Last week, Epic, makers of the blockbuster game Fortnite, engineered an antitrust lawsuit against Apple: The company violated one of Apple’s most indefensible (and jealously guarded) rules, waited for Apple to punish it, then immediately filed suit and pushed a brilliant PR campaign to accompany it. That PR operation included a mix of angry tweetstorms from Epic CEO Tim Sweeney and slick media, including a pitch-perfect parody of Apple’s 1984 Macintosh launch ad featuring a Fortnite warrior smashing a screen on which a totalitarian anthropomorphic apple drones on about its plans for total dominance.
Epic’s lawsuit and PR campaign represent an expensive speculative bet that Apple would remove the Fortnite app (antitrust lawyers don’t work cheap), but the company was certain that Apple would rise to the bait. Likewise, Epic is risking a lot in this lawsuit, but it is in line for a huge payoff if it triumphs.
What policy could be so beloved of Apple and loathed by its vendors?
Nothing less than the exclusivity of the iOS App Store.
Apple didn’t invent “walled garden” stores. Long before the App Store, games console–makers were using technological countermeasures to ensure that they—and they alone—could supply games for their products. First there were proprietary cartridges, and then CDs that used proprietary encryption and other countermeasures to force games-makers to press their discs at manufacturer-controlled plants at a steep premium—meaning that even before a single game was sold, companies like Sega creamed off a handsome rake on every disc pressed, money they got to keep even if the game’s creators never sold a single copy.
The Dreamcast era was a turning point for walled gardens. In 1998, Bill Clinton signed the Digital Millennium Copyright Act into law, a gnarly legal hairball that exerted enormous influence over the development of digital technology, only growing in salience with each passing year.
Section 1201 of the DMCA bans “circumvention” of “technical protection measures,” or “TPMs,” which most of us call “Digital Rights Management,” or “DRM.” (Sorry for the alphabet soup, but this stuff is performatively wrapped in abstruse jargon that acts as a kind of Shield of Boringness that normal human attention bounces off of, allowing for all manner of mischief to proceed unobserved.)
In other words, the DMCA bans you from removing or bypassing digital rights management, for example, to remove region restrictions from your DVD player. (Remember, the DMCA was passed in 1998.) Now, buying a DVD in India and watching it on a DVD player in America is not a copyright infringement. It’s the opposite of a copyright infringement: When you walk into a store in Mumbai and pay the asking price for an official, authorized DVD and then bring it home and watch it, you are upholding copyright, not breaking it. But because your DVD player was designed to only let you watch discs that had the “USA” bit set, that Indian disc won’t play on your American player. There were (and are) plenty of smart technologists who can figure out how to get around this, but they risk a lot when they do.
Watching Indian discs in the USA isn’t a copyright violation, but it is a business-model violation. In 1998, Congress could have easily written DMCA 1201 to say, “Bypassing DRM to violate copyright is illegal”— but it didn’t. It wrote a law that provides for a five-year prison sentence and a $500,000 fine for anyone who gives you a tool to bypass DRM, even if no copyright infringement takes place.
The DMCA created a new crime, “felony contempt of business model,” and made it available to any company that designs its products so that using them in ways that displease the manufacturer’s shareholders is a literal crime. In the DMCA’s early years, that was only available to computer and computerized device-makers, but now that computers are embedded in coffee machines, pacemakers, engine parts, and thermostats, everybody is getting in on the act. Companies have figured out that the DMCA gives them the power to control “interoperability”—that is, which products work with theirs, and how.
Which brings me back to Epic and Apple. Apple’s position on its App Store is essentially: We take 30 percent. If you don’t like it, don’t put your products in our App Store. If we catch you trying to bypass our payment processing so you get to keep that 30 percent, we’ll kick you out of the store and then you won’t be able to sell iPhone apps anymore.
Is this monopolistic, anti-competitive conduct? Yes. Apple is both a monopolist—the sole seller of apps for its computers—and a monopsonist—the sole arbiter of which apps can be installed on iOS devices. However, this is the kind of conduct that firms have gotten away with in America and around the world for a long time, 40 years or so—dating back to when Ronald Reagan gutted antitrust law, starting a long decline that has been accelerated by every president since, regardless of party affiliation.
