Today, Explained - Fortnite fights Apple for your phone

Episode Date: May 6, 2021

One of the world's biggest video games is suing one of the world's biggest tech companies. The Wall Street Journal's Tim Higgins explains how the fight might fundamentally change your phone. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit megaphone.fm/adchoices Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Visit connectsontario.ca. You can get into a match and you can find guns and you try to eliminate people. And whenever all the people get eliminated, you win. When you enter a match, the first thing you do is you are in this bus in the air. You and 60 to 100 people jump out of a flying object onto an island of sorts. It's constantly getting smaller, and players don't start with any gear or weapons or anything like that. They have to scavenge. Guns scattered around the map, and you have to gather materials to build defenses and structures. And you fight with guns and other weapons. There are some creatures and stuff,

but it's mostly just shooting people and hiding until the last person. It's basically like a sport for people like me who don't like moving anything other than their hands and mouths. My character looks like a little hot dog man with sunglasses. I did customize it. I bought him in the store. So my character was not customized until my 10-year-old cousin sent me a skin that has a burger head. Oh, what is a skin? It's a character. It's what your character looks like. It's a skin. That's what it's called. You can buy characters in the item shop, and there's like Batman, Flash, or Iron Man.

Creatures, there's different astronauts, there's fish, bananas, like literally anything. So it's not graphic. It's so cartoonish that you can do the renegade while shooting someone with a rocket launcher. What's a renegade? Some TikTok dance that people apparently like. So you can shoot people and dance? Not at the same time, but yes. Yo, nice comms, bro.

Hot comms, dude. Good work. you killed Turner dude why is Fortnite fun there's really no reason I should like this game as much as I do I'm not a violent person I think because it's competitive and short

you spend probably 40-70% of every game not fighting anyone, which gives you a lot of time to sort of socialize in the game and with whoever you're playing with. My nephews play Fortnite, and they're the main reason that I started playing Fortnite. And while I don't have too many other friends who play it, I've convinced my sister and my girlfriend to start playing it. During the pandemic, when I couldn't see my actual friends,

I communicated with a few of my friends over Fortnite and played with them using the game's in-game voice chatting. I feel like it also triggers your adrenaline in a way. Like, I get sweaty and excited and angry in a way that I don't otherwise. I don't know. There's probably something chemical happening too. How much do you love Fortnite? A billion. Should everyone play? I think at this point, almost everyone has. Yeah, everyone should play Fortnite because it's free. So why not?

Is it for kids or adults? Well, it's designed for kids, but a lot of adults play it. Do a lot of adults play? Well, you play it and all your friends play it. So you think it's not just for kids? Well... So I shouldn't feel shame for playing it with all my other man friends? No. Even though I tease you about it. I don't think there's anymore things I need to tell you. Can you play Fortnite and I can friend you?

I am not very good at games. I can teach you. Do you have a Switch? I do have a Switch. You can download it on there. Okay, then I will do that and we should be Fortnite friends and you can teach me how to play. Okay.

Fortnite is played by hundreds of millions of people around the globe. You can get it on just about any platform. Xbox, PC, PlayStation, Nintendo Switch. But as of late August, you cannot get Fortnite on your iPhone. And that's because Epic Games, the maker of Fortnite, is in an epic legal battle right now with Apple. It's one of the biggest video games in the world versus one of the biggest tech companies in the world. And even if you don't play the game, the fight could change your life. Yeah, this is a fight in some ways about the future of your phone and how and what you can buy. Tim Higgins does not play Fortnite, but he does report on technology companies like Epic and Apple for the Wall Street Journal. Epic would like to have the freedom to

sell directly to you, whereas Apple wants to control that experience for you on your iPhone. And people are paying attention because Epic's Fortnite is much more than a video game, right? Yeah, definitely. It's definitely a cultural force. Fortnite is taking center stage tonight in New York City. Gamers from around the country gathering in Queens for a massive Fortnite competition. $30 million is what's on the line at the first ever Fortnite World Cup that is underway at Arthur Ashe Stadium in Queens, New York. Good luck getting in because as of Friday afternoon, tickets were going fast. Thousands in attendance here, hundreds of thousands, if not millions, expected to tune in online.

