Showing posts with label Epic Games Store. Show all posts
Showing posts with label Epic Games Store. Show all posts

Thursday, April 15, 2021

Discussion of Apple's alleged need to redesign iPhone to support third-party app stores continued--and expanded into why web apps don't help

This is a follow-up to yesterday's posts on Epic Games v. Apple, especially the third one (Apple expert incorrectly claims Apple would need to "redesign" iPhone hardware and software to allow alternative app stores ), which Apple Insider picked up.

That article drew additional attention to the discussion. A New Zealand-based developer, @hishnash, gave his explanation of what Apple's witness meant by a need to redesign even the iPhone's hardware. Epic Games founder and CEO Tim Sweeney then pointed to the fact that Apple's Enterprise program works on current iPhones:

We then discussed the technical aspects of installing and running apps on iPhones that are not installed via the App Store (but via the Enterprise Program, TestFlight, or Microsoft App Center). @hishnash noted that there are certain feature sets, such as CarPlay, that require special permission. My understanding of everything said up to that point was that it was "all just about Apple lifting lifting restrictions (some contractual, some technical) as opposed to really having to take its architecture to a higher level."

This here hinges on how one would reasonably understand the verb "to redesign" in connection with "software and hardware." There is another key term in this dispute--commission--that Apple clearly redefines in ways that no dictionary supports. In the case of to redesign, they also mislabel something, but one needs to consider the context:

"The duty upon Apple is more than the usual duty to deal; it would include a duty to redesign its hardware and software [...]" (emphases added)

The duty-to-deal case in U.S. antitrust law is Aspen Skiing, which must nowadays be understood in light of the warning in Trinko not to go too far, but Trinko didn't affect the part that is relevant in this redesign context. The Aspen outcome was that a larger ski resort had to (again) offer multi-area tickets together with its smaller competitor, which might otherwise have been forced out of the market.

So when Apple's expert says Epic wants more than the Aspen plaintiff and points to a "redesign" of hardware and software protected by intellectual property rights, the question is: is Epic really asking for (fundamentally) more? If yes, then "redesign" would mean Apple would have to make a huge architectural effort, and that wouldn't be fatal to Epic's case, but certainly involve a higher hurdle. Unlike Apple's witness, I don't see a structural difference. Here's why:

Epic's case, just like Aspen Skiing, is at the core about lifting restrictions, not about creating something new. The ski resorts didn't have to create a new skiing area. They just had to provide a ticket that gave customers access to both companies' existing areas. Apple doesn't have to invent something new: all those arguments about APIs, certificates, credentials etc. don't change the simple fact that Apple artificially put up barriers with a Gods may do what cattle may not attitude.

Apple's expert makes it sound like the Aspen Skiing defendant didn't have any obligation under antitrust law beyond signing a contract. But it definitely took more to implement the court-mandated cooperation. Even if you had a duty to sell someone potatoes, you'd have to do something to make it happen. Aspen Skiing was about issuing (in that case, printing) tickets, and about validating them (manually or electronically). Interestingly, the security architecture that ensures only authorized apps can access, for example, the CarPlay APIs is also about issuing "tickets" (in that case, digital certificates) and about validating them (@hishnash mentioned "root certificate chain validation" in connection with "the Entitlement system"). Also, even those ski resort tickets involved intellectual property (copyrights, trademarks)--plus real property.

It's a different jurisdiction, but when the European Commission obligated Microsoft to give developers of competing network servers (like the Samba open source project) fair access, Microsoft not only argued that it shouldn't have to grant a license but additionally complained about having to provide technical documentation. Then-competition commissioner Neelie Kroes "[found] it difficult to imagine that a company like Microsoft does not understand the principles of how to document protocols in order to achieve interoperability" and fined Microsoft for its (temporary) refusal.

Unlike the question of whether a "commission" is a "rebate" (it's a clear Boolean "false"), this here is one of degree. I stand by my criticism of the verb "to redesign" in this context because lifting unreasonable restrictions just means to fix a problem, not to take some technology to a higher level as "redesign" implies.

In particular, I'm unaware of Epic Games demanding access to Car Play at this stage. The types of apps one finds on the Epic Games Store don't need APIs that are subject to specific restrictions. In light of that, I summarized my understanding as follows:

Of course, even the second part (access to those other systems) could involve duties to deal. But it would be a first step to at least allow games like Fortnite to be installed via third-party app stores.

