Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 1 of 38
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`Paul J. Riehle (SBN 115199)
`paul.riehle@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`Four Embarcadero Center
`San Francisco, California 94111
`Telephone: (415) 591-7500
`Facsimile: (415) 591-7510
`
`Christine A. Varney (pro hac vice)
`cvarney@cravath.com
`Katherine B. Forrest (pro hac vice)
`kforrest@cravath.com
`Gary A. Bornstein (pro hac vice)
`gbornstein@cravath.com
`Yonatan Even (pro hac vice)
`yeven@cravath.com
`Lauren A. Moskowitz (pro hac vice)
`lmoskowitz@cravath.com
`M. Brent Byars (pro hac vice)
`mbyars@cravath.com
`CRAVATH, SWAINE & MOORE LLP
`825 Eighth Avenue
`New York, New York 10019
`Telephone: (212) 474-1000
`Facsimile: (212) 474-3700
`
`Attorneys for Plaintiff Epic Games, Inc.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`OAKLAND DIVISION
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`
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`Plaintiff,
`
`Defendant.
`
`Case No. 4:20-CV-05640-YGR
`PLAINTIFF EPIC GAMES, INC.’S
`NOTICE OF MOTION AND MOTION
`FOR A PRELIMINARY INJUNCTION
`AND MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT THEREOF
`
`Date: September 28, 2020 at 9:30 a.m. (via
`Zoom Platform)
`Courtroom: 1, 4th Floor
`Judge: Hon. Yvonne Gonzalez Rogers
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`EPIC GAMES, INC.,
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`vs.
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`APPLE INC.,
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 2 of 38
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`NOTICE OF MOTION AND MOTION
`TO ALL PARTIES HEREIN AND THEIR ATTORNEYS OF RECORD:
`PLEASE TAKE NOTICE THAT on September 28, 2020, at 9:30 a.m., in the United
`States District Court for the Northern District of California, before the Honorable Yvonne
`Gonzalez Rogers, Plaintiff Epic Games, Inc. (“Epic”) will move this Court pursuant to Federal
`Rule of Civil Procedure 65 for a Preliminary Injunction: (1) restraining Defendant Apple Inc.
`(“Apple”) from removing, de-listing, refusing to list or otherwise making unavailable the app
`Fortnite or any other app on Epic’s Team ID ’84 account in Apple’s Developer Program,
`including any update of such an app, from the App Store on the basis that Fortnite offers in-app
`payment processing through means other than Apple’s In-App Purchase (“IAP”) or on any
`pretextual basis; (2) restraining Apple from taking any adverse action against Epic, including but
`not limited to restricting, suspending, or terminating any other Apple Developer Program
`account of Epic or its affiliates, on the basis that Epic enabled in-app payment processing in
`Fortnite through means other than IAP or on the basis of the steps Epic took to do so;
`(3) restraining Apple from removing, disabling, or modifying Fortnite or any code, script,
`feature, setting, certification, version or update thereof on any iOS user’s device; and
`(4) requiring Apple to restore Epic’s Team ID ’84 account in Apple’s Developer Program.
`This motion is made on the grounds that: (1) Epic is likely to succeed on the merits of its
`claims that Apple’s conduct violates the Sherman Act; (2) absent a preliminary injunction, Epic
`is likely to suffer irreparable harm; (3) the balance of harms tips sharply in Epic’s favor; and
`(4) the public interest supports an injunction.
`This motion is based upon the Complaint in this action, this Notice of Motion, the
`Memorandum of Points and Authorities filed herewith, the Proposed Order Granting Plaintiff’s
`Motion for a Preliminary Injunction, the Declaration of Timothy Sweeney (“Sweeney Decl.”)
