By Stephen Nellis
(Reuters) – A federal judge on Monday said she was “inclined” to grant Epic Games’ request to block Apple Inc’s move to terminate the “Fortnite” creator’s developer accounts and said she saw “no competition” to Apple’s App Store on the iPhone.
Epic’s antitrust lawsuit filed against Apple earlier this month and an accompanying social media campaign have become the highest profile challenge to Apple’s App Store business. The maker of the popular “Fortnite” battle game alleges that Apple has engaged in anticompetitive behavior by abusing its dominance in the market for iPhone apps.
Judge Yvonne Gonzalez Rogers said during a hearing that she viewed Epic’s request through “two lenses.” One was with the harm that would come to Epic’s own games, which have been taken out of the App Store. The other was what harm would come to the hundreds of other games that would be hurt if Epic was unable to maintain its Unreal Engine software because Apple terminated all of the company’s Apple developer contracts.
“I can tell you right now that I am inclined not to grant relief with respect to the games, but I am inclined to grant relief with respect to the Unreal Engine,” Gonzalez Rogers said.
Unreal Engine is a software tool for computer graphics that hundreds of other games and other apps use to power their offerings.
Apple removed Epic’s “Fortnite” after Epic rolled out its own method of in-game purchases, rather than using Apple’s system, which charges commissions of between 15% and 30%.
Epic Games has asked the court to block the removal of “Fortnite” from Apple’s App Store, claiming the App Store rules violate antitrust laws.
Gonzalez Rogers highlighted Apple’s ban on downloading iPhone apps from outside the App Store in an exchange with Apple counsel Richard Doren.
“There is no competition. The question is, without competition, where does the 30% (App Store commission) come from? Why isn’t it 10? 20? How is the consumer benefiting from, you (Apple) get to say what you want it to be?” she asked.
Doren replied that consumers had choices when deciding to buy an Android device or an iPhone. “The competition is in the foremarket,” he said, reiterating an argument that has been central to Apple Chief Executive Tim Cook’s defense during Congressional anti-trust hearings.
Gonzalez Rogers replied that there was “plenty of economic theory” to show that switching brands imposed costs on consumers.
During a terse exchange, Gonzalez Rogers at one point muted Doren in the virtual proceedings. Doren later said Apple would prove at trial that “people switch all the time.”
“It’ll be interesting, like I said,” Gonzalez Rogers replied.
Reporting by Stephen Nellis in San Francisco; Editing by Leslie Adler.