@hishnash acknowledged that "apps that could be replaced with PWAs (aka apps that do not use any key system apis could be installed through a third party apps store." (PWAs = HTML5-based Progressive Web Apps). In other words, the Epic Games Store could install Fortnite because--performance and other issues apart--Fortnite doesn't need to access APIs like CarPlay and could therefore be a web app (it wouldn't be playable, but again, no API access issue). Thereafter, the discussion was more about whether third-party app stores would be an effective remedy as developers would still need to use some of Apple's SDKs etc., and whether PWAs would be a workable or potentially even superior alternative.

Epic's proposed findings of fact and conclusions of law list a number of shortcomings that PWAs have. Mr. Sweeney described Apple's pointing to PWAs as "disingenuous" because Apple limits those APIs and doesn't allow third parties to fix the issues though they technically could. In addition, what I know from one of my own projects is that major ad networks don't even support in-app advertising in WebGL apps. So there are usability issues including but not limited to performance, and monetization issues. Mr. Sweeney noted that Apple itself tells developers to build native apps:

And in my favorite @TimSweeneyEpic tweet to date, he explained iOS is "an intermediation trap":

@hishnash thought Epic wanted exposure on the App Store and would therefore not even accept a workable PWA solution. He inferred this from Epic's decision to offer Fortnite via the Google Play Store despite sideloading being possible. Let's focus on Apple here, so I'll just note that sideloading on Android doesn't really work for consumer software in its current form: my own company even experienced problems because beta testers didn't manage to install our stuff via Microsoft App Center. As for Apple, I pointed @hishnash (whom I commend for his thoughtfulness and constructive attitude) to the fact that Epic Games v. Apple is not just a Fortnite case but the central issue is third-party app stores like the Epic Games Store (even though the early stage of the dispute was very much about #FreeFortnite).

The remainder of the remedies discussion basically was about weighing the pros and cons of two remedies--PWAs and third-party app stores. @hishnash thought that if Apple--in what I consider an alternative universe--sincerely made an effort to provide a great user experience for PWAs, developers would then at least be independent, while apps distributed via alternative app stores would still depend on some kind of IP license from Apple:

In other words, we were then talking about two different dependencies:

  • With PWAs, @hishnash assumed there was no licensing issue (and for simplicity's sake, I don't want to digress into the related IP questions here), and if usability issues came up, the solution would be to hold Apple to a hypothetical commitment to comply with a certain technical standard.

  • For apps distributed via third-party app stores, @hishnash assumed there was a need to take a license from Apple (which I again won't discuss from an IP perspective, though I'd be tempted to talk about the recent Android-Java API Supreme Court decision), and the terms might be unreasonable (as he suggested in the above tweet).

It's not that @hishnash would necessarily oppose both better PWAs and competing stores. At least on videogame consoles (which are an important topic, but can't talk about them or this post will never come to an end), he might even like the idea of going down both avenues. And he clarified he didn't mean to say that PWAs "worked well right now."

To make a long story short, the reason I don't believe PWAs could lead to a practicable and reasonably enforceable remedy is because user experience happens in users' minds. What's pretty doable (not trivial, but manageable) is to ensure compliance with a standardized protocol like 5G. What's already a lot harder is to measure purely technical performance: there are different benchmark programs for CPUs, for example. But what's absolutely impossible--except perhaps with 26th-century artificial intelligence--is to objectively quantify the user experience, especially of entertainment products like games. So even if Apple theoretically promised to do a better job on PWAs, or just made an announcement to that effect without a formal legal obligation, developers wouldn't have a reliable--i.e., justiciable--assurance of being able to compete outside Apple's App Store.

By contrast, if Apple clearly had to allow the distribution of apps via third-party stores that use the same APIs as those distributed via the App Store, the remaining area of potential dispute would come down to license fees for SDKs, for developer tools, for documentation etc.--which can be worked out. The EU solved that problem in the Microsoft network server protocol case. I follow standard-essential patent royalty disputes all the time (this blog has written more about them than about any other topic so far). Even if something went wrong, we could all develop, innovate, compete--and seek a refund later. Right now, Apple just says "no" and that's the end of the story (and of this post).

Share with other professionals via LinkedIn:

Share|

Eingestellt von Florian Mueller um 12:04 PM
Labels: , , , , ,

Saturday, March 27, 2021

Has European Commissioner Thierry Breton already announced that Apple will have to allow alternative app stores? A matter of interpretation.