`along with its accompanying exhibits, the Declaration of Nicholas Penwarden (“Penwarden
`Decl.”), the Declaration of Andrew Grant (“Grant Decl.”) along with its accompanying exhibits,
`the Declaration of M. Brent Byars (“Byars Decl.”) along with its accompanying exhibits, the
`
`EPIC’S NOTICE OF MOTION AND MOTION
`FOR A PRELIMINARY INJUNCTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 3 of 38
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`Declaration of David Evans (“Evans Decl.”), all matters with respect to which this Court may
`take judicial notice, and such oral and documentary evidence as may be presented to the Court.
`Plaintiff hereby requests, pursuant to FRCP 65 and Civil Local Rules 7-2 and 65-2, that
`the Court issue a preliminary injunction.
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`EPIC’S NOTICE OF MOTION AND MOTION
`FOR A PRELIMINARY INJUNCTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 4 of 38
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`TABLE OF CONTENTS
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`Page
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`TABLE OF AUTHORITIES ...........................................................................................................v 
`PRELIMINARY STATEMENT .....................................................................................................1 
`FACTUAL BACKGROUND ..........................................................................................................5 
`A. 
`Fortnite ....................................................................................................................5 
`B. 
`Unreal Engine ..........................................................................................................6 
`C. 
`Apple and iOS ..........................................................................................................6 
`D. 
`Epic’s Challenge to Apple’s Monopolistic Conduct ...............................................8 
`E. 
`Apple’s Retaliation ..................................................................................................8 
`F. 
`Procedural History .................................................................................................10 
`ARGUMENT .................................................................................................................................11 
`I. 
`LEGAL STANDARD ........................................................................................................11 
`II. 
`EPIC IS HIGHLY LIKELY TO SUCCEED ON THE MERITS OF ITS
`ANTITRUST CLAIMS. ....................................................................................................12 
`A. 
`Apple Has a Monopoly in the iOS App Distribution Market. ...............................12 
`B. 
`Apple Unlawfully Maintains a Monopoly in the iOS App Distribution
`Market. ...................................................................................................................15 
`Apple’s Tying of the App Store and IAP Per Se Violates Section 1. ....................15 
`Apple’s Tying Unreasonably Restrains Trade and Unlawfully Maintains Its
`Monopoly in the iOS In-App Payment Processing Market. ..................................19 
`IRREPARABLE HARM & PUBLIC INTEREST: APPLE’S RETALIATION
`WILL IRREPARABLY HARM EPIC AND MILLIONS OF ITS CUSTOMERS. .........23 
`Epic’s Decision To Defy Anti-Competitive Restrictions Does Not Require
`A. 
`Discounting the Harm to Epic or Its Customers. ...................................................23 
`Epic and Its Customers Will Suffer Irreparable Harm if Apple Is Permitted
`To Continue Its Retaliation. ...................................................................................25 
`THE BALANCE OF HARMS TIPS SHARPLY IN EPIC’S FAVOR. ............................29 
`IV. 
`CONCLUSION ..............................................................................................................................30 
`
`III. 
`
`C. 
`D. 
`
`B. 
