This morning Epic Games pushed out an update to their popular battle royal game Fortnite on mobile devices that allowed players to use Epic’s payment system to buy in-game items and currency direct from Epic at a 20% discount. Epic promoted the update heavily on social media and their website, stating that Apple and Google collect a 30% “fee” from purchases. Epic makes it sound like Apple and Google set the price, which is a little dishonest, but they do collect 30% of the transaction from the developer. The developer can choose to eat that fee or pass it onto the user; Epic chooses to pass it onto the user.
Epic was able to push this update out via a server-side game patch, bypassing Apple and Google’s app update processes.
In 1984, the fledgling Apple computer company released the Macintosh—the first mass-market, consumer-friendly home computer. The product launch was announced with a breathtaking advertisement evoking George Orwell’s 1984 that cast Apple as a beneficial, revolutionary force breaking IBM’s monopoly over the computing technology market. Apple’s founder Steve Jobs introduced the first showing of the 1984 advertisement by explaining, “it appears IBM wants it all. Apple is perceived to be the only hope to offer IBM a run for its money . . . . Will Big Blue dominate the entire computer industry? The entire information age? Was George Orwell right about 1984?”
Fast forward to 2020, and 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.
Epic clearly states they are not after money, but instead:
Epic brings this suit to end Apple’s unfair and anti-competitive actions that Apple undertakes to unlawfully maintain its monopoly in two distinct, multibillion dollar markets: (i) the iOS App Distribution Market, and (ii) the iOS In-App Payment Processing Market (each as defined below). Epic is not seeking monetary compensation from this Court for the injuries it has suffered. Nor is Epic seeking favorable treatment for itself, a single company. Instead, Epic is seeking injunctive relief to allow fair competition in these two key markets that directly affect hundreds of millions of consumers and tens of thousands, if not more, of third-party app developers.
As Nilay Patel explained on Twitter:
To make this more plain-english, this lawsuit’s main claims are not about whether Epic agreed to the App Store terms; it’s that the terms themselves are illegally furthering a monopoly.
A few hours after Apple pulled Fortnite and Epic filed suit, Google pulled the game from the Play Store, and Epic sued Google. I think, with the second lawsuit, Epic made their intentions crystal clear: they’re here to dismantle the app store monopolies enjoyed by Apple and Google.
Based on the immediacy of Epic’s lawsuit, the company knew exactly how Apple would respond to their game update, and they were ready for it. (Apple, for it’s part, likely knew Epic would sue; both companies have very smart people working for them.) In addition to the lawsuit, they had a surprise for Apple fans: a parody of Apple’s original Macintosh commercial, 1984, and in a jab to Google, uploaded to Vimeo.
Epic is a monster in gaming (yet small compared to Apple), and they’re using their size to reach a massive number of iPhone and iPad users with the message “Apple isn’t playing fair.” They’ve released a brief FAQ on their #FreeFortnite website, taking aim at Apple for “blocking your ability to get the latest Fortnite updates!” (For those with an exclamation mark allergy, you’re better off avoiding the site.) Epic is a master of the Internet, and the damage to Apple’s reputation, if this lawsuit is allowed to run it’s course, will be far worse than any amount of money Apple might lose in In-App purchases.
But this lawsuit is also about control of Apple’s iPhones, marketplace, and relationship with users. Apple is, if nothing else, a control freak. They’re switching from Intel to their own Apple silicon for better control of their Mac hardware, and they bought Intel’s 5G modem business last year to control pricing and escape the heel of Qualcomm. Apple has a history of being in control, but they just might be losing control of the narrative against Epic.
Jason Snell at Six Colors knows the future:
My inclination is that Apple should compete on the merits of its features, rather than winning because it’s the only option. Apple’s in-app purchase system will be simpler, more convenient, and more familiar to most users of its platforms. Add in Sign In With Apple and Apple Pay and things could become even more frictionless. If Apple is afraid that video-game-streaming services threaten the future of games in the App Store, I can relate—but if that’s truly the future of gaming, Apple won’t prevent it from coming true by banning the future from its store. It’ll just end up being behind the times.
“Apple” and “gaming” are two words that have never quite fit together. But by banning some of the most popular games and cutting edge platforms from the App Store, Apple is on the wrong side of technology and history. Apple is a company that feels very protective of it’s iPhone and App Store, and I don’t think anything less than a legal order will change their policies.