5 min read.Updated: 26 Feb 2021, 01:27 PM ISTTim Higgins, The Wall Street Journal
Computer-game distributor Valve is the latest to be pressured into playing a role in a legal battle over app-store fees; ‘it’s not just you’
“Fortnite" creator Epic Games Inc.’s battle to paint Apple Inc. as a harmful monopoly is drawing more technology companies into the fray, as each side seeks to bolster its case.
Epic wants to take testimony from a senior executive at online-dating company Match Group Inc., the owner of Tinder and other apps, as well as a former Apple executive that the iPhone maker has suggested it cannot locate. The company’s lawyers are also set to question Apple Chief Executive Tim Cook in a multi-hour deposition.
Apple has subpoenaed Sony Corp., Microsoft Corp., Nintendo Co., Amazon.com Inc. and Samsung Electronics Co. The latest skirmish came Wednesday as Valve Corp., one of the largest computer-game distributors in the world, cried foul to a federal judge in California over Apple’s expansive pretrial effort to subpoena its privately held financial records of its offerings.
Facebook Inc., unhappy with Apple over issues including privacy, has pledged to support Epic in its fight to prove that the hardware company is misusing its power over the digital ecosystem that it has created for the iPhone and iPad.
The litigation appears set to expand into the kind of high-stakes legal contest that broke out almost a decade ago between Apple, Google and Samsung over the creation of the smartphone. In just six months, Epic and Apple have begun to contest issues raised in that case in the European Union, Australia and the U.K., as well as in several state legislatures in the U.S.
Valve, the privately held company behind game distributor Steam, objected to Apple’s demands that it turn over six years’ worth of data on games offered through its online platform. Valve competes against a digital PC games storefront operated by Epic and lets users purchase and play more than 30,000 titles on laptops and desktop computers.
“Apple has, for lack of better words, salted the earth with subpoenas to other participants in the market," Judge Thomas Hixson told Valve’s lawyers on Wednesday. “So don’t worry, it’s not just you."
He sought to reach a compromise between the two parties, limiting the scope of the request and noting that a protective order is in place to limit a rival’s ability to see private information.
Apple previously sought data from more than 30,000 games before narrowing it to 436 that are available on both Epic and Valve’s digital stores, including “Grand Theft Auto V." Valve complained, in part, about the heavy burden placed on its 350 employees, based in Bellevue, Wash., of pulling such records.
While Apple’s request of Valve may be a normal part of an antitrust case, the tech giant’s approach may leave it open to criticism in the court of public opinion. “It seems like a pick-a-side moment, and that’s not a good look for big tech," said Paul Swanson, a Denver-based antitrust lawyer at Holland & Hart LLP who has been following the case. “I think it’s been Epic’s main object throughout all of this to make Apple look like they are just picking on the small guy. And Apple has played into it…That narrative is gaining traction that Apple is just a big jerk."
The requests arise as Apple prepares to go to trial in early May to defend itself against Epic’s claims of anticompetitive and monopolistic practices through Apple’s control over the third-party software on iPhones and iPads.
The spat centers on fees Apple collects through its App Store. In August, Epic introduced an in-app payment system within its “Fortnite" game to bypass Apple’s collection of a 30% fee, a move that led Apple to boot the popular game. Epic responded with the lawsuit.
In addition to its PC game store, “Fortnite" and other games, Epic owns Unreal Engine, a suite of software tools for making videogames, television and movie special effects and other types of digital content.
Apple, in court records, noted a previous ruling by a judge that made clear that Epic’s distribution options are central to the dispute over “market definition and market power." Apple defended its request as narrowly tailored and noted that it wasn’t seeking details on future plans or strategic assessments.
Valve raised concerns about the burdensome nature of the original request and echoed Epic’s previous arguments that the overall case is about the mobile market—an idea Apple disputes as it looks to demonstrate how Epic can compete in the broader videogame industry.
“Valve does not disclose its sales and revenue information and projections, and Valve derives a significant value and edge from the confidentiality of such information, including by keeping it out of the hands of companies like Epic who also sell PC games," the company’s outside lawyer said in a filing.
Valve didn’t immediately respond to a request for comment.
The legal fight between Apple and Epic has already provided some heated moments. In September, Apple offered a full-throated defense to Epic’s broadside, claiming that the videogame maker was greedily trying to keep money it owed Apple. As part of a counterclaim, Apple accused Epic of essentially stealing and sought monetary damages. In November, a judge threw out the arguments, telling lawyers that the disagreements came down to a breach of contract case and an antitrust case.
In another sign of how chippy things have become, Epic told the court that former senior Apple executive Scott Forstall hadn’t responded to a request to have his testimony taken in the case. When Epic asked for his last known address, Apple responded, according to a filing, with a post-office-box address and Twitter handle, and claimed that it wasn’t authorized to share his telephone number. Later, Apple said that it “did not believe that it was in possession of Mr. Forstall’s current phone number."
Last week Epic broadened its efforts to go after Apple by filing an antitrust complaint against the tech giant in the European Union. Epic’s complaint adds to those already lodged to the EU by other companies, including Spotify Technology SA, that have already prompted formal investigations into Apple’s alleged anticompetitive behavior.
Epic has also previously filed similar lawsuits in Australia and the U.K.
A spokeswoman for Epic declined to comment. Chief Executive Officer Tim Sweeney has previously stated that Epic is fighting for the future of mobile platforms with its lawsuit against the iPhone maker.
This story has been published from a wire agency feed without modifications to the text.
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