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`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 5 of 38
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`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Acquaire v. Canada Dry Bottling Co. of New York, Inc.,
`24 F.3d 401(2d Cir. 1994)..................................................................................................... 2, 24
`
`Aerotec Int’l, Inc. v. Honeywell Int’l, Inc.,
`836 F.3d 1171 (9th Cir. 2016) .................................................................................................. 16
`
`Apple Inc. v. Psystar Corp.,
`586 F. Supp. 2d 1190 (N.D. Cal. 2008) .................................................................................... 13
`
`Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc.,
`2018 WL 3032552 (S.D. Cal. June 19, 2018) ........................................................................... 14
`
`Cascade Health Sols. v. PeaceHealth,
`515 F.3d 883 (9th Cir. 2008) .................................................................................................... 16
`
`Coal. For ICANN Transparency, Inc. v. VeriSign, Inc.,
`611 F.3d 495 (9th Cir. 2010) .................................................................................................... 20
`
`CollegeNet, Inc. v. Common Application, Inc.,
`355 F. Supp. 3d 926 (D. Or. 2018) ........................................................................................... 18
`
`Collins Inkjet Corp. v. Eastman Kodak Co.,
`781 F.3d 264 (6th Cir. 2015) .................................................................................................... 25
`
`Continental Wall Paper Co. v. Louis Voight & Sons Co.,
`212 U.S. 227 (1909) .............................................................................................................. 1, 24
`
`Datagate, Inc. v. Hewlett-Packard Co.,
`60 F.3d 1421 (9th Cir. 1995) .................................................................................................... 19
`
`Deckers Outdoor Corp. v. Ozwear Connection Pty Ltd.,
`2014 WL 4679001 (C.D. Cal. Sept. 18, 2014) ......................................................................... 30
`
`Digidyne Corp. v. Data Gen. Corp.,
`734 F.2d 1336 (9th Cir. 1984) ............................................................................................ 19, 22
`
`Eastman Kodak Co. v. Image Tech. Servs., Inc.,
`504 U.S. 451 (1992) .................................................................................................................. 13
`
`FTC v. Qualcomm Inc.,
`2020 WL 4591476, __ F.3d __ (9th Cir. Aug. 11, 2020) ................................................... 15, 16
`
`Germon v. Times Mirror Co.,
`520 F.2d 786 (9th Cir. 1975) .................................................................................................... 24
`
`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`v
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 6 of 38
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`
`Go Daddy Operating Co. v. Ghaznavi,
`2018 WL 1091257 (N.D. Cal. Feb. 28, 2018) .......................................................................... 27
`
`Hawaii ex rel. Anzai v. Gannett Pac. Corp.,
`99 F. Supp. 2d 1241 (D. Haw. 1999) ........................................................................................ 27
`
`hiQ Labs, Inc. v. LinkedIn Corp.,
`938 F.3d 985 (9th Cir. 2019) .............................................................................................. 11, 25
`
`Home Comfort Heating & Air Conditioning, Inc. v. Ken Starr, Inc.,
`2018 WL 3816745 (C.D. Cal. July 24, 2018) ........................................................................... 27
`
`Image Tech. Serv., Inc. v. Eastman Kodak Co.,
`903 F.2d 612 (9th Cir. 1990) .................................................................................................... 22
`
`Image Tech. Servs., Inc. v. Eastman Kodak Co.,
`125 F.3d 1195 (9th Cir. 1997) .................................................................................................. 20
`
`Kaiser Steel Corp. v. Mullins,
`455 U.S. 72 (1982) ................................................................................................................ 2, 23
`
`McMullen v. Hoffman,
`174 U.S. 639 (1899) .............................................................................................................. 1, 23
`
`Memorex Corp. v. Int’l Bus. Mach. Corp.,
`555 F.2d 1379 (9th Cir. 1977) ........................................................................................ 2, 23, 24
`
`Milsen Co. v. Southland Corp.,
`454 F.2d 363 (7th Cir. 1971) .................................................................................................... 24
`
`Newcal Indus., Inc. v. Ikon Office Sol.,
`513 F.3d 1038 (9th Cir. 2008) .................................................................................................. 13
`
`Ohio v. Am. Express Co.,
`138 S. Ct. 2274 (2018) .............................................................................................................. 22
`
`Perma Life Mufflers, Inc. v. Int’l Parts. Corp.,
`392 U.S. 134 (1968) .................................................................................................................. 23
`
`Rebel Oil Co. v. Atl. Richfield Co.,