You know, on one hand, this is a shooter game. But beyond that, it is something more. It has become a place where people come to hang out. And beyond the game, there are movies and concerts. Travis Scott's performance in Fortnite was groundbreaking. During Astronomical, a 10-story Travis Scott danced across Fortnite Island, igniting himself to reveal his robot interior. The audience was flossing hard in this digital world and that would be kind of your extension of your life. of the Metaverse is going to be some sort of real-time 3D social medium, where instead of sending messages and pictures to each other asynchronously, you're together with them

in a virtual world and interacting and having fun experiences, which might span anything from purely games to purely social experiences. It's really, you know, almost out of science fiction, like Ready Player One. This is kind of his dream and kind of the way he wants to take the company. Tell me a bit more about Tim Sweeney because he's an important figure here, right? Yeah, Tim Sweeney founded the company in 1991 in his parents' basement. He was a computer programmer. These were early days of the video game kind of movement. It went from PCs and eventually became more dependent on consoles. And as smartphones became part of everyday life, started to pivot the company in some ways into that mobile gaming system as well. So

it's a very large company. It's made him a billionaire. But he is not like all of the other tech giants. He has based his company in North Carolina, far from Silicon Valley, in part because you escape that kind of Silicon Valley bubble. He is not flashy. Like he's not scheduled to host Saturday Night Live this week or whatever? Yeah, he's known for his cargo pants. He likes to eat fried chicken. You know, he's soft-spoken and kind of down-to-earth kind of computer programmer. that he was behind a very sophisticated plan to try to disrupt Apple's business and to declare war on it and which has ended up in this courtroom drama that's playing out in Oakland, California

right now. Yeah, so how does he go from like a tech guy who's got a successful video game to like a tech guy who's taking on one of the biggest tech companies in the world well it gets back to you know the fundamentals of fortnite fortnite you can play it for free so the company doesn't make any money off that where they're making their money is selling these special costumes, if you will, for their players that you can customize. You know, this is kind of lucrative for them. But the key is to get as many players into the system to do that, let's say, you're playing on a PlayStation, but I'm your friend and I own an iPhone. We could do that. We could be in the same game together, but we're playing with whatever device we have.

The hardware was not what was supreme here. The idea was it was a digital world that we could live in together. This was a big change, and it took a lot of negotiations by Epic and Tim Sweeney to get that to happen. And that helped the company grow its user base in a very dramatic way.

It gave them hundreds of millions of users that helped them generate billions of dollars. So cross-play, playing the game across platforms from PlayStation to your iPhone is huge for Fortnite. How do we go from there to this trial? Yeah. So once Epic gets cross-play, the business is doing great. It's making a lot of money. Their user base is growing dramatically. Apple was very excited to have Fortnite on the iOS system. That's the mobile operating system that runs on your iPhone. They were involved in marketing and trying to help Epic and it was doing well for them. But you know video games have ups and downs. Think of it kind of like a movie star who's hot for a moment and then maybe not so hot. Like after Tom Cruise jumped on that couch that kind of thing. Something happened to you. Something happened to you.

I'm in love. Yeah, exactly. And so one of the things we've learned from the court records is that Fortnite revenue fell dramatically in 2019 from 2018. It fell almost 50%. The users were just weren't there the way they had been, and there was some concern about that. And so this is the kind of position the company was in, and they're thinking about what's next for Fortnite. And you get back to this idea of the metaverse and Tim Sweeney's idea of all of these things that can occur in that metaverse. And the concern that Epic has said that they had was some of the finances of the way that the App Store works in Apple

and in the Google App Store as well is that they take 30% of the revenue that's generated, and they felt like that just wasn't fair. Well, they also had some concerns about Apple's rules that prohibited them from creating their own app store. They didn't want to use Apple's app store. They wanted to create their own app store. They want to use their own payment system. So we start to see through the court records that Epic starts to think about ways that it can maybe attack this walled garden that Apple has around its products. And by kind of springtime of 2020, the company is kind of focused on something that calls Project Liberty.

