Epic Games, the company that produces the hugely popular video game Fortnite, has sued Apple and Google for the percentage they collect on payments made through apps for iOS and Android devices. It is a legal battle that immediately attracted great attention, because it questions the business model underlying the two services with which apps are downloaded on Apple and Android devices – the App Store and the Play Store – and which for some time is heavily criticized by developers, who especially accuse Apple of withholding off-market percentages on payments within apps, exploiting a de facto monopoly position.
To download an application on iPhone or iPad, you must necessarily use the App Store, Apple's official service. Google instead exercises less stringent control over its software, and theoretically allows you to download applications from places other than the Play Store, even if it remains the service used by the vast majority of users. Until last April, Fortnite was not present on the official Google store, for example.
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Even if an application is free, it can request “in-app” purchases, ie made within the app, to work: both Apple and Google require these purchases to be made with their payment systems, and withhold percentages that they reach up to 30 percent. An extremely higher share than that held by other services, such as PayPal or Visa, below 5 percent. Moreover, this mechanism gives a great advantage to Apple's services, for example the Apple Music music streaming service, which enjoy a higher profit margin by not having to give a third of the revenues to another company.
In-app purchases are often the ones on which the business model of developers is based: this is the case of Fortnite, a shooter video game that has become the most popular in the world in a few years and has reached a turnover of 4.7 billions of dollars last year. You can play on consoles, on PCs or smartphones, and it's free: but inside you can buy many additional functions, which represent the income of Epic Games.
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On Thursday, Epic Games announced the introduction of its own in-app payments service, alternative to those of Apple and Google, which offered users significant savings because it did not include the previously withheld 30 percent percentage. In response, both Apple and Google banned Fortnite from their app stores, explaining that it had violated the terms set when it agreed to distribute the app through their services. It means that users can no longer download or update it, and therefore that if the situation is not resolved soon they will no longer be able to play it on iOS and Android devices. They will be able to continue to do so on PC and consoles, but it would still be a huge loss for Epic Games.
It's a big deal, because we are talking about a video game that is estimated to be played by 350 million people (it is very popular especially among teenagers), and that has such dimensions that it can afford to challenge two of the largest and richest companies in the world. Epic Games' decision was in fact to deliberately challenge what it considers a monopoly, especially in the case of Apple since in theory Android apps can also be downloaded outside the Play Store.
In a long statement, Epic Games explained in practice that it had decided to wage this legal battle to question a system that, it says, limits free competition between developers and damages users, who are forced to spend more. He also released a video that mentions a hugely popular Apple commercial that aired during the 1984 Super Bowl, which in turn was inspired by the famous George Orwell novel.
For its part, Apple says that Fortnite was aware of the functioning of in-app payments on iOS, and explained that those who accept the terms receive all the advantages that the developers who work on the App Store have, in terms of security, efficiency and support. As Epic Games explained, however, Apple actually makes exceptions, for example for the Amazon app, for which the 30 percent percentage on each purchase is not withheld. However, these are rare cases: Netflix and Spotify, for example, do not subscribe to the iOS and Android apps but redirect users to the site, to avoid giving 3 or 4 dollars a month (30 percent of the subscription) to Apple. For a video game like Fortnite, directing users out of the payment app would be impractical.
It's not a new story – developers have been complaining about this system for years, but Epic Games' legal battle is the first time it has been questioned so seriously. The lawsuits against Apple and Google have been filed in a California court, and it could take some time before they are resolved: in the meantime, Epic Games can no longer distribute updates for iOS – those for Android yes, even if it is more difficult without Play. Store – and therefore could run out of two big chunks of its user base.
Even for Apple, however, it is a big headache, since there could be users who will no longer buy iPhones, if it no longer supports Fortnite: but if it had allowed Epic Games to keep the alternative payment system, in a short time they would have it. certainly introduced many other developers.
