1. What’s the case about?
In August, Epic’s billionaire founder, Tim Sweeney, announced that he would no longer abide by Apple’s rule that all purchases of apps and items within apps designed for its iOS-based devices go through Apple’s payment system. After he activated Epic’s own payment system, Apple kicked Fortnite out of its app store. It also threatened to make it hard for developers using Epic’s tools to build games. In response, Epic sued in federal court in the Northern District of California; it also sued Google over the same issue. Apple soon counter-sued.
2. What was Epic unhappy about?
That Apple and Google, the part of Alphabet Inc. that makes the Android mobile-phone operating system, charge fees of up to 30% to developers using their app stores. Consumers spent $50 billion worldwide on the App Store and Google Play in the first half of 2020, according to Sensor Tower estimates. That generated billions of dollars in highly profitable revenue for the companies. Some developers have derided this as an unfair and unwarranted tax, especially since it applies not just to the purchase of an app, but to anything bought within one -- like the pickaxes or other digital weapons, costumes or other accoutrements popular in Fortnite.
3. Why does Apple do that?
Apple says that the App Store’s success is directly related to its iron-clad rules because it spends significant resources to police apps and maintain high quality standards. Its payment system ensures that consumers using the store have a seamless and easy experience and are protected from fraud. But a growing number of developers say Apple is simply finding excuses to maximize its profits.
4. What are app makers doing?
Spotify Technology SA, the music-streaming company, and Match Group Inc., which runs dating services including Tinder, joined Epic and 10 other organizations to launch the Coalition for App Fairness to push Apple and Google, to change their app-store rules. The group launched a website outlining 10 “App Store Principles,” including one asserting that developers should not be required to exclusively use a particular app store or payment system. The group also criticized Apple’s 30% cut for most paid apps and subscriptions.
5. How is Apple addressing these concerns?
Apple in November said it will lower from 30% to 15% the cut it takes from developers that made less than $1 million in revenue in the previous calendar year. That, however, wouldn’t apply to Epic Games, as its revenues are far higher and the company is currently not allowing users to facilitate payments through the App Store. In September, Apple had said it would allow some games that stream from the cloud and will stop forcing some services, like free email apps, to offer a way to sign-up for a paid version of their service via the App Store, handing Apple a 30% cut. Spotify called the fee reduction “window dressing” that should be ignored by antitrust regulators.
6. What’s at stake for consumers?
It’s not clear consumers will benefit if Apple’s iron rule over its app store is diminished. There’s a possibility that the prices consumers pay for mobile apps and in-app items will decline if developers don’t have to pay Apple as much; Sweeney has said that Epic’s online store will charge developers lower fees and operate at a lower profit margin than Apple’s. But developers may also simply pocket the extra money.
7. How about for the tech companies?
The court’s decisions could have far-reaching consequences especially as authorities across the globe examine whether tech giants including Apple and Google have broken antitrust rules. The phone makers also run the risk of losing user goodwill if their charges are seen as unfair. Already some analysts say that Epic is seen as the good guy in this fight by gamers and developers alike.
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