Wednesday, September 16, 2020

Apple suspects Epic Games seeks "to reinvigorate [waning] interest in Fortnite" and notes Unity is far more popular than Unreal Engine

This is a follow-up to my post on Apple's opposition to Epic Games' motion for a preliminary injunction. Like the previous one, this is about Apple highlighting facts that don't make Epic look good. And Apple appears to have stepped up its rhetoric after weeks of Epic running an aggressive #FreeFortnite campaign and Epic CEO Tim Sweeney's Twitter presence increasingly looking like an "I hate Apple's App Store terms" type of campaign account. Interestingly, even though Epic is suing Google as well (for an update on that case, San Jose-based Judge Beth Freeman has declined Google's invitation to take over the Google Play Store antitrust cases), Mr. Sweeney almost exclusively lashes out at Apple in his tweets, and actually promotes Android over iOS at times. On Twitter I read that Epic is "giving away Android devices in #FreeFortnite tournament."

There will be opportunities in the build-up to, and after, the September 28 preliminary injunction hearing to talk a bit more about the parties' legal theories. However, Judge Yvonne Gonzalez Rogers said in the recent TRO (temporary restraining order) hearing that the case would not be decided at this early stage. For now, it's about Epic seeking relief before the court has had the chance to fully analyze the merits. At this point it's just about what the parties are allowed to do while the litigation is ongoing. Epic wants to be allowed to circumvent Apple's in-app payment system, and Apple argues (as I'll discuss later) that Epic's "cheating" (by not disclosing at the time of app review the existence of an alternative payment system) justifies a termination of all of Epic's developer accounts, including the one used for Epic's work on Unreal Engine.

As I reported before, Apple's opposition brief accuses Epic of bullying platform operators: "Epic's strategy of coercing platforms for its own gain, under the guise of being 'pro-gamer,' is something Epic continues to do." At the same time, Apple attributes Epic's behavior at least potentially to Fortnite's waning popularity:

"For reasons having nothing to do with Epic's claims against Apple, Fortnite's popularity is on the wane. By July 2020, interest in Fortnite had decreased by nearly 70% as compared to October 2019. This lawsuit (and the front-page headlines it has generated) appears to be part of a marketing campaign designed to reinvigorate interest in Fortnite."

That passage points to an August 2019 Bloomberg article ("Fortnite's Slowdown Has Epic Games Battling to Spark New Growth"), according to which "[r]evenue has been sliding for the battle-royale juggernaut," and a Google Trends analysis of how popular three game-related search terms were bbetween mid-July 2017 and late July 2020, shortly before Epic's litigation against Apple started. The Google Trends chart shows that Fortnite surpassed Minecraft and Pokemon a few months after its launch, and stayed on top until about the middle of last year, but as of this summer both Minecraft and Pokemon are more popular search terms on Google:

You can find Apple's brief in my previous post, and the links are in footnotes 11 and 12. There is a clerical error in the abbreviated URL ("tinyurl") contained in footnote 12. When I clicked on that one, I immediately saw that something had gone wrong because the yellowish curve for Pokemon was just on the base line of the chart. That's because the search term was "Pokemon." (right, with a period). I manually deleted that one from the URL text field of my browser and got the correct chart (which you can see above). Then the whole thing made more sense.

The following quote from Apple's filing also suggests that Epic is seeking to commercially benefit from its #FreeFortnite campaign:

"Finally, a word about Epic’s claimed reputational harm. Epic has engaged in a full-scale, pre-planned media blitz surrounding its decision to breach its agreement with Apple, creating ad campaigns around the effort that continue to this day. If Epic were truly concerned that it would suffer reputational injury from this dispute, it would not be engaging in these elaborate efforts to publicize it. From all appearances (including the #freefortnite campaign), Epic thinks its conduct here will engender goodwill, boost its reputation, and drive users to Fortnite, not the opposite. That is not harm."

Apple's filing furthermore explains that Unreal Engine is not the market leader--Unity is. While Unreal Engine is, according to Apple, "used by a minuscule fraction of iPhone apps," Unity (which my app development company uses as well) "characterizes itself as 'the world's leading platform for creating and operating interactive, real-time 3D content,' and is available for 'more than 20 platforms, including Windows, Mac, iOS, Android, PlayStation, Xbox, Nintendo Switch, and the leading augmented and virtual reality platforms, among others.'" Apple goes on to say that "Unity is used by the overwhelming majority of Apple developers that use a graphics engine."

As I already wrote earlier today, the #1 question in the preliminary injunction context is not going to be Fortnite (I can't see how Epic could dissuade the court from its assessment that Fortnite's removal from the App Store is simply self-inflicted harm) but whether Apple will or (as per the TRO) will not be allowed to terminate all of Epic's developer accounts, including the one Epic uses for its work on Unreal Engine. Microsoft has already twice (1, 2) supported Epic in this litigation through declarations that stress the importance of Unreal Engine to other companies, such as Microsoft. But that doesn't change the fact that Unity is the undisputed market leader. It does, however, look a bit like Mr. Sweeney, in the tweet I already linked to further above, reciprocated the favor by celebrating the launch of Microsoft xCloud...

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