`51 F.3d 1421 (9th Cir. 1995) .................................................................................................... 14
`
`Regents of Univ. of California v. Am. Broad. Companies, Inc.,
`747 F.2d 511 (9th Cir. 1984) .................................................................................................... 25
`
`Rick-Mik Enters., Inc. v. Equilon Enters. LLC,
`532 F.3d 963 (9th Cir. 2008) .................................................................................................... 16
`
`Robert’s Waikiki U-Drive, Inc. v. Budget Rent-a-Car Sys., Inc.,
`732 F.2d 1403 (9th Cir. 1984) .................................................................................................. 18
`
`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 7 of 38
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`State of Ill. ex rel. Hartigan v. Panhandle E. Pipe Line Co.,
`730 F. Supp. 826 (C.D. Ill. 1990) ............................................................................................. 19
`
`Stuhlbarg Int’l Sales Co. v. John D. Brush & Co.,
`240 F.3d 832 (9th Cir. 2001) .................................................................................................... 25
`
`Teradata Corp. v. SAP SE,
`2018 WL 6528009 (N.D. Cal. Dec. 12, 2018) .......................................................................... 16
`
`trueEX, LLC v. MarkitSERV Ltd.,
`266 F. Supp. 3d 705 (S.D.N.Y. 2017) ..................................................................... 25, 26, 27, 29
`
`U.S. Anchor Mfg., Inc. v. Rule Indus., Inc.,
`7 F.3d 986 (11th Cir. 1993) ...................................................................................................... 19
`
`United States v. Microsoft Corp.,
`253 F.3d 34 (D.C. Cir. 2001) .................................................................................................... 16
`
`W. Power Sports, Inc. v. Polaris Indus. Partners L.P.,
`951 F.2d 365 (9th Cir. 1991) .................................................................................................... 19
`
`Winter v. Nat. Res. Def. Council, Inc.,
`555 U.S. 7 (2008) ................................................................................................................ 11, 23
`
`Statutes & Rules
`
`Sherman Act Section 1 ........................................................................................................ 12, 15, 19
`
`Sherman Act Section 2 .................................................................................................. 12, 15, 19, 20
`
`Other Authorities
`
`David S. Evans & Richard Schmalensee, Matchmakers: The New Economics of
`Multisided Platforms (2016) ..................................................................................................... 22
`
`
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`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 8 of 38
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`PRELIMINARY STATEMENT1
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`Apple is a monopolist. It controls all app distribution on iOS. It controls all in-app
`payment processing for digital content on iOS. It unlawfully maintains these two monopolies by
`explicitly prohibiting any competitive entry in either market. It is highly likely to lose this case.
`On this motion, however, all Epic seeks is for the Court to stop Apple from retaliating
`against Epic for daring to challenge Apple’s misconduct. As set out in more detail in the
`Complaint, on August 13, 2020, Epic ceased complying with one of Apple’s anti-competitive
`rules: it offered players of its popular game, Fortnite, the option of lower prices on in-app
`purchases using a competing payment processor. This was a necessary first step on the long road
`to freeing consumers and developers from Apple’s decade-long monopolistic grip over app
`distribution and in-app payment processing on iOS.
`Apple retaliated with ferocity. Not only did it remove Fortnite from the App Store,
`which Epic anticipated, but it also declared it would terminate every one of Epic’s Apple
`Developer Program accounts and cut off Epic’s access even to software tools that are widely
`available to the public. This was a clear warning to any other developer that would dare
`challenge Apple’s monopolies: follow our rules or we will cut you off from a billion iOS
`consumers—challenge us and we will destroy your business.
`In short, accused of antitrust violations for misusing its power to create and maintain two
`monopolies, Apple used that same power to try to coerce Epic to abide by its unlawful
`restrictions. The Court should not allow Apple to enforce these restrictions. “The authorities
`from the earliest time to the present unanimously hold that no court will lend its assistance in any
`way towards carrying out the terms of an illegal contract.” McMullen v. Hoffman, 174 U.S. 639,
`654 (1899). That result is mandated by strong public policy considerations: “In such cases the
`aid of the court is denied, not for the benefit of the [non-complying party], but because public
`policy demands that it should be denied.” Cont’l Wall Paper Co. v. Louis Voight & Sons Co.,
`212 U.S. 227, 262 (1909). More recently, the Supreme Court has explained, “our cases leave no
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`1 Unless otherwise noted, all emphasis is added and all internal quotation marks and citations
`are omitted.
