Apple has taken another aggressive move against Epic Games, the maker of the popular video game Fortnite, by blocking its attempt to launch its own app store on iOS devices in Europe. This is the latest escalation in a long-running legal feud between the two tech giants over Apple’s control of the app ecosystem and its commissions on in-app purchases.
What is the dispute about?
The dispute between Apple and Epic Games started in 2020, when Epic Games introduced a direct payment option in its Fortnite app, bypassing Apple’s 30% cut on in-app transactions. Apple responded by removing Fortnite from its App Store, accusing Epic Games of violating its terms of service. Epic Games then sued Apple in the U.S., alleging that Apple’s practices were anti-competitive and monopolistic.
The lawsuit is still ongoing, and both sides have presented their arguments and evidence in a trial that ended in May 2021. The judge has not yet issued a verdict, but the outcome could have significant implications for the future of the app economy and the power of Apple and other platforms.
How does the EU law affect the situation?
In the meantime, the European Union (EU) has enacted a new regulation called the Digital Markets Act (DMA), which aims to curb the dominance of large online platforms and foster fair competition and innovation. The DMA, which took effect this week, requires platforms like Apple to allow third-party app stores and payment systems on their devices, and to refrain from imposing unfair conditions on developers and users.
Epic Games saw this as an opportunity to bring back Fortnite and its own app store, the Epic Games Store, to iOS users in Europe. The company had created a new developer account in Sweden and was preparing to launch its app store on Apple’s devices, taking advantage of the DMA.
How did Apple react?
However, Apple was quick to block Epic Games’ plans, citing its past breaches of contract and its ongoing litigation in the U.S. Apple terminated the new developer account that Epic Games had created in Sweden, effectively preventing the company from distributing any apps on iOS devices. Apple also argued that the DMA did not apply to its dispute with Epic Games, and that it would continue to enforce its own rules and policies.
Apple’s move has sparked criticism from Epic Games and some EU lawmakers, who accused Apple of defying the EU law and undermining the competition and choice of consumers and developers. Epic Games said that Apple was taking out one of its largest potential competitors and showing other developers what happens when they try to challenge Apple’s dominance. The company also said that it would explore other ways to bring Fortnite and its app store to iOS users in Europe, possibly through other third-party app stores.
What are the implications of the feud?
The feud between Apple and Epic Games is not only a legal battle, but also a clash of visions and values. Apple claims that it provides a secure, reliable, and high-quality app ecosystem for its users and developers, and that its commissions are justified by the value and services it offers. Epic Games argues that Apple is abusing its power and stifling innovation and creativity, and that its commissions are excessive and unfair.
The feud also reflects the broader tensions and challenges in the app economy, where platforms, developers, and users have different interests and expectations. The app economy is a huge and growing market, with global revenues reaching $218 billion in 2020, according to Statista. However, it is also a highly concentrated and unequal market, with a few platforms dominating the distribution and monetization of apps, and a large number of developers struggling to survive and succeed.
The outcome of the feud could have far-reaching consequences for the app economy and the tech industry. Depending on the verdict of the U.S. judge and the enforcement of the EU law, Apple could be forced to change its policies and practices, or face fines and sanctions. Epic Games could regain access to iOS users, or lose a significant portion of its revenue and user base. Other developers and platforms could also be affected by the precedent and the regulation, and may have to adapt to a new competitive landscape.
