Epic Games' Lawsuit Fires a Shot at Apple's App Store 'Monopoly'

Fortnite creator Epic Games launched a spear at Apple’s gatekept iOS App Store market today with a lawsuit filed in the US District Court of Northern California. The move aligns with the developer’s years-long quest to disrupt digital marketplaces and their associated fees—and comes as Apple has faced increased antitrust scrutiny on Capitol Hill.

Alleging that Apple’s grip over the iOS market is “unreasonable and unlawful,” Epic Games seeks to force access to more apps and payment processing options on iOS. The lawsuit came just moments after Apple removed Fortnite from its iOS store for instituting an in-app payment system that let users circumvent Apple altogether, a violation of App Store guidelines. Hours later, after Google removed Fortnite from its Google Play Store, Epic Games filed a lawsuit alleging that Google also engages in similar “anti-competitive conduct.”

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100 percent monopoly over the iOS in-app payment processing market,” said an Epic Games representative.

Epic Games’ Fortnite boasts 350 million players, some of whom access the bubblegummy shooter on iOS devices. As with all iPhone and iPad apps, the only way for iOS users to download it is through Apple’s App Store. While Fortnite is free to install, it brings in serious money through in-app payments—about $60 million in the past three months alone, after Apple takes its standard 30 percent cut, according to app analytics company Apptoptia. It’s consistently among the five top-grossing apps in the App Store.

Fortnite famously skipped the Google Play Store altogether when it launched on Android in the fall of 2018. Unlike Apple, Android allows you to “side-load” apps from outside official channels. Epic Games ultimately relented, putting Fortnite in the Google Play Store in late April. But earlier today it took the provocative step of launching its own payment system within Fortnite on both iOS and Android. Its in-game currency, V-bucks, would be sold at a discount to those who opted for Epic’s payment system—down to $8 from $10 for 1,000 V-bucks. (The discount was part of Fortnite’s Mega Drop event, which offered a 20 percent price reduction on V-bucks across all consoles.)

“If Apple and Google lower their fees on payments, Epic will pass along the savings to players,” the company said in an online FAQ.

In response, Apple hit Stop. It pulled Fortnite from the App Store altogether, and currently installed versions will no longer receive updates. “Epic enabled a feature in its app which was not reviewed or approved by Apple,” the company said in a statement before the lawsuit was announced, “and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.” Apple also noted that Epic has “benefited from the App Store ecosystem” for a decade. “The fact that their business interests now lead them to push for a special arrangement does not change the fact that these guidelines create a level playing field for all developers and make the store safe for all users,” the company said.

On Thursday evening, Google followed suit, removing Fortnite from the Google Play Store. In a statement, Google says that “The open Android ecosystem lets developers distribute apps through multiple app stores. For game developers who choose to use the Play Store, we have consistent policies that are fair to developers and keep the store safe for users. While Fortnite remains available on Android, we can no longer make it available on Play because it violates our policies. However, we welcome the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play.”

The quick rollout of the lawsuits after Epic Games stuck the Apple hornets nest indicates the company had a bigger plan than selling V-bucks. “Epic likes to poke and prod and make its points,” says Adam Blacker, vice president of insights at Apptopia. “Obviously Epic knew Apple was going to remove the app.” In a blog post Thursday, Epic Games also launched a #FREEFORTNITE campaign, clearly intended to turn its millions of Fortnite fans against the behemoth tech company.

This isn’t the first time Epic Games has leveraged Fortnite’s popularity to confront digital marketplace gatekeepers. Fed up with similar practices from longtime go-to digital games marketplace Steam—which also takes a 30 percent cut of game sales—Epic launched its own Epic Games Store for Windows and macOS in 2018. Epic’s store takes just 12 percent of developers’ sales. Tempted by the savings, several gamemakers moved to sign exclusive contracts and release their games on the Epic Games Store, which in turn drew in users.

