Would you rather fight 99 small or two really, really big opponents? Earlier this month Fourteen days Publisher Epic Games has been drawn into a dispute by both Apple and Google over the fees that the tech giants are charging developers in their respective app stores.
To make it short: Fortnite was launched on both the App Store and the Google Play Store after trying to bypass the 30% fee, Apple and Google charge developers. This is big news as the game has been downloaded over 250 million times on iOS alone.
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Epic countered by File a lawsuit against both companies. It's not about asking for money from both companies, just having them overturn what Epic sees as monopoly practices by the companies. The case against Google is not yet in full swing, but the case against Apple is already issued a temporary injunction against the iPhone maker.
And It comes at a time when both Europe and the US are Review of 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. 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.
Hours after Fortnite was booted off the App Store, Epic 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."
The suit escalated on Aug. 17, when Epic said in a court filing that Apple is threatening to ban the Unreal Engine code that Epic licenses to other game developers. This would affect dozens of apps, including Fortnite's competitor PlayerUnknown's Battlegrounds.
"Not content simply to remove Fortnite from the App Store, Apple is attacking Epic's entire business in unrelated areas," Epic said in its filing. "If the Unreal Engine can no longer support Apple platforms, the software developers that use it will be forced to use alternatives."
Apple fired back on Friday, Aug. 21, releasing a cache of emails between Epic CEO Tim Sweeney and Apple, showing that the Fortnite maker was seeking special treatment. Specifically, Epic wanted to run a competing app store and process payments itself rather than relying on Apple's App Store and its in-app purchase system that takes a commission of up to 30% on all sales made on an iOS app.
"Sweeney expressly acknowledged that his proposed changes would be in direct breach of multiple terms of the agreements between Epic and Apple. Mr. Sweeney acknowledged that Epic could not implement its proposal unless the agreements between Epic and Apple were modified," Phil Schiller, an Apple Fellow and former head of worldwide marketing, said in a statement filed with the court. "Apple has never allowed this," Apple said in its filing. "We strongly believe these rules are vital to the health of the Apple platform and carry enormous benefits for both consumers and developers."
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, "it says in the suit." Epic has signed a contract with OnePlus to make Epic games available on their phones through an Epic Games app. With the Epic Games app, users could have seamlessly installed and updated Epic games, including Fortnite, without being hampered by Google's Android operating system. However, Google forced OnePlus to cancel the deal, citing Google's "particular concern" about Epic being able to install and update mobile games while "bypassing the Google Play Store".
Like the Apple suit, Epic doesn't want payment from Google. "Instead, Epic is seeking an injunction that would fulfill Google's broken promise: an open, competitive Android ecosystem for all users and industry participants. Such an injunction is urgently needed."
Prior to Epic's lawsuit against Google, Google released the following statement regarding its decision to remove Fortnite from the Play Store:
"With the open Android ecosystem, developers can distribute apps across multiple app stores. Game developers who use the Play Store are subject to uniform guidelines that do justice to developers and keep the store safe for users. Fortnite remains available for Android cannot make more available on Play as it violates our guidelines. However, we appreciate the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play. "
How are the lawsuits going?
Although Epic's lawsuit is not yet known to Google, a hearing was held on Monday, August 24th, to decide on Epic's motion to reinstate Fortnite in Apple's App Store. The result was mixed for Epic. Judge Yvonne Gonzalez Rogers did not offer the company any relief over Apple's Fortnite. However, she did issue an injunction Limiting the tech giant to blocking developers who have used Epic's Unreal Engine developer tools as Epic claimed Apple could do the week before.
"The court finds that Epic Games has not yet proven any irreparable damage in relation to the application by Epic Games in relation to its games, including Fortnite," said Judge Rogers in her ruling on why she did not temporarily ask Apple to shut down the game return to the App Store. "The current situation seems to arise by itself."
Rogers spent much of the hearing to challenge the lawyers at Epic and Apple on the aspects of their respective arguments. When either company raised concerns about the financial success it could have either way as a result of their decision, Rogers scoffed.
"We're talking about a billion dollar company versus a trillion dollar company," she said.
The injunction remains "in force until the court issues an order to apply for an injunction". This means that an update should be made on September 28th when a hearing on the request for an injunction is scheduled.
Epic filed a brief (PDF) on that restraining order late Friday before Labor Day holiday weekend, further arguing that it wasn't just damaging Epic's reputation. "Daily active users on iOS have declined over 60% since Fortnite was removed from the App Store," Epic said in the letter, adding that 63 percent of Fortnite users on iOS only access Fortnite on iOS.
"Over 116 million registered users have accessed Fortnite on iOS - more than on any other platform," says the short version of Epic. "You've spent more than 2.86 billion hours in the app. By removing many of these players from Fortnite and blocking Fortnite's access to over a billion iOS users, Apple is irreparably damaging Epic's chances."
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 monopoly behavior that included Google's suite of apps like Chrome and Gmail that come pre-installed on all Android devices. Spotify said last year that Apple charges 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 has launched an investigation into Apple's App Store practices.
While the European Union has been more vigorous in regulating tech titans over the past decade, the US is beginning to question these giant corporations in the same way. In late July, Apple CEO Tim Cook attended a congressional hearing along with Jeff Bezos, Sundar Pichai and Mark Zuckerberg, CEOs of Amazon, Google owner Alphabet, and Facebook, in an historic antitrust hearing.
In an interview with the Congress, Cook rejected the idea that the App Store would give preference to Apple's own apps.
"Having started with 500 apps, the App Store is now hosting over 1.7 million - only 60 of them are Apple software," said Cook. "Of course, if Apple is a gatekeeper, we'll keep the gate open. We want to bring every app we can into the store, not keep them out."
CNET's Ian Sherr contributed to this report.
