Would you rather fight 99 small opponents or two really, really big ones? On Thursday, Fortnite publisher Epic Games became embroiled in a spat with both Apple and Google over fees the tech behemoths charge developers in their respective app stores.
Long story short: Fortnite has been kicked off both the App Store and the Google Play Store after attempting to bypass the 30% fee Apple and Google charge developers. That's huge news, since the game has been downloaded over 250 million times on iOS alone.
Epic countered by filing lawsuits against both companies. It's not seeking money from either company, just that they repeal what Epic considers the companies' monopolistic practices. And it comes at a time when both Europe and the US are scrutinizing the power of Apple, Google and other tech giants.
Why did this happen?
Fortnite is a free-to-play game, meaning it's free to download and Epic makes money from in-game purchases. Players can buy V-Bucks, in-game currency, which are used to buy new outfits, weapons and skins. It's a hugely profitable business model. Fortnite generated $4.2 billion over 2018 and 2019.
But Epic has never approved of the 30% cut taken by Apple and Google on their respective app stories, so it set up a direct payment system allowing players to buy V-Bucks for cheaper through Epic, circumventing Apple and Google. When buying 1,000 V-Bucks, players were given a choice over paying $9.99 via the App Store or $7.99 through Epic.
Apple wasn't having that, so it pulled Fortnite from the App Store. Google followed hours later, although Android gamers can still download the game directly through Epic -- and if you previously downloaded it on iOS, you can still re-download it (you just won't be able to update it or play new seasons).
And now Epic is suing Apple?
It sure is.
Epic on Thursday filed a lawsuit against Apple in the North District of California court accusing Apple of anti-competitive practices for app distribution and app-related payments. It stresses it's not looking for compensation or special treatment from Apple, but for Apple to roll-back its anti-competitive practices and allow for "fair competition."
"To reach iOS users," reads Epic's filing, "Apple forces developers to agree to Apple's unlawful terms contained in its Developer Agreement and to comply with Apple's App Store Review Guidelines, including the requirement iOS developers distribute their apps through the App Store. These contractual provision unlawfully foreclose the iOS App Distribution Market to competitors and maintain Apple's monopoly."
The filing argues that Apple, in charging a 30% fee to publishers, take 10x more than companies like "PayPal, Stripe, Square or Braintree, which typically charge payment processing rates of around 3%."
Apple's full reply, in which they said the App Store is an ecosystem that benefits developers and creates a level playing field, is below.
"Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users. As a result their Fortnite app has been removed from the store. Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.
Epic has had apps on the App Store for a decade, and has benefited from the App Store ecosystem - including the tools, testing, and distribution Apple provides to all developers. Epic agreed to the App Store terms and guidelines freely and we're glad they've built such a successful business on the App Store. 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. We will make every effort to work with Epic to resolve these violations so they can return Fortnite to the App Store."
Wait, what does this have to do with George Orwell?
Along with the lawsuit, Epic also released a video parodying Apple's famous 1984 ad. Apple's ad, released back in late 1983, promoted the upcoming launch of the Macintosh, railing against then-entrenched brand IBM. Epic's video says Apple has become the new Big Brother of industry -- a hugely powerful and overbearing entity.
This is something that Epic expounds more aggressively in its suit. "Apple has become what it once railed against: The behemoth seeking to control markets, block competition, and stifle innovation. Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear. At a market cap of nearly $2 trillion, Apple's size and reach far exceeds that of any technology monopolist in history."
What about Google?
Epic is suing Google, too. Epic followed its lawsuit against Apple hours later with a similar one against Google. Its basis is the same as Apple's: unlawfully anti-competitive practices related to app distribution, and app-related payments.
"Google acquired the Android mobile operating system more than a decade ago, promising repeatedly over time that Android would be the basis for an "open" ecosystem in which industry participants could freely innovate and compete without unnecessary restrictions," the filing reads. "Since then, Google has deliberately and systematically closed the Android ecosystem to competition, breaking the promises it made. Google's anti-competitive conduct has now been condemned by regulators the world over."
The suit argues that Android forms an effective monopoly for phone makers, like Samsung, LG and Sony, who have no real alternative to Android for their devices. Having achieved this monopoly, Epic says, Google then restricts the ability of companies to distribute apps in a way that competes with the Play Store.
"Epic's experience with one [phone maker], OnePlus, is illustrative," the suit reads. "Epic struck a deal with OnePlus to make Epic games available on its phones through an Epic Games app. The Epic Games app would have allowed users to seamlessly install and update Epic games, including Fortnite, without obstacles imposed by Google's Android OS. But Google forced OnePlus to renege on the deal, citing Google's "particular concern" about Epic having the ability to install and update mobile games while "bypassing the Google Play Store."
Like the Apple suit, Epic says it doesn't want payment from Google. "Instead, Epic seeks injunctive relief that would deliver Google's broken promise: an open, competitive Android ecosystem for all users and industry participants. Such injunctive relief is sorely needed."
Prior to Epic filing suit against Google, Google released the following statement on its decision to pull Fortnite from the Play Store,
"The open Android ecosystem lets developers distribute apps through multiple app stores. 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 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."
What do other companies think?
Epic is far from the first to complain about anti-competitive practices from Google and Apple.
In 2018, the European Union fined Google $5 billion for monopolistic behavior, which included Google's suite of apps, like Chrome and Gmail, coming preinstalled on all Android devices. Spotify last year claimed that Apple's charging 30% for in-app purchases, such as subscriptions to Spotify Premium, stifle competition with Apple's own apps, in this case Apple Music. In June, the EU launched a probe into Apple's App Store practices.
While the European Union has been more energetic about regulating tech titans over the past decade, the US is beginning to scrutinize these giant companies in the same way. In late July, Apple CEO Tim Cook sat in a Congressional hearing alongside Jeff Bezos, Sundar Pichai and Mark Zuckerberg, CEOs of Amazon, Google-owner Alphabet and Facebook respectively, in a historic antitrust hearing.
Speaking to Congress, Cook rejected the idea that the App Store tilts favor in the way of Apple's own apps.
"After beginning with 500 apps, today the App Store hosts more than 1.7 million -- only 60 of which are Apple software," Cook said. "Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the store, not keep them off."
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