On October 7th, in the United States District Court for the Northern District of California, Judge Yvonne Gonzalez Rogers ruled that Apple may continue its ban on the popular battle royale game, Fortnite, from the App Store. Judge Rogers claimed that the tech giant was well within its rights to do so after the gaming company violated their contract agreement. The jury trial between Epic Games, the developer of Fortnite, and Apple is slated for May 2021. In order to win the antitrust suit, the gaming developer must “prove [that] Apple has monopoly power in the relevant market and that it willfully acquire[d] or maintain[ed] that power.” Fortnite has reportedly brought over 133 million downloads on Apple products and generated $1.2 billion in revenue, with $360 million of that going to Apple. Meanwhile, the Apple App Store brings in about $15 billion in revenue from its $50 billion in annual sales, which would place the App Store at 64th on the Fortune 500 list if it were an independent company.
The lawsuit began when tech giants Apple and Google removed Fortnite from their app stores back in August of 2020. Both Apple and Google take a 30% commission on all digital app purchases. This includes all purchases of Fortnite’s in-game currency, “V-bucks.” Fortnite is a free-to-play game, meaning that it makes nearly all of its revenue from players purchasing “V-bucks” in order to access certain in-game content. To avoid paying the 30% commission, Epic Games enabled an unapproved feature that encouraged mobile players to make payments directly to the Epic Games Store, which offered a 20% discount. In response, both Apple and Google banned Fortnite from their app stores for intentionally violating their policies. Almost immediately after the ban, Fortnite filed antitrust lawsuits against the two tech giants in federal court.
But Epic isn’t the first developer to challenge Apple’s App Store policies. Just last year, Spotify, the largest music streaming service in the U.S., filed an antitrust complaint with European Union regulators against Apple. Spotify has to pay Apple 30% of all in-app purchases while also competing against Apple Music, its number one music streaming rival. The CLO of Spotify contends that Apple acts as a gatekeeper to companies seeking to reach consumers and violates competition laws because it “tilts the playing field in favor of its own services.” Spotify’s complaint resulted in an official antitrust investigation by the European Commission that is currently ongoing.
Apple defends its policies stating that the App Store’s commission is similar to other marketplaces. Apple also claims that the commission is necessary to maintain its security and safeguard user privacy, an argument that Google, who has dealt with its own antitrust scrutiny, makes as well.
Google, however, has requested not to be included in the same lawsuit as Apple. Google’s Android phones allow users to download apps from other sources, whereas Apple users must use Apple’s App Store to download any apps, making Epic’s antitrust claim against Apple slightly different. In the 30 days leading up to the lawsuit filings, Fortnite players using Apple devices spent $43.4 million while Google Play only saw $3.3 million spent on the same game.
Fortnite has made it clear that things are much more personal with Apple and that the courtroom is only half the battle. On the same day Fortnite was banned from the mobile marketplaces, the game’s Twitter account tweeted a video parodying Apple’s famous “1984” ad. But this time, Apple was playing the role of “Big Brother.” The account also promoted the hashtag #FreeFortnite which topped the trending charts just hours after it was posted. Epic even drew attention from other tech behemoths who were quick to jump on the bandwagon of criticizing Apple’s App Store policies. Only a day after the Fortnite ban and subsequent lawsuit filings, Facebook announced that it had asked Apple to lower its commission fees, citing that its policies were hurting struggling businesses in the wake of Covid-19. Then, later that month, Microsoft filed a declaration in support of Epic Games requesting that Apple allow Epic to keep its Unreal Engine on the App Store. The engine is “a widely used set of technologies that provides a framework for the creation of three dimensional graphics” for third party game developers, including Microsoft. Judge Rogers eventually ruled in favor of keeping Unreal Engine in the App Store, due to the reliance on the software by gaming developers. Proving in federal court that Apple is a monopolist may be an uphill battle for the creator of Fortnite, but with momentum and PR on its side, Epic has shown that it may have just what it takes to force Apple to change its policies.