Epic Just Took a Bite Out of Apple— The Legal and The PR Battle
What does the recent order from the trial of Epic Games vs Apple entail for both parties? Does this damage the business models of both companies, or has one entity managed to squeeze out a victory in this landmark ruling?
In November of last year, Epic Games suddenly had its developer account on the App Store suspended. This seemed to be because of Epic Games’ alleged violation of Apple’s anti-steering policy. This policy restricted developers from pushing users to external forms of payments or payment portals that may be outside the App Store payments ecosystem. Since Apple usually takes 30% of revenue generated by in-app transactions, subverting the default method of payment would lead to a direct and quantifiable loss in revenue for Apple Inc, from one of its most lucrative and profitable revenue streams.
With several publications and eminent personalities in the tech realm commenting on who won this case, let’s examine which party comes off better from this historic ruling.
The crux of the case initiated by Epic was to prove that Apple maintained an illegal monopoly on the app markets, which would be a violation of USA’s anti-trust regulations. This argument, although bold, may have been too large of a bite for Epic to chew.
The Court ruled that although Apple may be engaged in anti-competitive practices, Epic had not reached the burden of proof to prove the same. Although this seems like a loss for Epic, this also opens the door for other app developers to argue against Apple’s specific monopolistic practices, maybe not in such a boisterous fashion.
The most consequential change to come out of the ruling, is probably the mandated amendment to the anti-steering rule imposed by Apple itself.
Judge Gonzalez ordered Apple Inc. to no longer prohibit the app developers on the App Store from linking to their own payment platforms. This essentially provides developers a means to nudge users to use their own independent payment platforms, where they can subvert the contracted 30% payment to Apple Inc. Epic had done this by actively encouraging its users to purchase in-game currency (Vbucks) at a discounted rate from one of their external payment portals, rather than the one put into place by Apple through the App store. In fact, this was the exact action undertaken by Epic which had their developer account pulled from the App Store.
Apple Inc on the Defensive?
Whereas the public perception around this whole case points towards both parties losing equally, Apple feels like it’s policies have been vindicated through this verdict.
However, there is good reason to believe that Apple in itself is the party that comes worse off in this entire interaction. As per the order, Apple can no longer prohibit external payment portals, which essentially means that they have lost access to the In-App Digital Transactions market in its entirety. This could result in a considerable net loss in revenue, as developers will always choose to bypass paying the mandatory 30% fee to Apple, in favor of payments that will directly reach their pockets.
The Future of the App Store
Regardless of what the Judge ruled in the case Epic vs Apple, there is a larger discussion to be had with respect to whether or not Apple is entitled to a part of the proceeds earned from in-app purchases on their platform. Maintenance of Apple’s native payment portals inherently takes time and resources, so why is it unjustifiable to keep the 30% fee in place? The sad fact of the matter is that Apple is clearly a massive monopolistic entity, simply because of the closed market they maintain control over. Whereas this may be unethical, it is by no means illegal, as the App Store is the exclusive market for Apple devices, not all smartphones on the market.
However, this justification may also end here. Developers are charged periodical fees to keep their accounts existing on the App Store itself. So this is already one instance of Apple charging developers for merely using their platform. Moreover, a 30% charge on every single transaction seems extremely predatory, and even evil, from some perspectives. Just imagine if landlords started claiming 30% of every single sale achieved by shop owners and tenants. But for some reason, there seems to be a very pervasive smugness displayed by Apple Inc here, when they assume developers have to pay them for the privilege of making money on the App Store.
Regardless of anyone’s views on the ethics of Apple’s practices, smugness is sadly not prosecutable in a court of law.
So what exactly does this entail for the average consumer?
Well, assuming the appeal that Epic files an appeal, and fails, we can reasonably expect overall prices of in-game transactions to fall. Now that there probably are no overhead fees taken by Apple, microtransactions may become cheaper, and more attractive to potential whales. If you aren’t already in the micro-transactions ecosystem, you may be convinced, simply with the intention to directly support smaller developers.
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