This Week in Apps: Apple appeals Epic Games suit, Google files a counterclaim and Twitter adds more ads

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.
As the Apple v. Epic Games lawsuit goes under appeal, Google this week filed an answer and counterclaim in the Epic Games’ antitrust litigation against the company. The tech giant and Android maker denies Epic’s allegations of antitrust behavior and instead says that it’s owed relief, as Epic Games breached the Google Play Developer Distribution Agreement (DDA) by allowing Fortnite players who download the app through Google Play to use Epic’s own payment processing technology.
This situation is similar to what took place on the App Store, where Epic Games updated its app to workaround App Store policies, and then facilitated payments through its own payments system, in violation of its legal contract with Apple. The court’s decision in Apple’s case was that Epic owed financial relief to Apple, to the tune of $6 million.
Epic Games did much of the same thing on Google Play, the counterclaim alleges. Last year, Epic submitted a build of Fortnite to Google Play which used Epic’s own direct payments system and not Google Play Billing. This submission was immediately rejected for failing to comply with Google’s policies. Epic then submitted a compliant version in April 2020, which Google now describes as “an act of deception designed to provoke litigation.” The new version had concealed Epic’s payment system in an update that was sent to both Apple and Google’s app stores. This would allow Epic to switch over to its own payment system by applying a server-side configuration change, or “hotfix,” without Google’s knowledge.
That switch was flipped on August 13, 2020. It allowed Fortnite users to choose between Google Play Billing and Epic’s own direct payments system. Now Google wants to recoup the money lost to this version, as those who downloaded the app from the Play Store could continue to use Epic’s billing, even after the app was pulled down.
Epic’s position has been that Apple and Google’s requirement to use their own in-app payment systems exclusively is a monopolistic practice that disadvantages developers. In Apple’s case, the court agreed that Apple should not block developers from sharing a link to other payment methods inside their own app or communicating to customers. It did not declare Apple a monopoly. Despite the largely favorable ruling, Apple decided to appeal its case this week, after Epic filed its own appeal.
The key factor to Apple’s appeal is that it’s also asking the court to put a hold on it having to implement changes to the App Store’s anti-steering guidelines. That means, instead of permitting developers to add links to their website and other methods of payments, things would continue as is until the appeals case was decided. That could be months or even years from now.
In terms of the antitrust complaint, Google’s situation is a bit different from Apple’s, however. Android already allows for sideloading apps — that means there’s another method of reaching Android users outside Google Play, making an antitrust claim more difficult.
Twitter says it’s going to test a new ad format and placement on its platform. On Wednesday, Twitter Revenue Product Lead Bruce Falck said Twitter would begin showing ads on mobile devices inside conversation threads after the first, third and eighth replies. While the company stopped short of confirming the change would be permanent, it did say it would experiment with the formula to best determine the insertion points and layouts that made the most sense. Twitter also said it would consider making the display of the ads something creators would opt into, rather than forcing them to accept ads in their threads. In that case, creators would also see a share of ad revenue, Twitter said.
The company historically has struggled to grow its user base by significant numbers, meaning it’s had to get more creative with maximizing the revenue it’s able to extract from its existing users. Despite a flurry of new product development — which has included creator tools, subscriptions, audio chat rooms, tipping and more — Twitter has not yet had a runaway hit. For example, third-party data indicated recently Twitter’s new creator platform called Super Follow had only generated around $6,000 in its first two weeks live in the U.S. and Canada, or perhaps a bit more ($12,400 during 17 days in September, according to a second firm’s analysis).
Meanwhile, Twitter made a promise to investors that it will be able to double its revenue from $3.7 billion in 2020 to $7.5 billion or more in 2023. If the new products don’t turn a sizable profit, increasing Twitter’s ad load could help. Unfortunately, monetizing conversations like this could encourage users to post more content they hope to make viral. That could impact Twitter’s content and culture. Twitter is already a place that tends to reward a sort of performative type of user — like those posting snark, jokes, angry tweets and other emotive content; tying tweets’ “virality” to creator revenue could push Twitter even further away from the genuine, thoughtful conversations the company claims it wants to host.

After Apple filed a counterclaim against the video game developer, Twitter and Google followed suit and filed their own. In an effort to win the case, Judge Yvonne Gonzalez Rogers ruled in favor of Epic Games. But that doesn’t mean that Twitter has a free pass in the suit. Twitter and Google are appointing attorneys and a counterclaim was filed by both companies on January 28.

Apple appeals Epic Games suit

Following the legal battle between the two giants, Apple has filed an appeal in the Epic Games suit against Google. The lawsuit focuses on the App Store’s mandatory nature and business agreements, which the company says is anti-competitive. But even though Apple’s app store is a popular source of revenue for developers, there are many other sources of revenue for game developers. Apple’s lawsuit against Epic is the most recent example of this. Twitter added a counter-claim to the legal proceedings.

In addition to the appeal, Google and Twitter have filed a counter-claim. The counterclaim focuses on Epic’s “unlawful” behavior, which the two companies say enables them to bypass Apple’s comissions. Ultimately, Apple has the final say in whether or not it will appeal the suit. But even with an appeal, there are many issues to work out.

After deciding against the Apple appeal, the companies moved to have the case decided by the court. Apple wanted to exclude three tech company witnesses, but Epic said they did not comply with trial rules. After learning about the defendants’ names, Epic disclosed them to the court. The judge sided with Epic. The court noted that this trial would likely take several years, so the companies should prepare for many appeals.

