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Epic Games denies Apple’s claim of Fortnite losing popularity, says usage "actually increased by more than 39%" during chosen period: court filing

If you’re more interested in what Epic Games CEO Tim Sweeney said in a sworn declaration about the popularity of Fortnite, please click here to skip the part that addresses the legally more relevant questions surrounding Epic’s push for a preliminary injunction against Apple.

Shortly before midnight Pacific Time on Friday, Epic Games filed its reply brief in support of its motion for a preliminary injunction (PI) against Apple over Fortnite and other Epic games as well as Epic’s Unreal Engine (this post continues below the document):

20-09-18 Epic Reply ISO Mot… by Florian Mueller

Short of a hypothetical sur-reply (for which Apple would firstly have to seek permission from the court), this concludes the PI briefing process, giving the court a week and a half to form an opinion ahead of the September 28 PI hearing. This blog published and commented on the previous filings:

Epic is seeking a PI over the same two questions–whether Apple rightfully removed Fortnite from the App Store after Epic introduced an alternative payment system, and whether Apple may now terminate all of Epic’s developer accounts including the one used for the further development and maintenance of Unreal Engine–that it raised in its motion for a temporary restraining order (TRO). TROs are preliminary to PIs: they’re in force for a short period, after which a PI is needed as a replacement or the defendant isn’t enjoined until the final judgment. The court granted Epic a TRO over Unreal Engine, expressing concern over what the court at that stage thought might have been retaliatory overreach by Apple, but not over Fortnite, with respect to which Apple prevailed on its argument that Epic was complaining of “self-inflicted harm.”

It’s interesting to observe the priorities Epic’s lawyers set in their reply briefs. The one that reinforced the TRO request practically gave up on Fortnite by prioritizing Unreal Engine. Apparently Epic realized that the “self-inflicted harm” argument was pretty much insurmountable. After all, Epic could have simply continued to comply with Apple’s App Store terms while nonetheless challenging them vigorously in court. But this time around, Epic’s reply brief lumps the Fortnite and Unreal Engine issues together.

As a seasoned smartphone litigation watcher, I can’t help but conclude that just like Apple’s “self-inflicted harm” argument was too powerful last time (which led Epic to focus on Unreal Engine instead), Apple has apparently succeeded making its case that

  • the existence of two Epics, one in the U.S. and one in Switzerland, is irrelevant to the question of contract termination because the decisions and the payments are made by the very same people, and

  • that Apple routinely and consistently does terminate accounts under such circumstances (“Apple has terminated over 75,000 unique accounts for introducing new features without going through App Review; over 2,000 accounts for introducing a non-IAP payment method; and over 60,000 accounts for introducing hidden features or obfuscating code {…].”

    The latter is very important because Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California said in her TRO order that Apple’s reliance on its ‘historical practice’ of removing all ‘affiliated’ developer accounts in similar situations or on broad language in the operative contract at issue here can be better evaluated with full briefing.”

    In the reply brief, Epic is not even arguing anymore that the Unreal Engine business is run by a separate company. Instead, the emphasis is placed on antitrust theories.

Epic is now going for broke.

Epic’s lawyers–who are among the very best antitrust attorneys in the United States–have embarked on what is <b<a “Mission Impossible” with respect to the district court by making the fate of the entire motion (its Fortnite and Unreal Engine parts) dependent on whether the court will conclude at this early stage of proceeding that Apple’s App Store Teams, with respect to in-app payments, are illegal and unenforceable. Judge Gonzalez Rogers had made it clear in the late-August TRO hearing that she didn’t consider this case to be a “slam dunk” for either Epic or Apple, and said that the case wasn’t going to be won or lost at this stage. Epic’s legal strategy, however, is to persuade her to say now, with hardly a record (apart from a few declarations and their attachments) having been built, that Epic is likely to prevail on the merits of the case.

Seriously, Epic must be desperate, trying a Hail Mary to overcome the combination of Apple’s self-inflicted-harm, practically-just-one-Epic, and consistency-in-account-termination arguments. Obviously, Judge Gonzalez Rogers could say that Epic is going to win this handily. But she’s very unlikely to do so, given that she told the parties this was a complex case. I didn’t interpret her TRO order as encouraging Epic to sell her on the merits of the complaint–instead, the TRO order showed Apple a way to get rid of what was Epic’s consolation prize: the Unreal Engine-related part of the decision, where even Epic can’t argue anymore that its Swiss legal entity is not an independent business by any standard.

Even though Epic lumps the two issues together, the court could still find that the account used for Unreal Engine warrants different treatment from the one used for Fortnite. But that wouldn’t be easy to do, given what Judge Gonzalez Rogers wrote in her TRO order. So Epic is now facing a significant risk of its motion being denied in its entirety.

