⏩ The makers of Fortnite drop an Epic lawsuit on Apple
Welcome back to FORWARD, a 5 minute newsletter with fresh takes on the legal news you need to start your day. Curated by friends at Lawtrades—a company improving the sleep quality for GC’s everywhere.
This week: Apple has a big videogame lawsuit problem, and the TikTok conflict could tip the scales of the free internet. Plus, the force majeure clause is on the struggle bus.
Who’s most capable of forcing change among the world’s biggest tech companies? If you say Congress, guess again. It might be the video game industry.
The makers of Fortnite have sued Apple and Google: Epic Games didn’t want to pay the 30% fee Apple and Google charge developers on all revenues made from app store purchases. So Epic created its own in-app payment system to get around the fee. Then, Apple and Google kicked Fortnite out of their app stores. Epic responded with a lawsuit and a campaign particularly targeted at Apple.
Epic’s stand is about revealing the power of Apple as much as it is about money: The antitrust lawsuit accuses Apple of wielding monopolistic control over the iOs app distribution and payment process, leading to fewer profits for app developers and higher prices for consumers. That accusation should sound plenty familiar to people keeping an eye on Apple and other companies, which have faced numerous similar lawsuits.
This couldn’t come at a worse time for Apple
CEO Tim Cook was grilled by Congress last month over antitrust concerns, including possible anticompetitive behavior regarding the restrictions it applies on other companies. Epic is claiming that’s exactly what Apple is doing to app developers.
Don’t expect Apple or Google to back down anytime soon. They don’t want to give in to antitrust litigation because of everything swirling around them. And Epic Games appears to be in it for the long haul, too. The company said in its Apple lawsuit it is not seeking monetary damages or special treatment. It said it wants injunctive relief to bring fair competition for everyone.
President Donald Trump’s recent internet crusade isn’t just about the Chinese companies TikTok and Tencent. The long-term effects could be more far-reaching and turn the internet into a far less open space, according to the New York Times.
The U.S. has taken a hands-off approach to the internet for decades: Unlike China, it has been defined by openness, allowing American IP addresses to access almost any website and app and encouraging by example other countries to do the same.
But the TikTok tiff has introduced the concept of reciprocity to the internet: It’s how the United States has often run foreign policy. For the internet, reciprocity could mean the U.S. favoring domestic internet companies over others and foreign countries retaliating by disfavoring U.S. internet companies.
The result could be a fractured internet and a U.S. that looks more like China
People growing up in China already have little to no idea about websites like Facebook and Twitter. Could the U.S. continue to shun the next big websites out of China or other countries it competes with?
Some experts say the U.S. has already made the turn toward internet reciprocity, arguing that the TikTok ban is less about TikTok than getting back at China for banning so many American websites. But Clete Willems, an attorney at Akin Gump and a former member of the Trump administration, said, “We’re not just copying their playbook. The administration is trying to respond to what it sees as a legitimate security threat.”
Force majeure has been everybody’s favorite legal phrase during the pandemic. But so far companies trying to cash in on insurance settlements for pandemic-caused business interruptions haven’t had much luck, according to Law.com.
It’s not just a contractual language issue: Companies seeking insurance claims for Covid interruptions must also usually show a direct physical loss. That has been difficult to prove. “It’s not designed to insure against a bad business climate,” Rutgers Law professor Adam Scales told Law.com. “It is designed to deal with calamities that befall your business.”
A 2% lawsuit filing rate: Another lawyer, John Randy Sawyer of Stark & Stark, has reviewed more than 100 business insurance policies for clients. He’s filed two lawsuits so far. Many of the policies he has not acted upon actually use a virus as an exclusion to a business interruption.
And there’s been no major consolidation of lawsuits: In a federal court, plaintiffs’ attorneys wanted to package hundreds of lawsuits for business interruptions together. The judge denied the action.
Business interruption lawsuits could have greater success as the pandemic further unfolds, according to legal analysts. In fact, one federal judge in Missouri let a lawsuit proceed after agreeing Covid has led to direct physical loss -- because of the physical disease particles attaching to and damaging property.
What else we’re forwarding
Why have several athletic conferences cancelled college football this fall?: It’s as much about safety as fear of lawsuits. And lawyers say the schools that decide to play should be on the lookout for litigation if anything goes wrong.
The Justice Department may be jumping the gun in its antitrust investigation of Alphabet: Sources within the DOJ say an antitrust suit could be headed toward Alphabet from the federal government before the year is out. But there’s a problem: They’re not sure the DOJ has built a strong enough case.
Talk to you next week.