Google files a counterclaim

As Epic’s stock sank, Google and Twitter both filed a counterclaim and Twitter also joined the suit. In the blog post, Epic Games did not mention Google. Instead, they said that Apple forced them to take legal action after requiring that Valve Software hand over sales data for video games. Apple has been engaging with developers via an antitrust complaint since early 2019, which has not gotten any easier.

The lawsuit was a reaction to the massive lawsuit against the developers of Fortnite, which focuses on unfair competition in the gaming market. In December, a judge ruled in favor of Epic Games, ordering the company to allow developers to use other payment systems and compensate it for its Fortnite revenue. While the case is still ongoing, Google has been dealing with its own can of worms. It’s currently under scrutiny in numerous US states for its dealings with Android OEMs and has filed a counterclaim.

On December 14, Google, Twitter and Facebook filed their own counterclaims in the case. In an effort to streamline proceedings, the companies filed motions requesting that the judge render a decision based on the facts presented by both sides. Google and Twitter agreed to this motion and Twitter also added their counterclaim. The lawsuit now moves forward to a trial date of July 2021. In the meantime, it remains unclear whether Google and Twitter will settle the lawsuit.

Twitter adds counterclaims

Despite the recent ruling, Apple is still fighting the Epic Games case. The court ordered the developer to allow other payment systems and to compensate Apple for the revenue they generate from Fortnite. Epic declined to comment on the matter. Meanwhile, Google is dealing with a can of worms of its own. In court documents, it was revealed that Google had made deals with Android OEMs to allow developers to include links to third-party payment systems in their games. The company is also under scrutiny in many US states for its Play Store rules.

Although Apple appeals Epic Games suit, Google files a counterclaim, and Twitter adds counterclaims to their own, they all have the same goal: to make the app store work for them. In the complaint, Epic has argued that Apple’s policies limiting third-party developers’ access to their games violate the law. This argument is not only flawed but also untrue.

The lawsuits allege that the company evaded payment for its apps and services through the Play Store. This led to Epic obtaining a legal stance against Google for allegedly breaching a contractual agreement with Google and taking advantage of consumers. Google countersued Epic Games after it added its own payment system to Fortnite after the Play Store refused to allow the game.

Judge Yvonne Gonzalez Rogers rules in favor of Epic

In a decision announced on September 10, Judge Yvonne Gonzalez Rogers rules against Apple in the Epic Games versus Apple case. The judge found that the two companies have different definitions of the market. Epic argued that the iPhone’s monopoly distorted competition and caused its prices to be more expensive than those offered by competitors. Apple, meanwhile, argued that its walled garden policy compelled developers to follow the terms of its store.

In the first lawsuit, Epic argued that Apple had no right to refuse to sell Fortnite to consumers and impose a 30% cut on each sale. Apple responded by terminating Epic’s developer account and access to tools. Apple filed a countersuit claiming that Epic violated the law by refusing to allow Fortnite to sell in-app purchases in their app. The lawsuit also accused Apple of violating the California Cartwright Act and the Sherman Act.

The decision isn’t a final decision and Apple is expected to appeal. The company is not required to disclose the amount of its 30% commission to Apple, but this is a good thing for consumers. If the decision stands, it would likely encourage more competition and open the iOS ecosystem to other developers. In addition, Epic is still likely to face a huge legal bill. In the end, Gonzalez Rogers’ ruling will be a huge win for the video game industry.

Cook to testify in trial

Apple CEO Tim Cook is set to testify in the antitrust trial against Epic Games. The lawsuit started when the Fortnite maker decided to bypass the App Store in order to avoid paying a 30 percent commission. It’s unclear how much that commission will cost, but Apple says the fees are fair for both developers and users. If Cook is willing to testify, the company’s case will have a significant impact on the app store’s future.

Apple CEO Tim Cook is expected to testify in the Epic Games trial in Silicon Valley. The company is challenging Apple’s monopoly and profit split with developers. It’s difficult to sell an app without using the App Store, and it requires a subscription in order to download it. Apple charges app makers a 30% commission on any in-app purchase. Tim Cook has repeatedly defended Apple’s strict App Store policies. He argues that such restrictions are essential to protect consumer privacy and ensure a safe and secure app experience.

Apple CEO Tim Cook is expected to testify in the trial, where he is expected to answer tough questions about the App Store’s profits and the company’s relationship with Samsung. Apple also has the right to withhold its developers’ earnings if it finds a developer’s business model suspicious. Cook is expected to testify in Apple’s defense, bolstering the company’s case that Epic Games wanted a better deal than it gets on the App Store.

Impact of trial on platform integrity

Tim Sweeney, CEO of Epic Games, has completed his testimony at the Epic Games vs. Apple trial, offering a rare look into his philosophy. As one of the most influential executives in gaming, Sweeney sees the trial as a battle over the future of computing and media. For him, the company’s trial against Apple represents the future of software and the future of gaming. Here are four key takeaways from his testimony:

The court’s ruling is an important step toward determining the future of gaming platforms. In a recent ruling, a judge ruled that Apple and Epic had not violated antitrust laws by allowing games to be sold through the App Store. Apple denied the allegations. The company’s lawyers argued that the App Store is a platform for “multipurpose computing devices,” not “a replacement for a game console.”

While the court sided with Apple in the case, Epic has filed an appeal. The company has yet to provide details of why they filed this appeal, but it is expected to take more than a year. This could create a burden on anti-competitive government efforts. Moreover, the government’s decision to dismiss the trial against Apple could put Epic Games’ appeal at risk of further complicating the case.

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