Epic Games, the maker of Fortnite, is in a battle with Apple and Google. The fight is against monopoly power, stifling competition, innovation, and reducing customer choice. Could Epic Games win this case? Could this lawsuit affect Apple’s policies and revenue? Let’s find out.
In the last decade, the online gaming market has skyrocketed, with mobile gaming taking the market to a whole new level. Mobile gaming has outpaced PC games and console games, constituting 36% of the online gaming market. With mobile gaming ruling the video gaming industry, app developers are continually experimenting with new technologies to enhance consumer engagement.Â
To reach the maximum number of users, app developers have to distribute their game apps either on Google Play Store for Android or Apple App Store for iOS. However, the 70/30 revenue share model offered by Apple and Google Play has disappointed app developers for long. Challenging its revenue model, Epic Games declared war with Apple and Google when it introduced in-app payment for users. Let’s read the complete story behind this controversy.
Epic Games and Apple Battle Timeline
On August 13, 2020, Epic Games’ Fortnite added a feature that allowed its players to purchase V-Bucks (in-game currency) through an in-app payment option, depriving Apple of its standard 30% fee from all transactions. When gamers purchase V-Bucks through Epic Games’ new in-app payment system, they will get a permanent discount of up to 20%.Â
However, if users made the payment through the App Store or Google Play Store, the cost will be the same, thus violating the App Store guidelines. In response to the violation by Epic Games, Apple and Google removed Fortinet from their app stores. Epic Games retaliated with an antitrust lawsuit against Apple and Google in the U.S. District Court for the Northern District of California.
On August 17, 2020, Apple gave two weeks to Epic Games to update its app to comply with the App Store guidelines. If Epic Games fails to do so, Apple plans to remove it from the Apple Developer Program on August 28, 2020, thus blocking Epic Games from iOS and Mac developers tools and future Unreal Engine versions from Mac and iOS. This decision endangers Fortnite and every other game developer who uses Epic’s Unreal Engine. Retaliating this decision, Epic Games has requested a California federal court to block Apple’s decision temporarily.
Daniel Ahmad, a senior analyst at Niko Partners, tweeted that the battle between Epic and Apple would impact several other game developers.
Unraveling the War Between Epic Games and Apple
The biggest question of the hour is what started this war in the first place. Epic Games aims to remove monopolistic and anti-competitive practices that app developers have been facing for decades. And Epic Games rattled Apple with the lawsuit.Â
Epic Games seeks the court for fair competition in the mobile app distribution, which will benefit both third-party app developers as well as consumers. The company even launched a campaign (#FreeFortnite) to end Apple’s dominance on the app marketplace and unblock Fortnite from the App Store. This lawsuit is likely to fuel several antitrust investigations that Apple faces in the U.S. and the EU.
Epic Games CEO Tim Sweeney has been critical about the exorbitant 30% fee that Apple charges from developers and the unfair guidelines that kill competition spirits and gives an unfair advantage to Apple’s in-house apps. Epic Games’ decision has been supported by the likes of Spotify Technology SA and Match Group. In the past, Spotify filed an antitrust complaint against Apple with the European Commission for its anti-competitive behavior and unfair business practices. Finally, Apple allowed Spotify on its Apple Watch and integrated Siri with Spotify.Â
Likewise, Apple is also biased when it comes to its subscription fee. To get Amazon Prime Video app on its platform, in 2016, Apple only charged a 15% fee from Amazon, compared to its standard 30% fee from all the developers.
Nevertheless, Spotify’s lawsuit couldn’t alter Apple’s fee policy or the strict guidelines, which raises a big question- can Epic Games lawsuit make an impact? Fortnite has huge market influence, and its players are in millions. By removing it from the App Store, Apple has initiated a cold war with the video game industry and consumers. With this lawsuit, experts tout that Apple might review its App Store policies and create favorable grounds for app developers, thus discouraging anti-competitive behavior.
Patrick Moorhead, founder, president, and principal analyst at Moor Insights and Strategy, shared that the escalating dispute between Epic Games and Apple calls for better scrutiny on Apple’s App Store and anti-competitive practices.