Epic Battle

Epic Games is taking on Apple in a courtroom challenge that could change the global app economy forever. This is the latest event in a larger antitrust push against Apple (and other major tech giants) that has seen US lawmakers, EU regulators and global companies file similar complaints against the tech giant.

For more than a decade, Apple has dictated questionable rules that iOS developers are forced to abide by, effectively creating a monopoly by putting potential competitors at a serious disadvantage. In addition to charging astronomical fees, Apple controls access to buyers’ and subscribers’ personal data, and prevents developers from promoting alternative payment methods to users.

In August 2020, Epic Games announced a permanent discount of up to 20% on all in-app purchases for players of its blockbuster game, Fortnite. The mega-drop in prices was at the expense of the App Store, providing users with a direct payment option to avoid the 30% fee applied by Apple to in-app purchases.

The loophole violated Apple guidelines, and Fortnite was immediately dropped from the platform. Epic responded by slapping Apple with an antitrust lawsuit that’s garnering huge media attention, and will see both Apple and Epic’s CEOs testify in court.

Epic’s case is clear cut: it’s been boxed out of Apple’s iPhone and iPad user-base of billions. The company will argue, however, that app developers large and small are being squeezed out by Apple’s exorbitant fee structure. The company’s legal team will have to prove, in line with US antitrust law, that consumers have been damaged by Apple’s moves to reduce competition.

Apple is likely to counter that Epic is threatening to destroy what consumers like about the App Store: it’s a vertical integrated system that offers protection from malware, a safe payment system and access to a seamless ecosystem of approved apps.

Epic’s ambitions are far greater than simply having Fortnite re-instated on the App Store. The aim of the trial is to force Apple to relax its grip on the App Store, creating a more level playing field for developers, and passing on the savings to consumers. There is some recognition from Apple that adjustments need to be made. After making a record $64 billion from the App Store in 2020, Apple announced a cut in commission from 30% to 15% for developers making less than $1 million per year.

This isn’t the first time the App Store’s business model has been called into question. The European Union hit the tech giant with an antitrust complaint last week. With a focus on music streaming apps, the statement echoed the exact same issues playing out in the trial with Epic: that the App Store rules include mandatory use of Apple’s in-app purchase mechanism, and distorts competition by raising developers’ costs with sky-high fees.

The next three weeks promise to be interesting. Regardless of the outcome (it’s likely the verdict will go to an appeal) we can be certain this won’t be the last we hear of Apple and antitrust complaints. Even if Epic’s case fails, it will provide a platform for US lawmakers to argue that antitrust law itself has been compromised.

Across the oceans, the United Kingdom and Australia have begun voicing similar concerns. As momentum grows, we may be looking at a seismic shift not only for Apple and iOS developers, but for the brand’s billions of end-users.

Epic Games is taking on Apple in a courtroom challenge that could change the global app economy forever. This is the latest event in a larger antitrust push against Apple (and other major tech giants) that has seen US lawmakers, EU regulators and global companies file similar complaints against the tech giant.

For more than a decade, Apple has dictated questionable rules that iOS developers are forced to abide by, effectively creating a monopoly by putting potential competitors at a serious disadvantage. In addition to charging astronomical fees, Apple controls access to buyers’ and subscribers’ personal data, and prevents developers from promoting alternative payment methods to users.

In August 2020, Epic Games announced a permanent discount of up to 20% on all in-app purchases for players of its blockbuster game, Fortnite. The mega-drop in prices was at the expense of the App Store, providing users with a direct payment option to avoid the 30% fee applied by Apple to in-app purchases.

The loophole violated Apple guidelines, and Fortnite was immediately dropped from the platform. Epic responded by slapping Apple with an antitrust lawsuit that’s garnering huge media attention, and will see both Apple and Epic’s CEOs testify in court.

Epic’s case is clear cut: it’s been boxed out of Apple’s iPhone and iPad user-base of billions. The company will argue, however, that app developers large and small are being squeezed out by Apple’s exorbitant fee structure. The company’s legal team will have to prove, in line with US antitrust law, that consumers have been damaged by Apple’s moves to reduce competition.

Apple is likely to counter that Epic is threatening to destroy what consumers like about the App Store: it’s a vertical integrated system that offers protection from malware, a safe payment system and access to a seamless ecosystem of approved apps.

Epic’s ambitions are far greater than simply having Fortnite re-instated on the App Store. The aim of the trial is to force Apple to relax its grip on the App Store, creating a more level playing field for developers, and passing on the savings to consumers. There is some recognition from Apple that adjustments need to be made. After making a record $64 billion from the App Store in 2020, Apple announced a cut in commission from 30% to 15% for developers making less than $1 million per year.

This isn’t the first time the App Store’s business model has been called into question. The European Union hit the tech giant with an antitrust complaint last week. With a focus on music streaming apps, the statement echoed the exact same issues playing out in the trial with Epic: that the App Store rules include mandatory use of Apple’s in-app purchase mechanism, and distorts competition by raising developers’ costs with sky-high fees.

The next three weeks promise to be interesting. Regardless of the outcome (it’s likely the verdict will go to an appeal) we can be certain this won’t be the last we hear of Apple and antitrust complaints. Even if Epic’s case fails, it will provide a platform for US lawmakers to argue that antitrust law itself has been compromised.

Across the oceans, the United Kingdom and Australia have begun voicing similar concerns. As momentum grows, we may be looking at a seismic shift not only for Apple and iOS developers, but for the brand’s billions of end-users.