Apple's Legal Battle With Epic Could 'Shake' the Tech Giant (Even If it Wins)

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Tech Talk With Sean Burch and Alex Kantrowitz: Apple’s Legal Fight With Epic Could‘Shake’ Tech Giant (Even If It Wins)

“You never really want to be in the position where you’re on the receiving end of legitimate criticism,” Alex Kantrowitz says

The legal battle between Apple and Epic Games could have longterm ramifications on the world’s biggest company — even if Apple prevails.

Epic Games, the developer behind “Fortnite” and other popular video games, is in court arguing that Apple is a monopoly that uses its size and control over the App Store to extort app developers, forcing them to give Apple up to a 30% cut of all transactions.

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Apple has argued it can charge what it believes to be a reasonable rate to use its App Store and reach its one billion active iPhones. The stakes for Apple, as TheWrap reported last week, could be massive — including putting a significant dent into Apple’s $64 billion in annual App Store revenue.

But even if the case ultimately goes Apple’s way, it could still lead to big changes in how it operates the App Store, Big Technology’s Alex Kantrowitz told TheWrap’s Sean Burch on the latest episode of “Tech Talk.” You could see Apple loosening its grip over how users pay for in-app purchases, for example, or new ways for iPhone users to download apps, rather than being dependent solely on the App Store. As Kantrowitz said, this case, no matter how it goes, could force changes by Apple simply to avoid another legal dance again down the line with a different developer.

You can check out a portion the “Tech Talk” conversation below. Be sure to click the video above for the full conversation, which comes about 10 minutes into the podcast, after Burch and Kantrowitz discuss whether Facebook’s “Oversight Board” botched its handling of Donald Trump’s account last week. And don’t miss the 10-second reviews of Elon Musk’s recent “SNL” performance. What else could you ask for?

Sean Burch: We’re one week into the Epic versus Apple legal battle, and the early indications signal Apple is in the lead. What do you make of it so far?

The [consensus] read is generally right that Epic is struggling in this case. Whether they win or lose will ultimately be up to the judge, so it comes down to their judgment. But I think the right read on this is, even if the bullet doesn’t hit you and just whizzes by you, you still get pretty shaken, and might change some things in your life.

So to me it sounds like you’re saying even if Apple wins the case, they could still lose out in the long run?

I think that this is going to shake [Apple] a bit. Obviously, they made the decision they had to fight Epic in court, which left them open to documents coming out about the way they do business, and showed the world a whole heck of a lot in terms of how Apple exerts its power over app developers.

There’s a view Apple is going to make some changes on its front, no matter what happens after this, to leave it less exposed to the potential it might end up losing a court case like this. To keep going with the violence analogy, this isn’t like a murder trial, where you can’t get tried for it again if you’re found innocent. Epic is one developer. And there are many other developers operating within Apple’s iOS App Store that would like a chance to take it on because the take rate is absurd. Apple does present some serious advantages for those that end up using its App Store and its payment system — but there is no negotiation; there is no wiggle room. You either pay Apple’s 30% and walk away with 70% or you don’t operate on the platform. And for a lot of companies that could be the difference between life and death.

Watch the full conversation in the video above. For more tech coverage, subscribe to the Big Technology newsletter.

Sean Burch