In August 2020, Epic Games, the developer of the game Fortnite, sued Apple after Apple removed Fortnite from its App Store. This removal was a response to Epic Games violating App Store's in-app payment guidelines. Apple requires that in-app purchases are processed through its payment system. However, Epic Games had offered users the choice of using its own payment system instead of Apple's. The sources listed below. The material I list below occasionally references other companies. For example, Epic Games also filed a complaint against Google, and Apple's payment policy for different kinds of products is discussed. Focus exclusively on the relationship between Apple and Epic Games.

Case material to read: 1) These press articles together give a good high-level summary of the case and background a. https://edition.cnn.com/2020/08/15/tech/fortnite-apple-googlelawsuit/index.html b. https://www.theguardian.com/technology/2020/aug/13/fortnite-makerlawsuit-apple-app-store-removal c. https://www.ft.com/content/eef5c647-4b07-4535-99f5-93f020502022

2) This is the complaint filed by Epic Games: https://cdn2.unrealengine.com/applecomplaint-734589783.pdf. For the purpose of this assignment, you do not need to read the full complaint. (Page numbers below refer to the page numbers at the bottom of the pages, not to those in Acrobat Reader.) a. You should focus on pages 1 - 10 and pages 16 - 32. b. Pages 12 - 16 give further background information and I suggest you skim it. c. Pages 33 and following are not required for the purpose of this assignment though you are welcome to read them. 3) There are three other documents you should look into. a. This assessment by an independent analyst provides a view on the topic https://www.ben-evans.com/benedictevans/2020/8/18/app-stores.

b. Here you can find background on Epic Games https://en.wikipedia.org/wiki/Epic_Games. 2 c. At this link, Apple provides information on its App Store https://www.apple.com/app-store/.

1) Briefly describe the overall setting, including: a. What Epic Games offers to users and how Epic Games earns money b. What App Store offers to users and developers and how App Store earns money c. The focus of Epic Games' complaint and what Epic Games is trying to achieve

2) Discuss the distribution channel, including: a. What is the distribution channel for apps? b. What channel services does App Store provide and for whom (consumers or developers) does App Store create value and why? - Consider whether there may be different segments of consumers or developers for whom the platform may be more/less valuable (and, if so, how these segments differ). c. Are there any other channel services a marketplace for mobile applications could possibly provide?

3) Describe the channel conflict, including: a. What specifically is the channel conflict and why did it erupt?

b. How do you evaluate the conflict from the point of view of Apple and from the point of view of Epic Games? Using the framework (how important is the channel/developer and is there a threat to the business), carefully explain your argument.

4) Evaluate channel power, including: a. Where does channel power arise from for Apple and for Epic Games? b. On balance, who do you think has more channel power? Why?

5) Based on your understanding and discussion of the case, should Apple be required to make any changes to their current payment policy? You should base your answer firmly on your prior analysis of distribution channels. A legal assessment is not expected.