`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`doubt that illegal promises will not be enforced in cases controlled by the federal law”. Kaiser
`Steel Corp. v. Mullins, 455 U.S. 72, 77 (1982). The Ninth Circuit has stated simply, “‘Unclean
`hands’ has not been recognized as a defense to an antitrust action for many years.” Memorex
`Corp. v. Int’l Bus. Mach. Corp., 555 F.2d 1379, 1382 (9th Cir. 1977). This principle has been
`applied in analogous preliminary injunction contexts. See, e.g., Acquaire v. Canada Dry Bottling
`Co., 24 F.3d 401, 411(2d Cir. 1994) (affirming preliminary injunction despite antitrust
`defendant’s argument that “any irreparable harm to the [plaintiffs] was self-inflicted in that
`[defendant] withheld product only from those [plaintiffs] who elected to participate in the
`[challenged] program but refused to abide by its [allegedly unlawful] terms”).
`Epic is ideally situated to challenge Apple’s restrictions. Epic is a would-be direct
`competitor of Apple in the relevant markets, ready to offer competitive app distribution and
`competitive payment processing on iOS. Epic demonstrated its readiness by offering a
`competitive alternative to Apple’s payment processing, giving choice to consumers and
`delivering the benefit of lower prices to the users who chose it over Apple’s offering. To enable
`Epic to carry out this challenge without suffering irreparable harm from Apple’s retaliation in the
`interim, Epic respectfully requests that the Court grant its motion for a preliminary injunction to
`stop Apple from retaliating further and to undo Apple’s retaliation to date.
`First, Epic is likely to succeed on the merits. Apple controls a software platform—the
`iOS operating system—that gives it substantial market power over app developers and a billion
`consumers. Using that power, it has designed a set of restrictions through which it acquired and
`maintains monopolies in two downstream markets where competition can and should thrive: app
`distribution and in-app payment processing. In the app distribution market, but for Apple’s
`restrictions, developers would have a choice of how to distribute their iOS apps, consumers
`would have a choice of how to obtain them, and Apple’s App Store would have to compete by
`offering better quality and/or lower prices. Other successful operating systems, like Microsoft’s
`Windows or Apple’s own macOS, offer such a choice to consumers and developers. Likewise,
`in the in-app payment processing market, but for Apple’s restrictions, iOS app developers
`offering in-app purchases of digital content could choose which processor to use, just as they do
`
`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`when their apps sell physical goods to iOS users. Instead, Apple absolutely prohibits any
`competition in either market, leaving Apple free to impose distribution and processing terms
`unchecked by competitive forces. To be clear, Epic does not seek to force Apple to provide
`distribution and processing services for free, nor does Epic seek to enjoy Apple’s services
`without paying for them. What Epic wants is the freedom not to use Apple’s App Store or IAP,
`and instead to use and offer competing services.
`Second, without injunctive relief, Apple’s actions will cause irreparable harm to Epic, as
`well as harm to countless third parties and the public interest. In this case, these two factors of
`the preliminary injunction standard are closely related. Epic was willing to stand up to Apple
`because it was the right thing to do, and because Epic believed it was better positioned than
`many other companies to weather the storm. But Epic is not immune from irreparable harm.
`And Epic’s willingness to challenge an unlawful monopoly is not a basis on which to discount its
`harm under the long line of Supreme Court precedent quoted above. In fact, granting the
`injunction would promote the public policies favoring competitive markets and disfavoring
`enforcement of anti-competitive contract terms.
`Fortnite is more than just a game. It is an intensely social community whose value to its
`users depends in large part on the ability to connect with other users. Epic has built a community
`that people rely on. By removing Fortnite from the App Store, Apple has cleaved millions of
`users from their friends and family in the Fortnite community, which entirely depends on
`connectivity. The user outcry has been deafening, showing real harm to the public interest.
