Apple Versus Epic Games: Does the iOS App Store Need to be Reformed?
For a while now, many app developers have been unhappy with Apple and its iOS store policies. On August 13th, Epic Games introduced a new update to Fortnite: Battle Royale, adding a “direct payment” option. This option allows players to save money on in-game currency by paying Epic Games directly, bypassing the iOS App Store (which is against the App store’s policies).
Within hours, Fortnite: Battle Royale was removed from the App Store, and Google removed it from the Play Store a few hours later for the same reasons. Anticipating the ban, Epic Games filed a lawsuit. To win over public opinion, Epic launched a marketing campaign which included the slogan “Free Fortnite,” several in-game virtual items, and a parody of a famous Apple ad from 1984 for Macintosh.
The question of who is right or wrong is hard to answer, as both companies have strong arguments. Apple claims it has done nothing wrong, as its policies clearly state all digital goods purchased on iOS must pay Apple 30% of the sale. In return for this fee, Apple provides app developers with access to a broad toolset, as well as access to its large user base. Apple also argues that it treats all developers equally no matter the size. According to a TechCrunch article, app developers have made $120 billion since the App Store’s inception. While developers may have issues with Apple policies, it has clearly not deterred them from using the platform. In court, Apple revealed that Epic Games themselves asked for “special treatment” prior to the lawsuit, which would invalidate their bottom line of fighting against Apple’s so-called injustice.
Epic Games, on the other hand, is arguing that Apple and Google Android have a duopoly in the app store markets. Epic argues the policies are too strenuous, inflexible, and punishes successful companies. For example, Epic argues that it has its own payment processing that offers the same or a better experience than Apple, and that it therefore is not necessary for Epic to use any of Apple’s toolsets. Epic isn’t the only company that has made this argument. Netflix and YouTube TV have prompted users to sign up outside of a mobile device, Wordpress was cut off from updates until in-app purchases were allowed, and Spotify has filed multiple complaints with Apple regarding their privacy and 30% cut. Epic goes one step further by arguing that Apple in fact does offer preferential treatment to certain developers, namely Amazon and TenCent.
One argument against Apple is that a monopoly — or in this case, a duopoly — limits innovation and technological progress. Considering the growth of revenue generated by the app development community, it is difficult to make this argument. But then again, recent denials around video games like Fortnite or Microsoft’s next generation xCloud app not coming to the Apple ecosystem indicate that it might limit innovation. In short: Apple has faced very similar backlash in the past, and Epic Games is certainly not the first company to retort against Apple.
On August 28th, Apple announced they would be shutting down the Epic Games developer account, which is attached to the renowned Unreal Engine and is used to program and update countless games on iOS. In a public statement, they said:
“We have worked with the team at Epic Games…on their launches. The court recommended that Epic comply with the App Store guidelines…Epic has refused. [T]hey repeatedly submit Fortnite updates designed to violate the guidelines of the App Store. This is not fair to all the other developers on the App Store, and is putting customers in the middle of their fight. We hope that we can work together again in the future…”
Apple’s shutdown of the Epic Games Developer account leads to more implications than one might suspect upon first look. As the Epic Games Developer account is attached to Unreal Engine, Apple has endangered all apps that use Unreal Engine (not just Fortnite), and even apps that did not use the circumventing tactic that Fortnite did.
As of November, Apple has countersued Epic Games for damages, calling their entire pushback “willful, brazen, and unlawful.” They stated:
“Epic’s lawsuit is nothing more than a basic disagreement over money. Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store. Epic’s demands for special treatment and cries of “retaliation” cannot be reconciled…it rakes in billions by taking commissions on game developers’ sales and charging consumers up to $99.99 for bundles of “V-Bucks.”
Whether or not Apple’s countersue will be successful is uncertain. They are effectively arguing that Epic is not limited in what it can accomplish with Apple’s rules in place, as Epic really only capitalizes one thing: in-game currency. Epic Games and their most recent lawsuit, however, are not the only example. Applications that provide a subscription service, or something that can be downloaded and saved — such as online books — have disputed with Apple. Some of the aforementioned companies, including Spotify and the Kindle district of Amazon, might have some credence behind their claims, but Epic Games does not fit into that category, as the transaction of buying in-game currency does not limit their innovation.
One thing, however, is certain: Epic Games and their lawsuit over Apple’s cut of sales is not the first, and it will certainly not last. It raises interesting questions regarding Apple’s system. Still, it does not appear that a redesign is in the works; maybe we need one.
Sources:
Romain Dillet, “App Store Developers Have Earned 120 Billion Since 2008.” Tech Crunch, January 28 2018. https://techcrunch.com/2019/01/28/app-store-developers-have-earned-120-billion-since-2008
Kif Leswing, “Apple Fires Back in Court, Says Epic Games CEO Asked for Special Treatment,” CNBC, August 24, 2020. https://www.cnbc.com/2020/08/21/apple-says-epic-games-ceo-wanted-a-side-deal-for-fortnite.html
Brian Fung, “App Store War Between Netflix Apple is Heating Up.” The Washington Post, January 4 2019. https://www.washingtonpost.com/technology/2019/01/04/app-store-war-between-netflix-apple-is-heating-up/
Sean Hollister, “Apple apologizes to WordPress, won’t force the free app to add purchases after all” The Verge, Updated August 23 2020. https://www.theverge.com/2020/8/22/21397424/apple-wordpress-apology-iap-free-ios-app
Todd Spangler, “Apple App Store, Apple Pay Targeted in EU Antitrust Probes, Spotify Cheers Moves” . Variety, June 16 2020. https://variety.com/2020/digital/news/apple-app-store-eu-antitrust-probes-spotify-1234636728/
Gennaro Cuofano “Apple Mission Statement and Vision Statement In A Nutshell,” FourWeekMBA, January 25, 2020, https://fourweekmba.com/apple-mission-statement-vision-statement/.
Apple, “Epic Games, Inc. v. Apple Inc. : Free Download, Borrow, and Streaming,” Internet Archive, 2020, https://archive.org/details/gov.uscourts.cand.364265
