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Fortnite will remain banned from Apple's App Store, judge rules — a blow to Epic Games

Fortnite will remain banned from Apple's App Store, judge rules — a blow to Epic Games

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In a blow to Epic Games, a federal judge in California ruled Friday that Apple will be allowed to keep Fortnite off its App Store throughout its legal battle with the Cary-based game maker.

U.S. District Court Judge Yvonne Gonzalez Rogers issued the order late Friday evening, though she also ruled that Apple can't terminate Epic Games' important Unreal Engine accounts, a 3D-visual tool many design industries use.

Her ruling Friday was a second rejection for Epic Games, and could be extremely costly.

The decision reinforces an earlier order from Gonzalez Rogers. Epic Games had asked the judge to immediately restore Fortnite to the App Store when it was first removed in August. The judge denied that request and asked for further arguments.

The case could easily stretch on for more than a year, meaning Epic could forfeit millions of dollars it could have made from iPhone and iPad players.

"Epic Games has strong arguments regarding Apple's exclusive distribution through the iOS App Store, and the in-app purchase system through which Apple takes 30% of certain payments," Gonzalez Rogers wrote. "However, given the limited record, Epic Games has not sufficiently addressed Apple's counter arguments."

In a statement, Apple applauded the judge's ruling.

"We're grateful the court recognized that Epic's actions were not in the best interests of its own customers and that any problems they may have encountered were of their own making when they breached their agreement," the company said. "For 12 years, the App Store has been an economic miracle, creating transformative business opportunities for developers large and small. We look forward to sharing this legacy of innovation and dynamism with the court next year."

Epic also released a statement, but focused on the portion of the judge's ruling that protected Unreal Engine:

"Epic Games is grateful that Apple will continue to be barred from retaliating against Unreal Engine and our game development customers as the litigation continues. We will continue to develop for iOS and Mac under the court's protection, and we will pursue all avenues to end Apple's anti-competitive behavior."

Earlier in the day, the judge also set a court date for the high-profile antitrust lawsuit. The trial is to begin on May 3.

Whether it will be argued in person or on Zoom, as all of the proceedings have been so far, remains to be seen.

Despite Gonzalez Rogers' stated wishes, the case will not be heard by a jury.

Last month, the judge said a jury trial would give a clearer indication of what people care about in this case, and it would be less likely to be overturned by a higher court on appeal.

"I know I am just a stepping stone," Gonzalez Rogers said at the time, adding that whoever loses will likely appeal to a circuit court judge and argue that her opinion is wrong. She noted higher courts are also more likely to respect facts found by a jury.

But both Epic, the maker of Fortnite, one of the world's most popular games, and Apple came together and said they would prefer the case be decided by Gonzalez Rogers rather than a jury.

In its filings so far, Epic has painted Apple as holding monopoly power over the distribution of apps to iPhone users. Its chief complaint is that Apple forces app developers to pay a 30% fee on all payments made within apps. Epic would like to use its own payment systems, which bypass that fee.

Epic is also arguing that iPhone users should be able to download apps directly from developers, rather than go through the App Store. In the meantime, Fortnite has been kicked off the App Store, and iPhone users have been unable to update to the latest version of the game.

The judge has been critical of both Apple and Epic during the Zoom hearings that have been held in the case so far.

She has noted that a growing number of companies have raised complaints about Apple's policies and has asked several questions about Apple's arrival at a 30% fee on in-app purchases. "Why not 15%?" she asked at one point.

But she has also called Epic dishonest in its dealings with Apple. Before it was kicked out of the App Store, Epic installed a workaround of Apple's payment systems on Fortnite without telling Apple it planned to do so. Apple has said this was a major security violation and accused Epic of robbery for circumventing its fees.

"You lied about it by omission, by not being forthcoming," she said. "That's the security issue."

"There's a lot of people in the public who consider you guys heroes for what you guys did, but it's still not honest," she added.

The case could have widespread ramifications in the tech world, and Epic is being cheered on by many other app developers, like Spotify and the owners of the dating app Tinder.

A congressional report released this week accused Apple of having monopoly power via its App Store.

While Apple's technology has created significant benefits to app developers and consumers, the report says, "in the absence of competition, Apple's monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers."

Apple said it "vehemently" disagrees with the findings.

Matt Perault, director of the Center for Science & Technology Policy at Duke University, told the N&O earlier this week that Epic might be able to use the report as it argues in court that Apple is monopoly.

"The report's findings may help Epic in building a factual record against Apple, since Epic will be able to draw from documents and analysis that were produced during the course of an extensive 15-month investigation," Perault said in an email.

It also shows that the public perception of big tech companies may be changing. Epic timed its lawsuit to come out just a few weeks after Amazon, Facebook, Apple and Google faced public questioning on Capitol Hill about their market power.

"Apple's inclusion in the report also shows that it may no longer be exempt from the conversation about big tech and antitrust, and it increasingly may be subject to the kind of relentless scrutiny that other tech firms have faced," Perault said.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate

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