Epic Games, the successful Fortnite’s developer, was expelled from the Apple App Store last year. After this, Epic Games filed a lawsuit against Apple. It all boils down to payments in the app – and the court’s decision could completely change Apple’s business model.
Today, a unique lawsuit begins between developer Epic Games and tech giant Apple. We explain what it is all about and what the experience can lead to.
What happened and why?
In August 2020, Apple will release Fortnite from the App Store. The reason is that developer Epic Games violated Apple’s rules regarding in-app payments.
According to Apple’s rules, all payments must be made via it, and not via the app’s payment system. This means that anyone who buys something through an app (for example, optional items or features in Fortnite) does so with their Apple account.
Apple charges all in-app purchases that are 30 percent of the cost. As a result, Epic Games lost hundreds of millions of dollars in revenue.
Epic Games has opposed these rules and introduced their own payment tool in the Fortnite app. Epic Games has given users the ability to choose to pay for their purchase through Apple or through this payment tool.
The price of the products was cheaper in the special payment instrument. So more and more people are starting to buy things and functions in the game via Epic Games. This contributed to lower Apple’s revenue.
what is happening now?
Epic Games Developers has filed a 65-page lawsuit against Apple and the trial will take place in the coming weeks – starting Monday.
Thus, the court will investigate whether Apple has the right to disqualify Epic Games, and also on the agenda is the amount Apple requires from app developers regarding in-app purchases.
Epic Games described Apple as “blackmail.” According to the company, Apple’s control of the App Store is restricted to competition. Epic Games aren’t the only ones criticizing Apple. Big companies like Spotify, Match Group (which owns Tinder), and Tile have also criticized the tech giant.
Apple’s grip on the App Store has been a hot topic of debate in the US Senate, with many politicians describing the app store as a monopoly. The European Union also criticized Apple for violating European Union competition rules. The European Commission said last week that Apple is misusing its market position when it comes to streaming music.
Parties from various sides will be heard in the trial. Among other things, Apple CEO Tim Cook will testify, as will Epic Games CEO Tim Sweeney.
Witnesses from Facebook and Microsoft will also be heard.
Who has a better chance of winning?
Apple is a much larger company than Epic Games and thus has more money to file the lawsuit. Apple is known for having seasoned attorneys who win most fights.
Apple is trying to win the lawsuit by saying it’s a private company that invented the App Store – and so can claim the amount it wants from those who want to join the App Store. According to Apple, its 30 percent rules on the panel follow industry standards (such as Google Play, Microsoft, Nintendo, and PlayStation).
Experts have described Epic Games’ lawsuit against Apple as a “PR argument,” saying there are no legal grounds for the lawsuit. The mood remains favorable because Apple’s monopoly on the app store has been hotly debated among politicians, which could have had a huge impact at the trial.
According to experts, Apple is the most likely winner in the lawsuit, but how will it be clear at the end of May. The trial is expected to take several weeks.
What does the trial mean for the future?
If Apple wins, this means that the company may continue to demand commissions from companies that sell products and services through their apps. A win doesn’t mean that the discussion about the App Store will be over – on the contrary, the debate is expected to gain more momentum if Apple wins.
Epic Games’ move against Apple has actually led to a heated debate about whether the big tech companies can be regulated – and in what way in such cases.
If Apple wins, it will be difficult for US policymakers to pursue similar cases against the tech giant in the future.
However, if Apple loses, it will completely change the company’s business model. According to estimates, Apple is generating between $ 15 billion and $ 18 billion in revenue from the App Store. Apple said the amount is not correct, but it does not want to determine the amount itself. Instead, the company indicated that it does not require any costs for 85 percent of apps on the App Store.
What is still evident is that Apple would lose significant sums of money if Epic Games wins the lawsuit. And if Apple loses, it opens more lawsuits against the tech giant.
Sources: Reuters, Agence France-Presse, Associated Press, BBC