This past week, technology giant Apple has been muddled in a major lawsuit with Fortnite developer Epic Games in what is panning out to be a high stakes conclusion after almost a year of back and forth public blows. But what is this case all about? More importantly, what might it mean for us? Today we break down the entirety of the Epic Games V Apple suit and discuss the future of mobile marketplaces.
Background
The issue in question stems from Apple’s control over their App Store marketplace, which is the only (legitimate) way to download software on iOS devices such as iPhones and iPads.
Apple’s tight-knit control over their distribution platform essentially creates a monopoly where they approve and reject what is allowed on the store but also, quite importantly in this case, take a 30% cut on all App Store payments, including sales and in-App purchases.
Fortnite Conundrum
Since May 2018, Epic Games have distributed their hugely popular game Fortnite on iOS devices via the App Store.
Whilst free, Fortnite has proved to be hugely profitable by way of in-app purchases of digital items such as character costumes, axes, and dance moves, and they were said to have made $5.1 billion in revenue in 2020 alone.
As a cross-platform title, Fortnite users are able to save their progress and purchase items across a huge number of consoles including PC, Xbox, Android, and Playstation.
Whilst Fortnite did offer this same ability on iOS devices, due to Apple’s 30% cut, price increases were passed on to the user to account for this.
In August 2020, Epic attempted to defy this supposed Apple stronghold by offering a discounted direct payment option on their mobile apps to those who chose to pay Epic directly rather than through Apple’s own payment.
A clear breach of the App Store’s terms and conditions surrounding payment exclusivity saw Apple remove Fortnite from their stores and prompted Google to do the same on their Android marketplace, Google Play.
In retaliation, Epic fought back by challenging both Apple and Google in hefty lawsuits and quite hilariously, launching a #FreeFortnite marketing campaign which featured in-game events, items, and a genius parody of Apple’s iconic 1984 Macintosh commercial
In response to the case, Apple themselves filed a counter-suit alleging that Epic had breached their contract with Apple.
For some time it looked as though Epic may pull out of the suit, with many market pundits alluding that it was merely a marketing stunt but by early 2021 it became apparent that they were in this till the end and were going to get their day in court.
The Case
The trial began on May 3rd and ran for a period of 3 weeks until May 24th and in its duration covered a huge amount of debate with a number of significant conclusions
The first argument brought to the fore was the definition of Fortnite itself and whether it and other games, in particular, Minecraft and Roblox were games or so-called “metaverses”. They both agreed that Minecraft itself was a game but the disagreement came surrounding Roblox, where Epic argued that it, like Fortnite, was indeed a metaverse comprising of thousands of different games. Apple’s argument was that Roblox was indeed a game and the games within it were mere “experiences”.
Secondly, Apple staunchly defended its stronghold on the App Store by means of content control as a means to protect consumers from accessing mature and adult content. They used a specific case in Epic Game’s marketplace to hone on this point and continued to stress the importance of their content moderation policies.
The main point of discussion was situated around Apple’s previously mentioned anti-steering policy which prevented developers from directing users to other payment fronts to purchase items.
Epic’s argument to this, in layman’s terms, was that this was an illegal monopoly whereas Apple argued it was fully compliant with anti-steering laws as there was no due effect to the two-sided marketplace.
The final days of the trial saw Apple CEO Tim Cook take to the stand where he was consistently grilled on this point.
Whilst the initial trial is now concluded, the outcome remains somewhat unclear and both sides now wait for a verdict, the implications of the case are already in view:
Apple reduced their development cut from 30% down to 15%
Microsoft implemented measures to promote fair development relationships in their own stores
Facebook, Spotify, and the Match group came to the defense of Epic and discussed difficulties they themselves have had in the past with Apple’s policies.
Whilst the overall outcome of this specific case remains unclear, what is clear to us is that Epic CEO Tim Sweeney really enjoys fried chicken
What’s your opinion of the case and who do you think is right? Let us know by joining the discussion on our social media pages.
