On August 13th, two of the world’s leaders in tech began a legal battle that could very well change the landscape of the mobile-app industry. Epic Games filed a lawsuit against Apple in response to Apple removing their globally popular game, Fortnite, from the app store on their IOS devices.
For those who do not know, the Apple App Store, found on all 1.4b+ Apple devices, is the only way to download applications to an Apple device. Apple charges a 30 percent commission on all purchases in the App Store. This is found in their terms and conditions that all developers must agree to when hosting an app on the platform.
Fortnite is a free-to-play game that comes bundled along with micro-transactions that allow users to cosmetically upgrade their character, without giving them any in game advantages. The game is not “pay-to-win”, it is merely pay-to look like a banana.
These cosmetic upgrades cannot be purchased directly with money, but rather Fortnite’s virtual currency, V-bucks. V-bucks however, can and are directly purchased with real life money. Due to the fact that Epic Games was hosting their game on the App Store, every transaction that was being done for any amount of V-bucks, was being taxed this 30 percent commission. That is until last week.
On August 13th, Epic Games released an option within the game itself that allowed users to bypass buying V-bucks through the App Store and instead buy them directly from Epic Games. The users would receive the same amount of V-bucks as before, but the price was 30 percent less. As you can expect, Apple did not take too kindly to this. They immediately removed Fortnite off the app store, and as a result, off of billions (according to Epic games at least) Apple devices worldwide. Epic was ready for this and hit them with the aforementioned lawsuit almost immediately, as well as launching a strong marketing campaign themed off of old Apple ads. Oh and Google also removed Fortnite from the Google Play store in the same way Apple did the app store, for more or less the same reason.
So what exactly does all this mean and why should you care? Well I’m glad you asked! Epic Games is claiming that Apple should not be able to hold a monopoly on the hosting space for applications. They claim that it is an unfair business practice that hurts small developers trying to make meaningful applications on small budgets. A smaller developer might not have the deep pockets that a AAA studio might have. They might not be able to stay afloat because of the 30 percent cut Apple gets just by allowing a user to download the developers application on their phones. Epic claims that they are merely looking out for the little guys. This isn’t Epic’s first time doing something like this either.
For those not savvy with the PC gaming world there exists a little application known as Steam. Steam is a digital video game distribution service. Steam allows video game devs to host their games on their extremely user friendly and searchable platform and download games directly to their machines, bypassing having to buy a physical copy of the game itself. Valve, (Steam’s parent company) also receives a nice cut off the top for their hosting services. Funnily enough, it is also a 30 percent fee. Games get discovered and Valve makes money by basically just providing the search bar.
Steam existed as THE hub for video game distribution on the PC platform. On December 4th, 2018, Epic Games announced their own rival distribution service, The Epic Games Store, that would host the, at the time, hottest game in the world Fortnite. The Epic Games store also had some exclusives but they weren’t even in the same realm as Fortnite in terms of popularity. They also incentivized developers to make the switch to their platform by offering a 12 percent fee as opposed to Steam’s 30 percent fee. Epic once again is claiming to be looking out for the little guy.
I think it’s clear that given their track record, Epic seems to be once again planning to take on an industry titan in the distribution side of things. Their quick actions with both the marketing campaign and the lawsuit seem to indicate that they have their own app distribution platform in the works.
As of right now, only apps hosted on the app store can be downloaded onto Apple devices. Sure there are workarounds but installing the software needed to run apps not on the app store breaks the conditions of Apple’s warranty for their devices. If we know anything about Apple devices, it’s that they aren’t built to last. I had to use my own warranty three times within the first year of purchasing my last Apple phone due to a known defect with the model of phone I had. Oh yeah and there is also the multiple class action lawsuits Apple has had against them for planned obsoletion. Voiding your warranty on an $1,000 phone that has a glass chin is not exactly the smartest consumer decision.