The rollout wasn’t without its own controversy. Gamers who had preordered games on Steam were frustrated after Epic announced exclusivity deals with publishers. At the same time, users complained that the Epic Games store didn’t offer beloved community features like friends lists and groups. Epic Games CEO Tim Sweeney said at the time that if Steam committed to an 88 percent revenue share for developers and publishers, “Epic would hastily organize a retreat from exclusives (while honoring our partner commitments) and consider putting our own games on Steam.”

Sweeney has long been a vocal opponent of the iOS and Android marketplaces as well. In 2018 he told The Verge that Apple, Google, and Android manufacturers “do not in any way justify the 30 percent cut.” In July he wrote that while Apple is “one of the greatest companies that has ever existed, “they’re fundamentally wrong in blocking competition and choice on devices they make, and that holds up entire fields of technological progress.” Last week, after Apple determined that cloud gaming services—including Microsoft’s xCloud and Google’s Stadia—violated its App Store guidelines, Sweeney seethed: “Apple has outlawed the metaverse,” he wrote on Twitter.

Today’s lawsuits are the fullest expression of that frustration, as well as Epic Games’ own ambitions in the mobile game marketplace. The Apple lawsuit goes so far as to propose that Epic itself could create a “competing app store in iOS devices, which would allow iOS users to download apps in an innovative, curated store and would provide users the choice to use Epic’s or another third party’s in-app payment processing tool.” Epic Games echoed a similar sentiment in its suit against Google, describing how it “would open a store to compete with Google’s and offer developers more innovation and more choice, including in payment processing.”

(While Android does allow users to download apps from outside the Google Play Store, Epic Games alleges that Google makes it tough. In its suit against Google, Epic Games claims that although they struck a deal with OnePlus to distribute Epic games on its phones through an Epic Games app, “Google forced OnePlus to renege on the deal,” excluding mobile devices in India. It also claims that LG told Epic that “its contract with Google did not allow it to enable the direct distribution of apps.”)

“Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear,” the Apple lawsuit reads. “At a market cap of nearly $2 trillion, Apple’s size and reach far exceeds that of any technology monopolist in history.”

Chris Sagers, a law professor at Cleveland State University and author of United States v. Apple: Competition in America, believes the case could have huge implications for antitrust law. Not only has Epic Games enlisted powerhouse antitrust lawyers, including a former US assistant attorney general in the Justice Department’s antitrust division under Barack Obama; the suit also comes at a time when scrutiny of tech giants’ market power is at an all-time high. In late July, Apple CEO Tim Cook joined the CEOs of Amazon, Microsoft, and Google to testify before Congress about potentially anticompetitive behavior. The questions directed at Cook largely focused on the App Store.

Last year Spotify launched an antitrust case against Apple too, with the European Commission. Although Spotify pays less than the 30 percent commission on Apple’s in-app payment system, the music streaming company complained that Apple tried to “purposely limit choice and stifle innovation,” and give themselves “an unfair advantage at every turn.”

“We’ve been waiting,” says Sagers. “I’ve been on the edge of my seat waiting for the big antitrust case to come against Big Tech. We kept thinking the government would do it, and they haven’t done anything,” he says.

Apple, Google and Epic Games are all big enough that they can survive without each other. But the suits threaten so much more than kids’ access to Fortnite dances. It questions the sanctity of the entire Apple ecosystem—from its smartphones to its iOS software, App Store, and payment processing. Perhaps just as threatening, it’s bringing a heady antitrust issue down from the courthouse stands and into kids’ living rooms. They might not understand the legalese of antitrust law—but, Epic hopes, the public may be able to get behind #FREEFORTNITE.

This story has been updated to reflect that Google has removed Fortnite from the Google Play Store. This story has also been updated to reflect Epic Games’ complaint against Google.

Epic Games’ Lawsuit Fires a Shot at Apple’s App Store ‘Monopoly’

Author: sgadmin

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