Friday, August 14, 2020

The battle is joined: Fortnite vs. Apple and Google

Jack Nicas, Kellen Browning and Erin Griffith, Fortnite Creator Sues Apple and Google After Ban From App Stores, NYTimes, Aug. 13, 2020:
Apple’s and Google’s spats with app developers over their cut of revenues exploded into a high-stakes clash on Thursday when the tech giants kicked the wildly popular game Fortnite out of their app stores and the game’s maker hit back with lawsuits.

The fight began on Thursday morning with a clear provocation. Epic Games, the maker of Fortnite, started encouraging Fortnite’s mobile-app users to pay it directly, rather than through Apple or Google. The companies require that they handle all such app payments, so they can collect a 30 percent commission, a policy that has been at the center of antitrust complaints against the companies.

Hours later, Apple responded, removing the Fortnite app from its App Store. ...

Within an hour, Epic opened a multifront war against Apple that appeared months in the making.

First, it sued Apple in federal court, accusing the company of violating antitrust laws by forcing developers to use its payment systems.

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the” market for in-app payments on iPhones, Epic said in its 62-page lawsuit.

Then Epic rolled out a sophisticated public-relations campaign that depicted Apple, one of the industry’s most image-conscious companies, as the stodgy old guard trying to stifle the upstart. To do so, it used Apple’s own imagery against it, mimicking Apple’s iconic “1984” ad from its own fight against IBM 36 years ago. This time, Fortnite characters were defying Apple’s totalitarian regime. Within hours, #FreeFortnite was the top trend on Twitter.

Later on Thursday, Google also removed the Fortnite app from its official Android app store, the Google Play Store, saying the app violated Google’s policies. Epic replied with a similar lawsuit.

Apple’s confrontation with Epic has much higher stakes than Google’s because Fortnite remains available for Android devices. Google’s Android software allows people to download apps outside Google’s app store, unlike Apple’s approach with iPhones, and Epic had added Fortnite to the Play store only in April....

Epic, a North Carolina company that is valued at roughly $17 billion and is partly owned by the Chinese internet giant Tencent, now appears poised to sacrifice millions of dollars in revenue in a fight that will keep Fortnite off iPhones. That immediately makes Apple’s flagship devices far less attractive to millions of people across the world — just ahead of Apple’s most prominent iPhone introduction in years....

For Apple, the world’s most valuable company, there are few easy options. Apple has largely staked its future on its services business, which has become its second-largest source of revenue after sales of the iPhone, at $51.7 billion over the past year. But that business is mostly built on its cut of other apps’ sales, so enforcing its 30 percent commission is crucial to keeping its business growing.
Others have complained about Apple's policies:
Apple has had a series of recent spats with app makers. The music service Spotify has complained to regulators in Europe and the United States. Blix, which makes an email app that competes with Apple's service, also sued Apple on antitrust grounds last year. And last week, Microsoft ended a pilot of its mobile gaming app and Facebook watered down its gaming app on iPhones because of Apple’s rules.

Apple has said that all app developers are subject to the same rules, and that its commission is fair. Apple has argued that it spends billions of dollars on the App Store and iPhone technology, creating business opportunities for companies like Epic.

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