One of the first LinkedIn posts I read this morning was from the Coalition for App Fairness, which was founded last year by Epic Games, Spotify, Match Group and others. When the CAF started, I firstly wanted to wait and see, but at the start of this year I already predicted on this blog that it would keep growing. My own app development company may at some point apply for membership, but even in that case I'd obviously retain my independent opinion. It was high time someone founded the CAF, given that a couple of other organizations claim to represent app developers while in reality being paid and remote-controlled by Apple in one case, Google in the other. It's laughable when an entity claims to represent app developers but doesn't support Epic against Apple, for example.

So the CAF pointed to an article published by EU Internal Market Commissioner Thierry Breton on LinkedIn, entitled DSA/DMA Myths -- What is the EU digital regulation really about?

According to CAF's interpretation of the article, Mr. Breton is "stressing the importance that all gatekeepers allow other app stores on their platforms. This would mean that for the first time, there will be real competition for the App Store." (emphasis added)

It's obvious that I would want this to happen. Competition works wonders. This isn't just about the commission on in-app payments. When they reject your app and won't let you publish it at all or force you to give up on your original concept, your focus is not on 15%, 30% or any percentage for that matters. As Epic will argue in the May trial, alternative app stores can do a better job at curation (app reviews). I don't know whether the Epic Games Store, if it already existed on iOS, would have accepted my app (we'd have to build a Windows version and submit it to them to find out), but considering that similarly-themed games are available on Steam (a pretty meaningful point of reference), the Samsung Galaxy Store, the Microsoft Store etc., I'd be reasonably optimistic. At a minimum I would know that whoever (Apple, Epic, or any third party) rejected it would have to assume that some other app store might carry it. That would discipline all of them, and rejections would become more reasonable. Some people blame the reviewers, such as the Coronavirus Reporter complaint against Apple; I prefer to focus on structural and systemic issues, but regardless of how structural or not a problem is, competitive constraints can only help.

The European Union's envisioned Digital Markets Act could become the most important piece of legislation in the technology space ever, way above such laws as the U.S. Digital Millennium Copyright Act (the substance of which I don't mean to criticize; I vocally supported its enforcement in a case involving Blizzard Entertainment).

But the question is: is Mr. Breton actually saying in that LinkedIn article that there will be alternative app stores on iOS (and Android)?

Here's the only passage in his statement that mentions apps:

"Gatekeepers will keep digital opportunities; providers of operating systems will always be able to offer all sorts of software and apps as they wish. In addition, the DMA empowers the users who do not like the preinstalled apps to switch to a different service or use a different app offered by another provider." (emphasis in original)

The narrowest interpretation would be that users must be provided with alternatives to any preinstalled apps, either by selecting different services within an app (such as by selecting a different search engine in a search app) or installing "a different app" made by another developer. In that case, one would interpret "provider" as "service provider" in the same sense that users could switch to a different service within an app.

But one doesn't even have to interpret "by another provider" as "by a different app store" in order to arrive at the CAF's desired outcome. The Apple App Store is an app itself (as is the Google Play Store). And it's a preinstalled one. So, arguably, Apple would have to offer an alternative by another service provider (such as the Epic Games Store) to the App Store. At a minimum, the CAF's interpretation is defensible, even though I'm not going to take a definitive position on whether it's the only proper interpretation (absent additional evidence).

What Mr. Breton primarily sought to accomplish with his LinkedIn article is to debunk the "myth" that Apple couldn't offer, say, a music streaming service. Instead, the DMA would impose obligations requiring "that business users and end users are not unfairly deprived of their free choice, a fundamental postulate of [the EU's] single market." An alternative app store would be as consistent with that vision as it gets. Many roads lead to a multi-app-store ecosystem, and the DMA is one of them, at least potentially.

Share with other professionals via LinkedIn:

Share|

Eingestellt von Florian Mueller um 7:13 AM
Labels: , , , , , , , , , , , ,

Sunday, March 21, 2021

Central issue in upcoming Epic Games v. Apple trial: Apple's refusal to allow Epic Games Store and other alternative app stores on iOS

On Friday, Epic Games and Apple submitted tentative witness lists for their antitrust trial that will start on May 3 in Oakland. But Epic attached something far more informative: summaries of the opinions offered by its expert witnesses. In the previous post I discussed how two professors are going to debunk Apple's security pretext for its App Store monopoly. This here is the third and final part of the trilogy on Friday's filings.

