David and Two Goliaths, Epic Games Fortnite Lawsuit Against Apple and Google
The Rebels are taking on the Galactic Empire — That was a Star Wars reference for those of you who aren’t nerds. Fortnite’s parent company Epic Games is suing tech giants Apple and Google after both companies removed the popular game from both their app stores.
The wildly popular game boasts hundreds of millions of downloads for iOS and Android. The companies removed the games for violating their policies and guidelines by allowing players to purchase in-game currency through Fortnite directly without using Apple and Google’s payment platforms. It’s fair to note that Fortnite provided the option to pay with Google and Apple’s payment gateways or alternatively their direct in App payment gateway.
Epic Games hit back hard with a lawsuit and a smear campaign. Epics complaint extended 60 pages outlining its grievances with the tech companies. Apple and Google currently take a 30% cut from all in-App sales, which considering it’s only facilitating payments is egregious, and they can get away with it because they own the App marketplace. It’s a top of the market gated choke point for all of the software developers that create applications for mobile, and Apple and Google are the bouncers. In other words, since Apple and Google make the hardware and operating systems within the hardware, they can determine who passes.
Why it’s Significant
This comes amid a historic Congressional antitrust hearing on big tech, of which both Apple CEO Tim Cook and Google CEO Sundar Pichai were compelled to testify due to numerous complaints about their business practices.
While Apple and Google have a combined market capitalization of over $3 Trillion Epic Games lawsuit isn’t a lost cause. They have Christine Varney in their corner, who was a former assistant US attorney general in the Department of Justice’s antitrust division during the Obama administration. They also have Kathrine Forrest, who served as the US district judge for SDNY as well as being a deputy in the DOJ’s antitrust division — Both are currently under the employment of the prestigious law firm, Cravath, Swaine & Moore LLP. Attorney’s like Varney and Forrest do not step into the ring if they do not think they have a viable case. It’s also fair to note that Sony has a sizable stake in Epic Games. Epic Games is worth over $17 Billion, it has enough to mount a strong legal defense for a sustained period against giants like Apple and Google.
The Internet Reacts
Epic Games also launched an aggressive PR campaign to stir the pot further, with in-form gamer style trolling. The company parodied Apple's iconic 1984 Ad and portrayed Apple as the dystopian authoritarian villain. They then poked at Google’s “Don’t Be Evil” slogan, stating that it has clearly “relegated its motto to nearly an afterthought.” — To which Google’s executives likely joked amongst themselves, “we’re not being evil, we’re just being greedy”. The hashtag #FreeFortnite also started trending on social media. Players reacted towards the lawsuit in mixed fashion. Members of the esports collective FaZe Clan noted the negatives of the ban on mobile devices prior to the launch of Fortnite’s Season 4. One of the FaZe Clan collective’s members FaZe Jarvis was permanently banned from Fortnite last year which might have hurt Epic’s chances of gathering further public support from its community as these leaderboard players are able to set narratives with their large social media followings.
The esports and online game streaming market is set to be worth well over $100 Billion by 2030.
Final Perspective
While we would speculate this lawsuit will likely end in settlement to avoid further regulatory scrutiny, we would also speculate that the App store taxes on developers will likely come down as well. This could potentially become a class-action lawsuit with multiple plaintiffs such as IAC’s Match Group’s Tinder, who also voiced support for Epic Games legal action.
We will be providing more details and further analysis as the story continues to unfold.
Brookfield Brief is a weekly newsletter covering the most relevant stories in business and tech news.
Like our stuff? Subscribe here for free. Every Monday direct to your inbox.
