Apple’s app store war doesn’t end with Epic

Wednesday, September 30, 2020

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Apple is surrounded by enemies on all sides. The tech giant and first American company in history to see its market value greater than $ 2 trillion, faces a sustained backlash from app developers large and small, who say its App Store policies are unfair and, in some circumstances, violate antitrust laws.

The company has previously been similarly accused by Spotify (PLACE), but with federal and state investigations into Apple (AAPL) business practices are heating up, detractors of the company are making their case more than ever.

This illustrative photo shows someone waiting for a Fortnite update from Epic Games on their smartphone in Los Angeles on August 14, 2020. (Photo by Chris DELMAS / AFP) (Photo by CHRIS DELMAS / AFP via Getty Images)

And maybe no company comes after Apple with more enthusiasm than video game publisher and developer “Fortnite” Epic Games, which has filed a complaint against Apple claim your App Store operates as an illegal monopoly.

The dispute centers on Apple’s decision to remove “Fortnite” from the App Store after Epic added its own payment option in violation of App Store rules. On Monday, Epic argued that its hit “Fortnite” should be reinstated while the two heavyweights plead their case.

The problem behind it all? The 30% commission Apple charges app developers who sell their offerings through the App Store. And if Apple loses, it could have a direct impact on the company’s Services business, which grossed $ 46 billion last year.

Epic’s “Fortnite” fight

Apple requires app developers who sell digital products through their apps to use Apple’s proprietary payment system. Using this system also requires developers to pay Apple a 30% reduction in the total selling price of each purchase made by customers.

Bypass these rules and you will immediately see your app banned from the App Store. Apple normally reviews all app updates to make sure developers are complying with its rules, but Epic got around this by simply offering a “fix” for “Fortnite” on iOS which added a buy option. secondary.

In addition to paying for in-app items using Apple’s payment method, Epic has added the ability for players to pay using its own payment method. Epic has even taken the extra step of offering players a discount for using its payment option.

Epic made the same move with the Android version of “Fortnite”, since Google (GOOG, GOOGL) follows the same business practices and charges the same 30% for in-app purchases. Google, however, hasn’t received as much heat as Apple because, unlike the iPhone maker, it allows consumers to download third-party app stores for Android phones.

Apple quickly saw the change and shot “Fortnite”. He then threatened to remove support for Epic’s Unreal graphics engine, which would impact developers who had nothing to do with Epic’s subterfuge. By pulling on Unreal Engine, app developers wouldn’t be able to fix app updates or bugs using the software, leaving businesses that rely on the engine in limbo.

Apple CEO Tim Cook testifies remotely via video conference at a hearing of the United States House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on — Apple CEO Tim Cook testifies remotely via video conference during a hearing of the United States House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on “Online Platforms and Market Power.” (Image: Reuters)

Epic, in response, set up a website layout his arguments as to why he chose his fight with Apple. Apple, meanwhile, has said it will not budge for a business and that its App Store guidelines are in place to protect Apple users.

Now, Epic and Apple are arguing in court over whether “Fortnite” should be reinstated while the outcome of the lawsuit is still pending. Apple maintains that it operates its App Store as a walled garden to ensure the quality of the apps that appear on its devices, and says this is no different from how other app stores operate. Apple also claims that Epic is benefiting from the help the company offers to give it access to the App Store and its audiences.

Additionally, Apple says Epic could easily return to the App Store by simply removing the secondary payment tool. There’s also the fact that Epic is already selling “Fortnite” for a number of other platforms, including PlayStation, Xbox, Switch, and PC.

Epic may have a serious fight ahead of it.

“I think Epic is facing an uphill battle in its antitrust case,” Stanford Law School professor Mark A. Lemley told Yahoo Finance this week. “I think Apple’s pricing policies are problematic and the antitrust law should probably fix it. But the courts are very reluctant to dictate who a company (even a monopoly) should do business with. “

“In the longer term, however, Apple and Google are going to have to rethink their pricing policies around their app stores. I don’t think people will put up with exclusivity and a huge premium forever, ”Lemley added.

Epic is not the end of the line

Even though Apple is going through the epic fight without a hitch, it’s not the only company lining up to take on the Silicon Valley giant. A group of application developers, including Basecamp, Deezer, Epic, Match Group (MTCH), Protonmail and Spotify formed the Coalition for Application Fairness, which calls, among other things, for the establishment of new rules that would eliminate the 30% commission.

In 2018, Netflix (NFLX) removed the possibility for users to subscribe to its service via the App Store to make sure Apple doesn’t get a reduction in sales. And last year, Spotify, which took the same approach as Netflix, filed an antitrust complaint against Apple with the European Commission, the European Union’s competition watchdog.

SYDNEY, AUSTRALIA - SEPTEMBER 18: Customers line up to shop at the George Street Apple Store on September 18, 2020 in Sydney, Australia. Customers of Apple stores in Australia are among the first in the world to see the latest Apple products. The new Apple Watch Series 6 has a blood oxygen sensor and an app, while a new iPad (8th generation) has also been released. (Photo by James D. Morgan / Getty Images) — Epic is one of many app developers and publishers who have challenged Apple’s 30% commission on the App Store. (Photo by James D. Morgan / Getty Images)

More recently, Microsoft (MSFT) and Facebook (FB) criticized Apple for the way it regulates the game services offered through the App Store. Apple subsequently changed its App Store policies, but Microsoft says the company hasn’t gone far enough.

And then there are the ongoing investigations into Apple’s App Store policies, which include the Department of Justice and state attorneys general.

The House Judiciary Committee’s subcommittee on antitrust, commercial and administrative law is also looking at big tech companies, including Apple, and interviewed CEO Tim Cook, as well as executives at Google’s parent company, Alphabet, Amazon (AMZN) and Facebook, on their business practices.

The Supreme Court even struck a blow against Apple last year when it ruled that iPhone owners can sue the company for its 30% App Store fee, opening the company to possible class action lawsuits.

This means that unless Apple itself makes system changes to its App Store policies, Apple will not escape the specter of an antitrust crackdown in the near future.

Through Daniel howley, technical editor. Follow him on @DanielHowley