`Daily active users on iOS have declined by over 60% since Fortnite’s removal from the App
`Store. And removal already has resulted in a loss of goodwill and irreparable damage to Epic’s
`reputation. The continued loss of Fortnite as a gathering place for users on all platforms will
`lead Epic’s customers to defect. Epic may never see these users again. It will also be denied the
`opportunity to access even a single new user among the one-billion-plus iOS users for at least the
`next year. The removal of Fortnite from iOS also substantially impedes a major Epic
`initiative—evolving Fortnite into a full-fledged “metaverse”, a multi-purpose, persistent,
`interactive virtual space. Harm like this to Epic’s flagship app cannot be calculated in damages.
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`EPIC’S MEMORANDUM ISO MOTION
`FOR PRELIMINARY INJUNCTION
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`And then there is Unreal Engine. Apple has attacked Unreal Engine, Epic’s three-
`dimensional environment engine on which millions of third-party developers rely in fields from
`gaming to medicine, from movie production to space flight—as well as other parts of Epic’s non-
`Fortnite business. If Apple can cut off Epic’s ability to continue updating Unreal Engine for
`iOS and macOS, both Epic and the millions of developers using Unreal Engine would be
`harmed. Developers who have invested in creating projects for iOS and macOS would have to
`change course or simply end their work. Going forward, developers are questioning whether
`Unreal Engine would remain a viable platform on which to build their applications. There is no
`way to estimate the loss to Epic from an industry-wide shift away from Unreal Engine. Only a
`preliminary injunction can bring the level of certainty that developers need, and that Epic
`therefore needs to protect its business.
`Third, the balance of harms tips strongly in Epic’s favor. If the injunction is denied and
`Epic ultimately prevails, Epic will suffer the irreparable harm described above. If the injunction
`is granted and Epic ultimately loses, Apple would at most lose some commissions from Epic,
`which could easily be compensated in damages. Apple’s purported concern that every developer
`would follow Epic’s lead if Fortnite returned to iOS with Epic direct pay is speculative and
`implausible; few developers can risk the wrath of Apple, and developers would have little
`incentive to take the risk (and bear the expense of doing so) while this action is pending.
`Further, should Apple prevail, it could still easily be made whole with damages. In any event,
`Apple’s fear that developers will flee IAP if given the chance is further evidence that developers
`use IAP only because Apple prevents competition and forces developers to do so. And with
`respect to Unreal Engine, Apple would lose nothing at all if Epic continues to use iOS and
`macOS development tools to support it during the litigation. Moreover, Apple does not assert
`that the agreements governing the tools used to sustain Unreal Engine and many other Epic
`businesses were breached—and the apps for Unreal Engine and the other businesses are
`registered under different Apple Developer Program accounts than the account that registers
`Fortnite for distribution on iOS. Thus, Apple’s attack on these other businesses is pure
`retaliation to pressure Epic and deter others from challenging Apple’s anti-competitive conduct.
`
`EPIC’S MEMORANDUM ISO MOTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 12 of 38
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`FACTUAL BACKGROUND
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`A.
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`Fortnite
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`Fortnite is a multifaceted online videogame that has attracted over 350 million registered
`users, becoming a global cultural phenomenon. (Sweeney Decl. ¶ 3.) Fortnite has three main
`game modes, including the wildly popular Battle Royale. (Id. ¶ 4.) Battle Royale is an
`elimination and survival match involving up to 100 players marooned on an island in which
`storylines, challenges, and other major changes to gameplay are periodically released in the form
`of “chapters” and “seasons”. (Id. ¶¶ 4, 6, 9.) Chapters and seasons introduce new gameplay
`features and content, which requires users to have the same up to date version of Fortnite to play
`together online. (Id. ¶ 9.) Players greatly value Fortnite’s regularly refreshed content. (Id.)