Epic can appeal any partial or complete denial to the United States Court of Appeals for the Ninth Circuit. Contrary to what I wrote in August, when I expected Epic to comply with Apple’s terms again after a denial of a PI, it now looks like Epic is going to continue for a few more months to decline to walk through the door Apple opened. Instead of putting back a complaint version of the iOS version of Fortnite (one that doesn’t bypass Apple’s in-app payment system), Epic now appears more likely prepared to take this matter to the Ninth Circuit, and won’t moot the issue by complying until the West Coast appeals court has spoken. Epic may hope that whatever Ninth Circuit panel would hear the motion would actually side with Epic on antitrust questions that are extremely hard to resolve on the fast track.

Fortnite still gaining popularity: Epic Games CEO Tim Sweeney

In its opposition brief (filed a few days back), Apple voiced the suspicion that Epic’s very publicity-oriented approach to this litigation was driven by a marketing communications desire to reignite interest in Fortnite. That is one of various factual questions–which also include the accusation of Epic having bullied Sony into modifying its PlayStation terms–Epic CEO Tim Sweeney seeks to counter in his second declaration in this briefing process (this post continues below the document):

20-09-18 Tim Sweeney Declar… by Florian Mueller

Before I talk about some of what Mr. Sweeney said in this declaration, I’d like to mention something that is surprisingly missing: an update to his earlier declaration (in support of the PI motion). On the same day, September 18, Mr. Sweeney retweeted a tweet to which one of Epic’s own tweets is attached, and which complains about Apple preventing Epic from distributing Mac games (this post continues below the tweet):

In Mr. Sweeney’s earlier declaration, the claim was made–and it’s still mentioned in Epic’s reply brief–that Windows and the Mac are examples of platforms where anybody can publish anything. Apparently, Mr. Sweeney’s tweets and his corporate website (“Apple ending Fortnite Save The World updates for Mac“) are more up-to-date than his company’s court filings.

In connection with Fortnite’s popularity, Mr. Sweeney’s declaration–after noting that Google Trends is just about search, not game usage–says “Apple cherry-picked an unusual single-week peak in October 2019 with the average number of searches in July 2020,” and explains that the October 2019 peak was due to a special event called “The End” (where the world of Fortnite was sallowed by a black hole).

Mr. Sweeney says “the number of daily active users on Fortnite actually increased by more than 39%” during that same period (October 2019-July 2020).

While Mr. Sweeney has a point here about some selectivity by Apple, I don’t think his declaration paints a complete picture either:

  • He does not dispute another source than Google Trends that Apple cited: the Bloomberg article “Fortnite’s Slowdown Has Epic Games Battling to Spark New Growth” (which relies on different data than Google Trends).

  • Mr. Sweeney’s declaration misses the most important part of the Google Trends chart Apple referenced (this post continues below the chart), which is that Fortnite once overtook Minecraft and Pokemon, but then fell behind them again toward the end of the period selected by Apple:

    trends.embed.renderExploreWidget(“TIMESERIES”, {“comparisonItem”:[{“keyword”:”minecraft”,”geo”:”US”,”time”:”2017-07-01 2020-07-31″},{“keyword”:”Fortnite”,”geo”:”US”,”time”:”2017-07-01 2020-07-31″},{“keyword”:”Pokemon”,”geo”:”US”,”time”:”2017-07-01 2020-07-31″}],”category”:0,”property”:””}, {“exploreQuery”:”date=2017-07-01%202020-07-31&geo=US&q=minecraft,Fortnite,Pokemon”,”guestPath”:”https://trends.google.com:443/trends/embed/”});

  • If you move your mouse pointer to any particular location on the above chart, you get a popup that displays some numbers, of which 100 is the absolute peak that Fortnite had. You can see that the week of January 21-27, 2018 was the first one when Fortnite leapt ahead of Minecraft and Pokemon for the fist time, and stayed at the top of the chart until the week of May 26-June 1, 2019, when Pokemon reclaimed the top spot. By the end of the entire period (week of July 26-August 1, 2020, which was not an arbitrary choice by Apple considering the timeline of this dispute), Pokemon left Fortnite behind by more than a third, and Minecraft did so by more than 40%.

  • Mr. Sweeney’s declaration shows an alternative chart just for Fortnite, and limited to the period from August 4, 2019 to August 1, 2020. But that’s similarly selective as Apple’s on the October-2019-to-August-2020 decline: the full chart (which you can see further above) shows that Fortnite had multiple peaks at 86% of the level of the October 2019 peak, such as for the week of March 11-17, 2018, and September 23-29, 2018. In fact, the red line for Fortnite oscillates around the 75 level for most of 2018.

As a result, the 39% increase is clearly also the result of selectivity on Epic’s part. They’re not claiming there wasn’t any decline during the entire period Apple focused on, which was from Fortnite’s launch until this dispute broke out.

That said, Mr. Sweeney’s declaration is an interesting contribution to the public debate, though it changes nothing about the fact that Epic is now undertaking the long shot of preliminarily winning a huge antitrust case on the fast track.

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