And this is a plan they put together, pulling up to 200 employees to work on it. They hired some of the best antitrust lawyers in the nation, spending hundreds of thousands of dollars on public relations experts to try to figure out how they could kind of launch their attack. What was their plan? The idea centered around an update to the Fortnite game through the Apple App Store. And that would secretly put in place Epic's own payment system to circumvent Apple's payment system. Wow. And they knew this was potentially risky. As soon as Apple found it, it was very likely they would be kicked off. And they were concerned that maybe they'd even get sued to be made an example of.

Because Apple is very protective of its rules for how it controls the App Store. And these are big rules that they were going to be breaking. And so the concern was that they would then perhaps look bad in the court of public opinion. So they developed a strategy on how to talk about it, which is this idea that they're fighting this kind of monopoly situation. Apple is locked down and crippled the ecosystem by imposing an absolute monopoly on the distribution of software, on monetization of software, and they're preventing entire categories of businesses and applications

from being developed in their ecosystem. You know, they're working on this plan. They go to Tim Cook, who's the CEO of Apple. Tim Sweeney sends him an email and basically says, hey, can we create our own store? Apple refuses him, and then he's not happy about that. And by early August, they launch their attack, and they flip the switch, and this payment system is launched.

It comes along with some messaging that you could purchase the currency inside of Fortnite. It would be cheaper if you use this system, you know, go outside of Apple's system and use it. And that really also is not something that Apple was very excited about. And Apple very quickly kicked Fortnite off of the App Store. This morning, Fortnite is gone from the Apple App Store. Overnight, Fortnite fans reacting, getting hashtag free Fortnite trending. You know, essentially, Fortnite was booted from the iPhone. I mean, as a Tim, how do you feel about this Tim on Tim violence?

Well, it's very dramatic. You don't see this kind of thing very often in big business. And, you know, part of it is Tim Sweeney feels very passionate about this. He's talked publicly in the past about, you know, his concerns about the App Store and the way that these platforms have control over his business and how unfair he thinks it is. And then on the other hand, you have Tim Cook and Apple who feel like they have built this walled garden that has been very successful and has benefited a lot of developers

and that people should follow their rules. And so they don't want to back down and neither does Epic. So everyone lawyers up. Well, so anticipating that Apple was going to kick them off, Epic was ready with a legal challenge. They filed a lawsuit very quickly in the federal court to claim that Apple was acting like an illegal monopoly and launched a public relations campaign, including a video that tried to satire the famous 1984 Apple TV commercial that portrayed Apple as the underdog against IBM, the giant IBM back a generation ago in kind of the Big Brother motif.

In exchange, we have taken our tribute, our profits, our control. This power is ours and ours alone. We shall prevail. At this time, Apple is the bad guy and Epic is the underdog trying to fight to free Fortnite. That launches this fight that went immediately to the courts and has been fast-tracked in the trial before a federal judge in Oakland began this week. We go to trial in a minute on Today Explained. Support for Today Explained comes from Aura. Aura believes that sharing pictures Thank you. and videos directly from your phone to the frame. When you give an AuraFrame as a gift, you can personalize it, you can preload it with a thoughtful message, maybe your favorite photos.

Our colleague Andrew tried an AuraFrame for himself. So setup was super simple. In my case, we were celebrating my grandmother's birthday, and she's very fortunate. She's got 10 grandkids, and so we wanted to surprise her with the Aura Frame. And because she's a little bit older, it was just easier for us to source all the images together and have them uploaded to the frame itself. And because we're all connected over text message, it was just so easy to send a link to everybody. You can save on the perfect gift by visiting AuraFrames.com to get $35 off Aura's best-selling Carvermat frames with promo code EXPLAINED at checkout. That's A-U-R-A-Frames.com, promo code EXPLAINED.

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your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Okay, Tim, before the break, you talked about how tim sweeney and epic games decided to sue apple what exactly is their case here this case will come down to a key question what is the definition market. What Epic is trying to argue is that Apple has created a monopoly in the way it allows the

distribution of apps onto the iPhone. You can only go through the Apple App Store to put what are called native apps onto iPhones, and that they feel is improper. And then on top of that, they're unhappy that Apple has created a loan payment system. You have to use Apple's payment system and give them a 30 percent take. continue cooperating with these platforms which, you know, intermediate and obstruct us and are basically holding our business hostages to larger and larger ransom over time. Apple denies all of that, of course. They say that they're not anywhere close to a monopoly, and they point to the idea that you could buy Fortnite on a host of different platforms, whether it was the PlayStation or Xbox or Android devices, that there is no shortage of ways to get Fortnite. And if Epic was unhappy with the terms of Apple's contract, that they could take that and go someplace else.

