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I happened to start writing this column while I was in the city of Barcelona, which has a place dedicated to George Orwell, author of the two Tribute to Catalonia and 1984. This latest book is a reminder of the totalitarian society that could emerge if we left too much power to one person. This is not only true for politicians and governments. This is also true for technology and games. I read Orwell’s books decades ago, and I see the warnings he offered us as relevant as ever.
Apple evoked this imagery in its famous 1984 television ad, advertising the Macintosh computer as a counterweight to IBM’s blandness. Openness and freedom should reign over closed ecosystems or walled gardens and corporate greed.
Epic Games, maker of Fortnite, brought back the irony of this imagery by accusing Apple of antitrust violations in a lawsuit filed in federal court in August 2020. The court ruled in Apple’s favor on most counts. indictment in September 2021, but the case is still winding its way through the courts, and Epic still has a similar lawsuit pending against Google. This week, Epic filed another response to Apple in its appeal of the court’s decision. Epic wants reversals of lower court rulings on a number of major arguments and Apple must be held to account.
And so the question remains: why are we still interested in this case? For me, as I reflected on the meaning of Orwellian fears while I was in Barcelona, this legal battle between giant corporations is interesting because it’s a fight for consumer control between a big tech platform owner , Apple, and a major developer on this platform. , Epic games. I chose to use this time while in Spain to zoom in on some details of the case and zoom out to see the bigger picture. I can’t say I have all the answers, but I do have my point of view, and I can’t wait to see how the details and facts play into the drama ahead of us and influence that point of view in favor. Apple or Epic.
Epic CEO Tim Sweeney has been a big advocate for openness, and he thinks we’re on the cusp of a major shift in platforms, moving from app stores and distribution platforms to the era of metaverse, l universe of virtual worlds that are all interconnected, like in novels like Snowfall and Loan player one. Citi estimates that the Metaverse will be worth up to $13 trillion by 2030. That tells you something about the importance of the Metaverse and why it matters who rules it.
And Sweeney doesn’t want tech platforms to rule the metaverse because that means they’ll be able to extract their royalties — Apple charges 30% for its share of the fee when someone buys something from its App Store — from developers. . It’s like a car manufacturer charging a fee every time you fill up your car, Epic explained. Just as the Oasis was run by a single company in Loan player onetechnologists fear that walled gardens — like Apple or Meta or Microsoft or Amazon or Google — will rule the metaverse.
“And if you look at the term structure, Apple and Google have created terms that will give them a stranglehold on the metaverse unless there are major changes in the practices that they’re allowed to get away with. shoot,” Sweeney said in an interview with the Financial Times.
These companies claim to be in favor of transparency and want to treat everyone fairly. Do we believe them?
I would say that companies that create platforms that have a lot of users deserve some kind of royalty. But if they start pushing the developers who make the platforms valuable, then they are using a form of monopoly power, and we have to invoke antitrust laws to limit their power. Our antitrust laws are a bit outdated, as the federal laws are over 100 years old. But that could change if Epic gets enough people—developers, regulators, lawmakers, and tech companies—on its side, and if we strengthen antitrust enforcement.
Apple is going to release some cool AR/VR technology one of these days that supports Meta’s virtual reality and augmented reality platforms. And if Apple’s technology turns out to be amazing, developers will get rich creating apps for it. If it succeeds, then Apple deserves to be cut from profits, according to those who think innovation and capitalism work in our favor. Apple argues that it should be rewarded for the investment it made and the risks it took in building the iPhone platform. He doesn’t believe the courts should deprive him of rewards for his intellectual property.
But Epic says it’s been a long time since Apple did anything for us with its mobile platforms like the iPhone and App Store, and it argued in its brief this week that the District Court Judge American Yvonne Gonzalez Rogers in Oakland, California was right. when she said that Apple’s rules seemed too harsh on developers and that Apple’s market power was about to be illegal. But Epic said it erred when it ruled on the antitrust law and the history of the case suggests Apple didn’t break many laws.
The judge ruled that Apple violated California laws against unfair competition when it came to a narrow but important issue of “anti-riding rules.” In that part, she said Apple was behaving anti-competitively by prohibiting developers from saying in their App Store apps that they had better prices for virtual goods on their own websites. Simply put, the judge said Apple shouldn’t force developers to hide information about better consumer discounts off of its platform.
Epic lost a major point as it argued that it should be allowed to upload apps to the Apple platform that allow it to redirect players so they can bypass Apple’s platform fees. Apple said this would pose a lot of security risks, and Epic argued that wasn’t true because Apple allows this to happen on the Mac. Apple executives have argued that the Mac isn’t so safe because of this risk. I think Apple has allowed the best apps to rise to the top of the App Store, and those apps haven’t infected us all with malware. Epic argues that Apple should find a compromise where some form of notarization of downloaded apps would make them more palatable.
If we were in a perfect world, judges, regulators, and legislators around the world would be able to see the risks of new innovations and platforms like the Metaverse. They could act to stop these risks and preserve competition and allow the emergence of equitable relations between promoters and those who allow them to access large markets. They would prevent Apple from using its stranglehold on a billion smartphone users to force them to use only its app store and payment system, as Sweeney laments.
I think game companies like Epic, Roblox, and Microsoft (with Minecraft) are in a better position than big tech companies to deliver experiences people really want. Brands would likely side with Epic as they lead the way into this brave new world.
If Epic wins its antitrust appeal case, we could see alternative app stores gain traction, we could see development costs drop, and we could see Apple’s monopoly on payments fall apart. These cost reductions and efficiencies could be passed on to consumers in the form of lower prices, or they could be passed on to developers, allowing them to become healthier entities in the long run. This would benefit the entire gaming industry.
But we are not in a perfect world. The judge is paralyzed by a hundred years of case law. Lawmakers are at a loss when it comes to evaluating important new technologies and the balance that strikes between enabling competition and rewarding innovation. This case may not be the perfect case that shifts the balance of power between platforms and developers or between enablers and creators.
In that case, we may have to see Epic Games prevail solely by winning the market, perhaps by delivering something even more desirable than its Fortnite success. Or perhaps other entities, like the forces of decentralization behind crypto and blockchain games, could disrupt the status quo, taking power away from developers and platforms, and giving it back to the people.
Who would win in the battle for the metaverse? I think it will be the company that does the best job combined with game development, user-generated content, and machine learning. It would take these three things to create all the content needed to create a believable metaverse. Microsoft might be the presence leader in all of these things right now, and it will be stronger if its acquisition of Activision Blizzard goes through. But the good thing is that no company has a lock on any of that yet.
If I asked George Orwell what he would think would happen here, and what would be best for the people of the world, I wonder what he would say. But I think he would say this metaverse battle is one of the most important struggles of our time.
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