Nor are these workarounds exactly the most accessible for a base user. Only more tech savvy consumers would be even able to get these workarounds up and running. An additional competitor to the app store would allow for smaller developers to host their applications that might not meet the standards of Apple’s App Store, while also (most likely, based off the Epic Games Store) losing less of their revenue to the transactional fees that the App Store has. Epic Games wants to incite some competition to both the App Store and the Google Play store and possibly grab some big name developers from both. Competition, especially for these tech industry giants, is always healthy and the chance to host apps and possibly make more money is extremely promising for small developers. I personally think Apple does have too much of a chokehold on what can or cannot be on their devices and I would welcome a second or third option on where I can get my apps from.
This next part is all opinion so you can ignore it if you want, it’s gonna be ranty. I don’t have a problem with what Epic is doing. I think fostering some competition for the big tech giants is not only the best thing we can be doing but the single best thing we as developers should be doing. Challenging these big companies allows growth for smaller businesses and as a new developer I welcome the fact that hey, Epic might pave the way for my application in the future. I just don’t think that Epic has the greatest chance of winning the lawsuit.
When Epic first announced the Epic Games Store, they also announced a bunch of exclusive titles that would only be found on their platform. This angered many consumers because it forced them into using a new, unfamiliar platform in order to get access to content. They offered signing bonuses to developers for these games, on top of the sales that the game would bring in.
For smaller devs, this is awesome! They get a little bit of guaranteed money that can be put into future projects or eat some of the losses if the game didn’t preform as well as anticipated. But as a consumer and especially as an avid video game fan, this kind of sucks. I do not want to have every developer who makes a game also releasing a new distribution service. I want all of my games compiled into one nice library that I can easily access. I want to be able to manage them, update them, delete them etc., all from one place. I don’t stan Valve either. This could be the Epic Games Store for all I care. I just want an application that can host everything in a one-stop-shop.
In this same vein of exclusivity, I believe that Apple does have the right to limit which distribution services are allowed to exist on their own products. If it was a third party phone and a third-party operating system that was using only the App Store as their hosting platform, I would 100 percent be onboard for this lawsuit. However, because Apple does create the operating system and the hardware, I find it extremely hard to argue that competition should HAVE to be allowed on their devices. If Epic is allowed to limit where their games are hosted and allowed to be purchased, should that freedom not be held in the reverse situation? Shouldn’t Apple be allowed to NOT show a particular game or application hosting service on their devices?
It seems to me this opinion is shared by other people as well. If we look at the stock prices for both Apple and Tencent (the publicly traded company that has a 40 percent stake in Epic Games) on the 13th, we can see no noticeable drop in Apple’s stock. However, Tencent’s takes a 4 percent dip in value for the day, and continued to drop over the weekend.
While Google does allow third-party app stores, Apple does not allow them at all. This is another reason that Epic is going harder at Apple than Google. Losing Fortnite on IOS devices could mean a ton of lost revenue for Apple, and a lot of consumers switching over to Android based phones because of the strict restrictions set in place by Apple. Epic is hoping that consumers will force Apple’s hand to either loosen restrictions on the App Store. Personally I think relying on consumers to make an informed purchase with their money is wishful thinking in today’s climate. I can admit that Fortnite does seem to have this overwhelming influence on younger children and teenagers, so maybe they will start asking mom and dad for an Android based tablet for the holidays instead of an iPad. Who really knows right?
The lawsuit also might not even make it to court as Apple and Google will probably both try to have the lawsuit dismissed, saying that there are no grounds for the suit because of the clear competition of their respective platforms. Epic is trying to argue that there is a “single-brand market.” Apple and Google both argue that neither of them are monopolies in the realm of application distribution, because they both compete against each other so there is no single company that has sole means of distribution.
Overall, I think that Epic, if they are able to make it passed these giant hurdles that they have set up for themselves, is on pace to make industry defining change within the mobile app development industry. Epic has the financial resources to battle against not one but two of the richest companies in the world. If they do come out the victors, I would be shocked, but the change that comes with it would, in my opinion, better the world of software development and make it easier for smaller developers to make a living.