Epic Games lawsuit kicks off in Australia

Epic Games’ competition lawsuit against Apple and Google has finally opened in the Federal Court, with lawyers kicking off day one of an expected two weeks of opening submissions.

The case follows similar ones overseas, launched after the two giants pushed the publisher of Fortnite off their app stores for using its own in-app payment system.

The Australian case has been on hold awaiting the outcome of Epic’s US lawsuits. Epic lost its US case against Apple in 2021, but last year, it won against Google.

Originally three cases – one against Apple, one against Google, and a related class action – there is now a single case before Justice Jonathan Beach, to avoid the duplication of expert evidence.

Counsel for Epic Neil Young KC told the court the lawsuit “concerns restrictions imposed by a corporation … over services for app distribution and in-app payment”.

Google and Apple both tie developers to their payment systems – and their fee structures – whereas Epic wants to use its own in-app payments.

At 12.5 percent, Epic’s transaction fee is lower than both Google and Apple, who charge between 15 and 30 percent depending on the app’s annual revenue.

Rather than damages, Epic wants orders forcing Google and Apple to relax the restrictions that led to Fortnite being banned on the app stores.

Epic argues its case against Apple is bolstered by Apple’s different treatment of mobile and desktop software: Mac OS developers are not required to distribute software only through the App Store.

Apple's App Store-only rule “applies to MacOS, but the prohibition on alternative distribution does not apply,” Young said.

This would seem to undermine Apple’s assertion that non-Apple distribution channels are a risk to users’ security, he argued.

Young conceded that Google’s behaviour is different from Apple’s: “In contrast, users of Android devices can acquire apps from more than one app store; they can also download apps directly.”

However, Google is as restrictive when it comes to payment systems, with third parties forbidden from using payment systems other than Google Play Billing.

Young also drew attention to the discrepancy between in-app purchases of “physical goods and services” and digital content purchases: in Apple’s case, for example, if a developer offers purchase of a physical product, they’re forbidden from using Apple’s in-app payments, while they’re tied to Apple for digital purchases.

That means that payment platforms like Square and others know how to work within iOS software, but can’t process payments for in-app digital content purchases.

“Why does Apple draw a distinction between digital and non-digital goods? There’s no technical justification for the distinction … there are many third-party suppliers of payment systems, they offer in-app purchase systems for iOS developers for the purchase of physical goods and services.”

Such rules, he said, were merely a convenience for Apple: it can’t control deliveries in the physical world, so it opts out of that market.

Evidence in the case is expected to take five months.