‘Two Goliaths’: Apple labels Epic’s Australian challenge to in-app purchases ‘self-serving’

Apple has argued that Epic Games’ case against the tech giant’s in-app purchase system is not altruistically trying to secure a better deal for Australian customers and app developers in the app store, but the “self-serving” act of a Goliath trying to fundamentally change Apple’s business model.

The popular video game Fortnite was kicked off both the Apple App Store and the Google Play Store in August after Epic bypassed the companies’ in-app payment methods for their own cheaper direct billing that prevented Apple and Google taking a share.

Epic Games has since launched legal action in Australia against both companies, alleging that Apple has misused its market power, by forcing apps to use its own in-app purchasing system, and was hindering competition.

The Australian federal court held an interlocutory hearing on Tuesday to decide whether the case can be heard while a legal challenge is under way in the US.

Apple has framed the case as a contract dispute with Epic and sought a stay on the matter in Australia on the basis it needed to be handled in California – where a hearing is scheduled for 3 May.

Apple’s barrister, Stephen Free SC, told the federal court in Sydney the fight was between “two Goliaths” – pointing to the value of Epic being in excess of $17bn, with 350 million account holders and offices in 40 countries.

“You have a sophisticated commercial entity that sought and obtained access to Apple’s intellectual property and all of the benefits of access to Apple’s software and hardware, exploited that opportunity to great effect for many years, and the essence of the dispute … is that Epic wants to redefine the terms of access in quite fundamental and self-serving ways,” Free said.

“Epic wants to ignore its … contractual promise to litigate only in the northern district of California.”

Free said the change sought by Epic would fundamentally rewrite Apple’s business model which, he said, was built “around prioritising quality, security, and privacy of these operating systems”.

He said that could only be achieved through setting the rules by which developers on the platform can build and operate apps.

Epic has argued Apple exploited its market power to impose competitive restrictions on app developers – and this impacted Australian consumers and developers trying to reach Australian users.

The company argued that the actions Epic was challenging weren’t limited to the agreement between Apple and Epic.

Epic’s barrister, Neil Young QC, told the court Australian competition law was intended by the parliament to be enforced in Australia and not be overridden by private agreements between companies like Apple and Epic.

“Mandatory and protective laws of this forum … override any private choice of jurisdiction,” he said.

Young said a US court would not be able to grant Epic the relief being sought concerning Apple’s conduct in relation to all app developers, not just Epic Games.

“The issue is the impact on Australian markets and whether the requirements of our law are satisfied,” Young said. “It is a pretty straightforward case, and we would think the evidence is clear this conduct is going to substantially impact these markets in the way we allege.”

Justice Nye Perram has reserved his decision on whether the case can go ahead in Australia but said he would deliver it “pretty promptly”.

Since legal action commenced, both Apple and Google cut the fees they take from developers with up to $1m in revenue from 30% to 15%. Apple’s fee cut took effect in January while Google’s will take effect from July.

The federal court is due to hold a case management hearing for the Google case on Wednesday.

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