When Epic Games filed its complaints against Apple and Google in August, many people thought this was just about bringing down Apple's 30% App Store commission and requiring Apple to allow Fortnite to return to the App Store despite its alternative in-app payment system. In response to Epic's activation of the latter, Apple not only removed Fortnite from the App Store but even announced the termination of another Epic developer account: the one used for the development of Unreal Engine. A temporary restraining order (TRO), which Judge Yvonne Gonzalez Rogers later converted into a preliminary injunction (PI), barred Apple from terminating the Unreal Engine account.

It's a common misbelief that Epic just wants to get Apple to reduce the 30% commission. Epic's original complaint raised some more fundamental issues, and Epic wants to open up iOS more generally for developers and consumers. The most important part here is that Epic--and others--could provide alternative app stores and thereby act as a competitive constraint on Apple in the iOS app distribution market. In its August 2020 complaint, Epic already said the following:

"Epic approached Apple to request that Apple allow Epic to offer its Epic Games Store to Apple' iOS users through the App Store and direct installation. Apple's response was an unequivocal 'no'."

"The Epic Games Store provides access to more than 250 games from more than 200 developers, and those numbers are growing rapidly. The Epic Games Store offers personalized features such as friends list management and game matchmaking services. Absent Apple’s anti-competitive conduct, Epic would also create an app store for iOS."

In Friday's summaries of what Epic's economic experts say, the possibility of the Epic Games Store (and similar app distribution channels) competing with Apple's monopolistic App Store plays a key role. Stanford professor Susan Athey discusses the importance of "middleware" with en mphasis on "an independent Multi-Platform App Store" (this post continues below the document):

376-2 Susan Athey Opening O... by Florian Mueller

Professor Athey describes today's "market for mobile smartphone operating system platforms [as] a duopoly, with market leaders Apple and Android together accounting for almost 100% of mobile smartphone revenue share outside of China." Practically, either platform is a monopoly in its own right, as "[}a user who considers leaving one platform and joining another faces app-related switching costs, including the costs of migrating and synchronizing her apps, purchases [download fees as well as in-app purchaes] and app data (and, in many cases, the costs of re-purchasing apps on the new platform)."

While multi-platform app stores, multi-platform in app-payment systems, or cross-platform streaming platforms could help, "Apple imposes a set of technical and contractual restrictions that block critical categories of middleware, interfering with the competitive process and maintaining the market power of the iOS Platform."

Another Epic expert witness, Michael Cragg, a summary of whose opinions I've uploaded to Scribd (PDF), says Apple's experts focus "on the wrong product and not Epic's role as a would-be direct competitor to the App Store." Apple would like the court to consider the entire game distribution market (across all platforms) as the relevant antitrust market, but Epic's expert says those Apple experts "do not focus on the right market definition question."

Both Michael Cragg and another Epic expert, Nancy Mathiowetz (summary of opinions (PDF)), emphasize in this context that the mere access to, or even the regular use of, alternative devices by iOS users doesn't really mean much for the purposes of this case. As Michael Cragg notes, "by [Apple's experts'] logic, refrigerators and TVs (let alone stereos and TVs) are in the same market because users 'have access' to or 'regularly use' both." But in order for the distribution of games on other platforms to be part of the same relevant antitrust market, there would have to be evidence that "a small but meaningful change in the price or quality of app distribution on either device" would make "users switch from using one distribution channel to another" to an extent that it would be a competitive constraint on Apple's own decisions.

Here's another important point:

"When it comes to distribution, iOS games do not have unique characteristics that make them separable from other iOS apps. All iOS apps (including iOS games), however, do have unique characteristics that make them separable from non-iOS apps, including non-iOS games."

Due to restrictions imposed by Apple, there is no way to access a multi-platform app store on iOS; as a result, switching costs are too high for switching to take place to a meaningful degree, which is why "iOS app distribution remains a market unto itself."

Finally, the opening and rebuttal opinions by Epic's primary expert on platform economics, David Evans, also place great emphasis on "the competitive effects of Apple's foreclosure of alternative channels of iOS app distribution":

376-8 David Evans Opening O... by Florian Mueller

376-9 David Evans Rebuttal ... by Florian Mueller

Share with other professionals via LinkedIn:

Share|

Eingestellt von Florian Mueller um 4:24 PM
Labels: , , , , , , ,
Subscribe to: Posts (Atom)