Epic lost its 2021 antitrust case against Apple, but won its case against Google late last year.
Originally separate, the Australian cases have now been combined into a single monolith.
Justice Jonathan Beach decided to hear the two cases and an associated class action at the same time to avoid duplication of witness evidence.
David and Goliath?
In the Australian cases, which originally kicked off in 2020, Epic Games has alleged that Apple’s control over in-app purchases and its actions in banning the Fortnite app are a misuse of market power, which has substantially lessened competition in app development.
The company has also alleged Google harmed app developers and consumers in Australia by preventing choice over app distribution and in-app payments on Android devices.
Just like their phone operating systems, the legal cases between Apple and Google have many similarities – but also key points of difference.
Apple’s iOS and App Store are completely closed and controlled by Apple.
That means if an app is on your phone, and there is a payment through that app, it has to go through Apple.
Similar rules operate on Google’s Android operating system for the Play Store, but Google also allows “sideloading” of apps – meaning apps installed directly on the phone without using the app store.
It also allows for phone manufacturers such as Samsung to have their own app stores.
Fortnite is still available on Android, but only through sideloading or through the Samsung store.
Each company charges fees for transactions in their app stores.
Google Play charges a 15% fee for the first US$1m earned by developers each year, increasing to 30% above that.
Apple developers pay a 15% fee if the revenue generated the previous year is lower than $1m, but pay 30% if they earn more than that.
Fees are common in the industry – Epic’s own store charges developers a 12% fee.
Epic argues that it should be able to offer its own store as competition to Apple’s store, and also offer alternative payment options within their app in the official Games Store.
While Google has argued it is more open than the Apple App Store, it was this openness that cost the tech company in the US case.
A jury found that tying the Google Play Store to payments in apps was illegal, and that the company had entered into anti-competitive agreements with select developers to keep their apps in the Play Store.
In the Apple case, the judge took a narrower view, considering mobile gaming transactions specifically rather than the app store as a whole.
The judge found that Apple was not a monopoly, instead it was competing against Google and others.
The judge also backed Apple’s concerns about the security implications of opening up the App Store, and supported the company seeking a fee for the use of its intellectual property through in-app payments.
Apple is expected to run a very similar case in Australia.
The company believes there is little difference between the cases, and the principles underlying Australian competition law are similar to those in US antitrust laws.
Apple sees Epic not as David to its Goliath, but as a multibillion dollar company seeking to further profit at the expense of the security of iPhone users.
Google argues it does offer customers a choice in app stores, as well as alternative options for developers to sell content outside Google Play.
It also points to its permissions allowing the sideloading of apps while also trying to preserve security for users – something it argues Epic is attempting to water down.
“It’s clear that Android and Google Play provide more choice and openness than any other major mobile platform and it’s a model that’s good for Australian developers and consumers,” Google’s VP of government affairs and public policy,
All of the apps for the original iPhone were created by Apple when it debuted in 2007.
In his biography, Walter Isaacson claims that Steve Jobs was hesitant to approve third-party developers’ apps for the iPhone. In the end, he gave in to pressure when the App Store opened in 2008. However, a 2021 email revealed that the company desired stringent control over what was permitted on the platform.
Over the course of the next five months, a federal court in Melbourne will hear a case that will center on Apple’s control over its empire. Simultaneously, Google, which has taken pride in having an ecosystem that is more open than Apple’s, will have its own procedures tested.
In April 2021, two cases before the Australian federal court were placed on hold while similar cases in the US were being resolved. Accusing of abusing its market dominance by controlling Apple and Google’s control over their app stores, Fortnite creator Epic Games has been engaged in a global legal battle against the two companies for the last three years.
In 2020, Epic Games introduced its own in-app payment system that circumvented the platforms’ system and eliminated the fees Google and Apple received for in-app purchases, leading to Fortnite’s removal from the Google and Apple app stores.
Epic won its lawsuit against Google late last year, but it lost its 2021 antitrust case against Apple. The Australian cases were once distinct, but they have since been merged into one monolith. Judge Jonathan Beach made the decision to hear the two cases simultaneously with a related class action in order to prevent the testimony from witnesses being repeated.
