Nine things we learned from the Epic v. Apple trial

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It’s been a little over three weeks since the Epic vs Apple proceedings have begun and the news is relentless. So while we wait for a verdict to come in, we’ll quickly go through all the major takeaways of the trial. Many of the juiciest points didn’t speak directly to the verdict, such as the Xbox’s profit structure or the troubled history of Fortnite crossplay – but that’s part of the fun of such a massive trans-corporate dustup. Once you start digging through CEO Tim Cook’s inbox, all sorts of interesting stuff will come out.

1]Apple is keeping iMessage closed to sell more iPhones

We’ve known for a while that Apple won’t be making iMessage available outside of iOS devices, but this trial showed exactly how thoroughly Apple has considered extending iMessage to other operating systems – and exactly why the company doesn’t want to.

Internal emails show that Eddy Cue was pushing to expand iMessage to a WhatsApp-like messaging platform as early as 2013 – and the problem came back in an email to Phil Schiller in 2016. The idea was rejected both times for the same reason : opening iMessage would just mean one less reason to buy an iPhone.

2]PlayStation’s Fortnite crossplay deal is even more vague than we realized

Sony took the time to crossplay between different console versions of it Fortnite, who eventually admitted in late 2018. But a handful of new emails with Epic Games showed that the deal was even worse than publicly known. Apparently, Sony saw crossplay as a corporate liability to its company and was only willing to take over after Epic agreed to a complicated cross-platform revenue sharing agreement. It’s a unique arrangement – but since we’ve also learned that PlayStation is the main source of income Fortnite, Epic appears to have been willing to make concessions for the platform.

3]Apple has pulled out all the stops to ensure that Netflix continues to sell subscriptions on the iPhone

Apple insists that it treats all App Store developers equally, but it is clear that big players like Amazon have been given special treatment due to their sheer number of users. This trial provided another example, with emails showing Apple employees scrambling behind the scenes to stop Netflix from removing in-app purchases from its iPhone app in 2018.

For Netflix, the logic was hard to avoid: Apple’s 30 percent cut cost the money every time someone signed up through the iOS app instead of a web browser. But for a while, Apple was willing to do just about anything to keep Netflix from giving in to the obvious economy.

4]The App Store is hugely profitable, but Apple won’t admit it

One of the running jokes of the trial was that Apple insisted it had no idea how much money the App Store is making in profit. Phil Schiller said bluntly that he had no idea if the App Store had brought in more money since 2009 than it had spent “because that’s not how I look at the company.” (For context, the App Store grossed over $ 60 billion in 2020, which would be quite a lot to burn through without realizing it.) Tim Cook was a bit more reluctant, saying he believed it was profitable but had not calculated how much.

The strongest number came from an expert witness hired by Epic, who set the profit margin at 78 percent. That would bring Apple more than $ 45 billion in profit from the App Store alone – but don’t expect them to admit it out loud.

5]The Xbox’s economy is a bit weird

Microsoft was sort of an unofficial sidekick to Epic before the lawsuit, offering executives to testify in court and abruptly lowering Windows Store costs to put additional pressure on Apple. But the most exciting turn came when Xbox boss Lori Wright took the stand and testified that Microsoft doesn’t make money from Xbox hardware.

For lawyers on the Epic side, the goal was to differentiate the Xbox from the iPhone: Microsoft sells Xbox hardware at a loss (or near-loss), so the company’s approach is different from Apple’s, which makes money from every iPhone it sells. But all the new information about the Xbox business was interesting well beyond Epic and Apple, so things started to turn almost immediately. Microsoft’s official PR was quick to reverse the claim and make sure everyone knew that the overall Xbox business is profitable despite the hardware subsidy.

Apple took the matter even further, trying to force Microsoft to release its profit and loss statements for the Xbox business if it wanted to keep Wright’s testimony on record. It was an opportunity to see serious jousts between some of the largest companies in the world – and a reminder of how knotty these companies are once you look under the hood.

6]The Epic Games Store economy is even stranger

Leading up to the trial, Epic vs Apple The file showed that Epic spent hundreds of millions of dollars on its PC gaming store. Much of that went to expensive deals to attract developers and consumers, including a free game program that earned Epic millions of new users while offering developers a flat fee to participate. Epic also tried to get Sony and Microsoft’s first-party games on the Epic Games Store, although it apparently never reached a deal on them. Tim Sweeney said as testimonial that he expects the store to turn a profit around 2024 – although Epic has apparently planned different possible scenarios for its future.

7]Apple wins big with slow-moving, progressive web apps on the iPhone

In theory, there is a way to get software on iPhones that the App Store doesn’t include. After all, iPhones contain web browsers, and there are a whole host of technologies (usually bundled under the name of Progressive Web Apps or PWAs) that are intended to make the functionality of an app available through a browser. Google has been working hard on this with some support from Microsoft and Twitter, but so far mobile Safari support has been slowly rolling out.

We didn’t get any new documents explaining exactly why that is, but we did get a lot of Apple executives who said how important it was for Apple to protect iPhone users from bad apps. In short, Apple sees its stranglehold on iOS software as an important security feature – and progressive web apps are threatening that stranglehold. As long as that remains true, it’s hard to imagine mobile Safari catching up with PWA support.

8]Apple is still concerned about malware downloading on the Mac

One of Epic’s big challenges for Apple is why the company can’t use the iPhone in the same way as the Mac – with a central app store but plenty of other ways to get software out there. In the stands, Craig Federighi had a simple answer: we don’t really like how it works on the Mac. Federighi said the level of malware on the Mac was “unacceptable” and that iOS would be “run over” by malware attacks if it used the same model.

The whole point of the trial is to keep App Store exclusivity, so it’s no surprise that Federighi wanted to close the door – but the sheer concern he showed about Mac malware came as a bit of a surprise. It has been especially notable since some people are concerned that macOS is getting closer to the iOS model, making it slightly more difficult to install unauthorized software with each new version. If you were worried that the Mac ecosystem would shut down completely, Federighi’s testimony gave you a lot more to worry about.

9]Tim Sweeney has been bothering Tim Cook with this for years

Perhaps the funniest part of the trial was Tim Sweeney’s sheer determination to settle Apple’s app store policies. The fight then became public Fortnite went nuclear last year, but new emails from Sweeney show he’s been trying to charm, coax, and annoy Apple into allowing alternative app stores for years.

That effort culminated with a 2015 email direct to Cook outlining the arguments for an open iOS in four paragraphs. (Cook responded to Schiller and Cue, “Is this the guy who was at one of our rehearsals?”) Three years later, Sweeney was still trying, promote the matter through the various developer relationship channels.

Of course, Tim Cook isn’t going to change Apple’s business model just because a man sent him an email saying it would be a good idea – but it doesn’t hurt to try, right?