On top of that, they say that the price that they charge is fair because it provides a safe, secure, reliable environment for these developers and for their customers. We review every app in the App Store to make sure it meets standards for privacy, safety, security, and performance. And each week, we review about 100,000 submissions and we reject about 40% of them because they don't meet those standards. And that it's in line with what other platforms charge developers. They point to Sony and Nintendo and you go down the list and it's largely 30%. And so they feel like it's more in line with the market. And so you've got this question, a fundamental question of what a market is.

You mentioned that Epic's Tim Sweeney is kind of this like anti-Silicon Valley, North Carolina, cargo shorts, fried chicken eating kind of guy. Tim Cook and Apple are kind of the opposite. And this trial's being held in Oakland, California. Does that benefit Apple? Well, it's interesting because the judge hearing this case has a history of hearing complaints about Apple.

She oversaw a trial a number of years ago that was a jury trial, and this trial is a bench trial, so she will be the decider. And she has, in some pretrial hearings, had some comments that suggest that she thinks some of Epic's case will be hard for them to prove. Yet she notes that the area that they are in here in California is accustomed to dealing with novel legal questions because of the fast-moving tech world. So she's left that open that maybe there's something new here that Epic can prove. And the trial kicked off on Monday. We're speaking late Wednesday. How has the trial gone so far? Well, it's still early days. The trial is expected to go most of May. And just the fact that we got to trial into the courtroom on Monday after the lawsuit was filed less than a year ago in August is rather remarkable. That's really fast. And so,

you know, Monday kicks off and some of the big excitement going into it was you were going to hear Tim Sweeney on the stand essentially making his case for why he has brought Project Liberty out to the world. And, you know, he was there. In some ways, I've talked to some observers who felt he did a good job in the sense that he sounded down to earth and genuine. He wasn't putting on a show, these sorts of things. you know, that Apple was probably pretty happy with his performance in that he maybe did not make the strongest case for himself from the stand. And in some ways, it might not matter, because the judge will be deciding the merits of the legal case. And that's really gets back to that issue of the markets. And in these big antitrust cases, a lot of times it comes down to the company records, the emails between the executives that give indications of

their thinking at the time of when they're doing things. And so we still have a lot of ways to go. We're also expecting Tim Cook to take the stand later in the trial. Does this feel like David and Goliath or is it more like two Goliaths or is it like, you know, Goliath and his, you know, not nearly as rich friend Greg, who's like also a pretty big dude himself? It's definitely a clash of titans. The thing that's very unique here is that Tim Sweeney has the backbone and the pocketbook to fund this fight. Lots of people have made these kinds of claims in private or less privately, but they haven't been able to take on Apple directly, there is the very real threat of maybe Fortnite gets kicked off Apple's App Store forever. And so it takes a lot of courage to do what Tim Sweeney has done.

Tim Higgins is a reporter at The Wall Street Journal. Big thanks to everyone who contributed their voices to this episode. That is Landon, Austin, Ben, Louie, Sienna, Ed, Reed, Noah, and Harper. And thanks to Taylor Makin, Peter Kafka, the big boss Rick Ross, and Afim, the dream Shapiro, for speaking to their friends from the Fortnite community for us. I'm Sean Ramos from the Fortnite community for us. I'm Sean Ramos for them. The Today Explained team includes Will Reed, Victoria Chamberlain, Halima Shah, Miles Bryan, Emily Sen, Muj Zaydi,

and Amina Alsadi, who's our supervising producer. Extra, extra read-all about it help from Paul Mounsey this week. Facts checked by Laura Bullard. Music by Breakmaster Cylinder and Noam Master Hassenfeld. Liz Kelly Nelson is the veep of audio at Vox. And Jillian Weinberger is the deputy. Today Explained is part of the Vox Media Podcast Network. You can find us on Twitter.

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