Epic Games vs Apple: It’s Bigger Than You Think
Having worked in the video game industry myself, I saw the move Epic Games made against Apple as a “David vs Goliath”. It was about time video game developers took a stand against the giant corporate behemoths like Apple. It was about time video game developers saw more profit from their hard work instead of surrendering it to companies that did nothing to help create the product in the first place. In my mind, companies like Apple (which earlier this week was valued at 2 trillion dollars) had grown too big and controlled too much of the market. They needed to be reeled in and brought down a few notches.
This is what the game developer part of me thought. Turns out, as I began researching more into the subject I found out it was not as cut and dry as I had thought. In fact, it was much bigger.
President Trump Signs Executive Orders
On August 6, 2020, President Trump signed Executive Orders that banned transactions with the Chinese-owned ByteDance, the parent company of the app TikTok. Also targeted was the Chinese owned WeChat, who’s parent company is Tencent. Guess who owns 40% of Epic Games? You guessed it: Tencent.
What these Executive Orders by the President do are ban any transactions of said companies, taking effect in 45 days from signing. Why did he do this? These Chinese companies routinely harvest data of millions of Americans, and if you have not been keeping up with current events, the governments of the United States and the Peoples Republic of China are not exactly friends. In fact, it could be argued that they are in a state of Cold War. President Trump, by taking this action, has deemed these Chinese companies, and the information harvesting they do, a national security threat.
To be clear, this is not a partisan issue. The Chinese Communist Party controls the Chinese government. The Chinese government in-turn controls companies such as ByteDance and Tencent. Apps like TikTok and WeChat gather tons of data on U.S. citizens who use them. The same could also be said for games like Fortnite and League of Legends, both owned by Epic Games and played by tens of millions of Americans. Food for thought.
Epic Games Mega Drop Event
Epic Games decided it was time to reward it’s legion of Fortnite fans with a discount. On August 13, 2020, Fortnite players received a permanent 20% discount on purchases of V-Bucks, the in-game currency for Fortnite. With this, Epic Games offered players on iOS and Android the option of buying directly from them and not through Apple or Google, receiving the 20% discount by doing so. This circumvented both platforms payment systems and went directly to Epic Games instead.
As with the American Revolutionary War and the “shot heard ‘round the world”, Epic Games had loaded their gun and aimed it directly at Apple and Google. War had been declared.
Apple Strikes Back: Fortnite Removed From the App Store
Not long after Epic announced it’s Fortnite discount, Apple moved swiftly and removed the game from its App Store, preventing people from downloading the game on all of its devices. Players who already had the game on their device could still play, but new players would not be able to download Fortnite.
Apple released a statement citing Epic Games had violated their Terms of Service by circumventing the Apple payment system. “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.” Apple went on to state that Epic would need to remove its new payment method from the game to be featured once again in the App Store.
The “level playing field” that Apple alluded to is the 70–30 split, which has become standard in the industry. When a developer gets their app/game onto a distribution platform such as Apple or Google, they agree to relinquish 30% of purchase revenue to the platform that is selling it, while the developer pockets the remaining 70%.
By doing what they did, Epic was picking up its ball and going home. The 70–30 split wasn’t good enough any more. For years developers have been stating this, citing advances in technology that make the process much easier and cost effective for companies like Apple to host and distribute products to it’s users. In essence, Epic Games was making its case to be the “champion for the little guy,” despite the fact that Epic Games is now worth an estimated $17 billion.
Nineteen Eighty-Fortnite and Lawsuit
In a matter of hours Epic reacted. After removal of Fortnite from the Apple App Store, Epic announced an in-game event, premiering a short film entitled “Nineteen Eighty-Fortnite” to its players. Epic based the film on Apple’s own commercial that aired in 1984. Salt, meet wound. Shortly after the film debuted on company social media accounts, #FreeFortnite began trending on Twitter. Epic didn’t stop there.
Along with the video, Epic also filed an antitrust lawsuit against Apple in the Northern District of California seeking injunctive relief. In other words, Epic took legal steps to try and stop Apple from removing Fortnite until the court could make a decision on the suit, which could take years.
Google Wants To Party Too
Not to be left out of all the excitement, Google took a look at the trending #FreeFortnite and decided a couple of hours later to remove Fortnite from its Play Store. In a statement to The Verge, Google echoed what Apple had: Bypassing its payment system also violated its Terms of Service. “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 the 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.”
It should be noted that the Android provides a much easier environment for Epic and Fortnite, with other avenues of download available such as Samsung’s Galaxy and the Epic Games app itself. In other words, it’s not completely locked out on Android devices like it is Apple.
Defcon 1: Apple Plans to Terminate all Epic Games Developer Accounts
On August 17, 2020, four days after removing Fortnite from the App Store, Apple announced it would remove Epic Games developer access on August 28th. Essentially this would prevent Epic from using the necessary tools for both iOS and Mac to test and debug their games. Tim Cook was threatening to push the red button on Epic and go nuclear.
Like a scene played out in a Cold War film, Epic retaliated by filing a court request to stop Apple from carrying out their plans. If the court decides to take no action regarding the request Apple will be able to effectively nuke Epic and destroy their presence on all Apple devices. Epic argues this would be catastrophic for their company as a developer account with Apple is vital. Existing Fortnite accounts on all iOS and Mac devices would basically die, unable to receive updates until all legal matters were resolved. Fortnite players would leave the game in droves.
If that wasn’t bad enough, the development of Epic’s Unreal Engine creation platform would also be significantly hurt by Apple’s decision. Unreal is used by developers all throughout gaming. Not having access to Epic updates for Unreal on iOS and Mac would be crippling for developers to say the least.
With out a court decision, the gaming world could be facing its own version of a nuclear winter.
It’s More Than Just Games
So after taking all of this in I came to the realization this isn’t just about how the game industry operates, it’s much, much bigger than that. Let’s play Devils Advocate with this situation. Let’s say for instance Epic were to win their antitrust lawsuit against Apple. What would that mean? Well, you could potentially see the U.S. government step in and decide to break Apple up, like they did with Ma Bell back in 1982. This would possibly lead to a domino effect, with companies like Google, Amazon, and Facebook also being targeted. In the very least, an Epic victory could set precedent for future antitrust lawsuits against other major corporations.
Let’s look at it from another point of view. Let’s say Apple was to prevail and Epic was at their mercy. This would give Apple even more power and possibly cause them to demand an even bigger split in profits with not only Epic, but developers across the board. Would they do this? Most likely no. Apple would not want to start losing developers left and right. The more likely outcome would be status quo, but it would be nearly indestructible against any change.
This case has major business implications both nationally and internationally. It also has implications from a political standpoint as well. How will President Trump’s EO effect Epic Games and their Tencent partnership? Will Epic Games be able to even do business anymore when nearly half their company is owned by a Chinese firm?
Epic vs Apple is a heck off a lot more than just a game company vs a phone company. It’s a very complex issue who’s outcome is going to be felt for a very long time by not just companies and governments, but by people like you and me.
It’s bigger than you think.