`Players with an outdated version of the game may play only with other players with the same
`outdated version. (Id.) Fortnite is one of the first videogames to offer full “cross-platform”
`play, meaning that Fortnite players on different platforms can play together in the same virtual
`space, even though their underlying software and hardware is different. (Id. ¶ 8.) In fact, Epic
`was instrumental in convincing the major gaming console manufacturers to support cross-
`platform play, which also benefited other game developers. (Id.) Prior to August 13, Fortnite
`was available on Sony’s PlayStation 4, Microsoft’s Xbox One, Nintendo’s Switch, personal
`computers (“PCs”) and Macs, and Android and Apple mobile devices. (Id. ¶ 3.)
`Fortnite is also a home for vibrant social community, creativity, and expression. (Id.
`¶¶ 4-5.) Players can meet up with their friends to talk and socialize; build new worlds, structures
`and environments; dance and play with one another; experience film releases together; attend
`concerts with others; and spend time together engaging with exclusive content from providers
`like ESPN and Discovery. (Id.) Fortnite has even hosted a series of discussions on racial
`equality in America. (Id. ¶ 5.)
`Fortnite is free to download and update, and the Battle Royale mode is free to play. (Id.
`¶ 7.) Epic sells in-app content, such as digital avatars, costumes, and dances. (Id.) These items
`can be bought individually or through a subscription model. (Id.)
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`EPIC’S MEMORANDUM ISO MOTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 13 of 38
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`B.
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`Unreal Engine
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`Aside from Fortnite, Epic has other lines of business, including the Unreal Engine.
`(Sweeney Decl. ¶ 2.) Unreal Engine is a software tool for developing digital three-dimensional
`environments for multiple uses. (Id.; Penwarden Decl. ¶¶ 2-3.) Unreal Engine users enjoy free
`access to products and services developed by Epic affiliates, including Quixel Megascans, an
`online scan library of photorealistic three-dimensional content, and Twinmotion, architectural
`visualization tools. (Sweeney Decl. ¶ 29.) Epic also offers the Unreal Engine Marketplace, an
`e-commerce platform through which developers can create and sell art, animation, textures, and
`other assets to use with Unreal Engine projects. (Id.) With millions of developers relying on it,
`Unreal Engine has been called the most successful videogame engine in history. (Id. ¶¶ 30, 34.)
`It powers popular videogames like PlayerUnknown’s Battlegrounds (“PUBG”), which has
`hundreds of millions of mobile device users (id. ¶ 30; see Penwarden Decl. ¶ 4). It also has a
`broad range of other applications, including training astronauts, generating visual effects for
`television, helping brain surgeons prepare for operations, and televising the Olympics.
`(Sweeney Decl. ¶ 31.) Developers can use Unreal Engine commercially on a royalty model or
`negotiated license, and it is free for non-commercial use. (Id. ¶ 32.) Unreal Engine powers
`games and other products on all major platforms. (Id. ¶ 33.)
`C.
`Apple and iOS
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`At a market cap of over $2 trillion, Apple is the most highly valued publicly traded
`corporation in history. Apple’s empire is vast, and extends to personal computers, smartphones
`and tablets, music sales and streaming, wearable devices, digital messaging, digital storage, web
`browsing, creativity and productivity software, credit cards, television programming, and more.
`Apple controls iOS, one of the world’s most widely used operating systems (“OS”), used
`solely in mobile devices that Apple sells. (Evans Decl. ¶ 16.) An OS is software that supplies
`basic functionality to users of computers, including personal computers and mobile devices such
`as smartphones and tablets. (Id. ¶ 6.) On mobile devices, consumers’ OS options are effectively
`limited to a choice between devices that run on Google’s Android OS and Apple devices running
`iOS. (Id. ¶ 16.)
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`EPIC’S MEMORANDUM ISO MOTION
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`Case 4:20-cv-05640-YGR Document 61 Filed 09/04/20 Page 14 of 38
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`Applications, or apps, are software programs that users install on smart mobile devices to
`provide added functionality. Most apps are not developed by the creator of the OS; they are
`developed by third parties for distribution on mobile devices. (Byars Decl., E