But Epic has an easier way around this monopoly and monopsony than filing a lawsuit that could take a decade to work its way through the courts. Epic has a building full of engineers. It could pay some of them to make an app store for iOS and sell its games through it, keeping all the money. It could even invite other app creators into its store and offer them a better deal than they’re getting from Apple.
Installing a third-party app store on iOS devices has some technical challenges, of course. Apple has gone to great lengths to prevent this, using a combination of software and hardware to enable its devices to uphold the interests of its shareholders against the interests of its customers. That said, engineers are fallible, and in security, defending is always harder than attacking. (Defenders have to make no mistakes; attackers only need to find one mistake.)
Which is why, for example, nine years’ worth of iOS devices (including several models of the Apple Watch) are vulnerable to an exploit called Checkm8, which attacks a defect in the devices’ Secure Enclave—a chip designed to resist any patching or modification, rendering these permanently vulnerable to Checkm8 attacks. Epic could field a third-party app store that used Checkm8 to install itself on compatible iPhones and access millions of the customers it just lost to Apple’s bum rush from the official App Store—for a mere fraction of what a decadelong lawsuit will cost it. Indeed, lawsuits will only cost Epic money, while an Epic Store for iOS would be a giant moneymaker.
Epic is not averse to earning money. But its lawyers doubtlessly explained that giving people a tool to install a rival app store would violate Section 1201 of the DMCA and risk felony charges and a $500,000 fine per act of circumvention, and this would be even more costly than suing a $1 trillion monopolist with access to some of the most aggressive litigators in the world, and whose case will be supported by the manufacturers of every device that relies on TPMs to threaten competitors with “felony contempt of business model” prosecutions—from coffee makers to tractors to insulin pumps.
Interoperability is an iron-clad requirement for self-determination. Your sneaker-maker doesn’t get a veto over whose socks you wear. We have done away with coal bosses who pay in noninteroperable scrip than can only be spent at the company store. Microsoft couldn’t stop Apple from making the iWork Suite, which reads and writes every one of Microsoft Office’s baroque file formats.
The idea that Apple gets to tell you whose store you’re allowed to buy software from is an affront to human dignity—every bit as assuredly as Google’s insistence that you can only make an Android handset if you include Google’s core apps, or Microsoft’s blocking Slack from integrating Skype alongside of Zoom and Webex. It’s your device; you should be in charge of it.
And yet Apple—and its defenders—insist that Epic is the one overstepping here. According to them, Apple customers like the fact that Apple gets a cut of every app sale, just as they are said to prefer that independent repair of Apple devices be banned so that Apple alone can fix their phones (and decide when those phones can’t be repaired and so must be replaced). They say Apple’s veto lets it protect its users by blocking malicious apps, and that it would never abuse this power for its own gain.
The technical term for this argument is laughable. If Apple believes that its customers prefer cutting the company that charged them $1,000 for a phone 30 percent of every app they run on that phone, it could just give them the choice: “Buy Fortnite through the App Store, or through Epic’s app; it’s up to you! Think different!”
The idea that Apple customers prefer to buy from Apple is belied by Apple’s extreme measures to prevent them from buying elsewhere. We didn’t believe East German bureaucrats who insisted that the Berlin Wall’s purpose wasn’t to keep the people locked in, but rather to stop outsiders from breaking in to the workers’ paradise of the GDR. We shouldn’t believe Apple when it insists that preventing interoperability is just a way of enforcing its customers’ preferences. Apple can easily prove that its customers don’t want to escape its walled garden: Just let Epic install a gate and see if anyone goes through it.
Perhaps it’s too much to ask Apple to unilaterally forswear the incredible monopolistic weapons that the U.S. government has bequeathed it; rather, we should abolish the weapon for everyone. That’s what the Electronic Frontier Foundation is trying to do in its Green v. Department of Justice lawsuit, which seeks to overturn Section 1201 of the DMCA and end the felony contempt of business model once and for all. (It’s this kind of deep, structural work on self-determination that makes me so proud to work with EFF as a special adviser.)
Epic’s not just playing games: This fight is a battle royal whose stakes are nothing less than the right to decide how the computers in your world work—whether they take orders from you, their owners, or from millionaire senior managers in a distant corporate boardroom.
For more of Slate’s business coverage, subscribe to Thrilling Tales of Modern Capitalism on Apple Podcasts or listen below.