Even when Apple doesn’t control apps, it retains control, court hears

Lawyers for Epic Games have argued that even when Apple doesn’t control app distribution it retains power of who gets access to iOS users.

Epic Games has claimed that even when Apple doesn’t control app distribution, the company controls access to iOS users. Picture: AFP

The maker of one of the world’s most popular games says Apple has effectively set up a system in which its App Store gives the tech giant on average free financing for 60 days, a federal court has been told.

Sydney barrister Ruth Higgins SC, representing Epic Games against Apple and Google, said the company believed that an App Store clause that allowed Apple to withhold the remittance of developers for up to 45 days following the close of the monthly period was enough to provide ­financing for other parts of the company.

“Given the size of the billings that the App Store processes, those 60 days provide enough refinancing support to the App Store and extra financing for other parts of Apple,” Ms Higgins said.

The points were made to the court on day three of Epic Games’ 16-week trial against Apple and Google.

Epic Games has accused Apple of abusing its market power by charging 30 per cent of all money made on mobile apps and not allowing its own payment services.

Epic Games has also accused Google of anti-competitive conduct with its own app store, the Play Store.

Apple had initially argued that an Australian court had no jurisdiction over the company as it is a US company.

But that defence was “baseless”, according Sydney barrister Neil Young KC, leading Epic’s case.

“We will say that defence is baseless. We will also say it is more revealing about the lengths Apple will go to avoid the lengths of the competition act,” Mr Young told the court on Tuesday.

Judge Jonathan Beach appeared to agree and overruled confidentiality claims Apple made over its number of Australian customers, which revealed there were as many as 20 million iPad and iPhone users as at the second quarter of the 2022 financial year.

Epic Games argued that Australia’s legal system should have jurisdiction over the company as every one of those 20 million Australian users, a figure representing more than two-thirds of the population, had to agree to the company’s terms and conditions upon setting up their device.

Much of Wednesday was spent running through Apple clauses that provide the US tech giant certain provisions over developers that can create mobile applications and games that can be used on iPhones and iPads via the company’s App Store.

On Wednesday, Epic Games cited an incident earlier this year in which the company had its iOS developer account temporarily deleted.

The move from Apple was the latest in a longstanding dispute following the company removing Epic Games’ Fortnite app from iOS in 2020 after the company had breached its policies by including third-party payment support in its iOS app.

Earlier this year Apple provided Epic Games a developer ­licence, following the Digital Markets Act passing in Europe that required the US tech giant to allow third-party app stores on its devices.

Two days after deleting Epic Games’ account, Apple reinstated it, after the European Union sought a detailed explanation from the company.

Ms Higgins said the incident “speaks to the market power as well as a willingness and an ability to wield that power in a retributive manner”.

“The episode illustrates a broader point, which is that even in a world in which Apple does not have exclusive control over app distribution, it will retain control over access to iOS,” she told the court.

“And it will do so because ­irrespective of the method of app distribution employed by a developer, Apple will always be in a position to decide which developers are granted access to iOS software, and equally which developers will be denied access.”