Goliath and David?
The Australian cases began in 2020. Epic Games claims that Apple misused its market power by banning the Fortnite app and controlling in-app purchases, significantly reducing competition in the app development industry. Additionally, the business claims that by limiting Android device users’ options for app distribution and in-app purchases, Google hurt Australian consumers and app developers.
Similar to their phone operating systems, Apple and Google’s legal cases share many commonalities as well as important distinctions. Apple controls the entirety of the iOS and App Store and keeps it closed. Accordingly, any payments made through an app on your phone must be made through Apple.
Google permits “sideloading” of apps, or installing apps straight from the phone without going through the app store, on its Android operating system, although there are similar restrictions. It also permits phone makers to have their own app stores, like Samsung. Although it can only be accessed through the Samsung store or sideloading, Fortnite is still accessible on Android.
Fees for transactions in app stores are imposed by each company. For the first US$1 million that developers make annually, Google Play charges a 15 percent fee; after that, the fee rises to 30 percent. When revenue for the previous year is less than $1 million, Apple developers pay a 15 percent fee; if revenue exceeds that threshold, they pay a 30 percent fee.
In the industry, fees are typical; for example, Epic’s own store charges developers a 12 percent fee.
In addition to providing alternate payment methods within their app in the official Games Store, Epic contends that it should be permitted to open its own store to compete with Apple’s store.
Google has maintained that its app store is more transparent than Apple’s, but in the US case, this transparency actually worked against the tech giant. The jury determined that Google had engaged in anti-competitive agreements with certain developers in order to maintain their apps in the Play Store, and that it was unlawful to link the Play Store to payments made through apps.
Considering only mobile gaming transactions in the Apple case, the judge adopted a more limited perspective than the app store in its entirety. In contrast to Google and other companies, the judge determined that Apple was not a monopoly. The judge further supported Apple’s concerns regarding the security ramifications of launching the App Store and the company’s request to charge for the use of its intellectual property through in-app purchases.
In Australia, Apple is anticipated to handle a case that is much the same. The business feels that the cases are essentially similar, with US antitrust laws and Australian competition law stemming from similar ideas.
From Apple’s perspective, Epic is not a Goliath to its David, but rather a multibillion dollar enterprise looking to maximize profits at the expense of iPhone users’ safety.
Google claims that it does provide developers with other options to sell content outside of Google Play, as well as giving customers choice in app stores. It also highlights its permissions, which permit sideloading of apps while attempting to maintain user security—something it claims Epic is attempting to weaken.
Wilson White, vice president of government affairs and public policy at Google, wrote in a post this week that “it’s clear that Android and Google Play provide more choice and openness than any other major mobile platform and it’s a good model that’s good for Australian developers and consumers.”.
“We’ll keep fighting tooth and nail for our right to a long-term business plan that lets us protect users, help developers expand their enterprises, and maintain a robust and healthy Android ecosystem for all Australians.”. “.
Apple was forced to modify the EU App Store.
Two weeks will be dedicated to opening submissions; the next three months will be devoted to fact witness and expert testimony; and the final two weeks will be devoted to closing submissions, which will conclude in the middle of July.
Prominent figures from Apple and Google, along with Tim Sweeney, the CEO of Epic, who is in Melbourne for the hearing, are among the witnesses anticipated to provide testimony.
If Epic’s case is unsuccessful, a class action being pursued concurrently on behalf of Australian developers and consumers will be unsuccessful.
It is unlikely that the case will be settled this year because Beach is not expected to provide a decision for six months, after which there may be an opportunity for an appeal.
Apple and Google might lose the app store war in the end, regardless of whether Epic prevails in the conflict. According to the Digital Markets Act, Apple was compelled to make modifications to its App Store in the European Union, including permitting different payment methods and marketplaces. Consequently, Apple last week reinstated Epic’s developer account in the EU.
Epic claims that although Apple’s execution of those modifications isn’t flawless, other governments—like Australia—might decide to follow suit.
