I really thought the news that Apple was preparing to launch a bundle of its subscription services, known as Apple One, would be the biggest story I’d write about the company this week. I was wrong. There’s more, including a game update, a ban, a parody ad, and a lawsuit–and that was just Thursday.
If you missed it, yesterday Epic Games, the creator of Fortnite, added an in-game payment system that violates the App Store’s terms and conditions. That payment system bypasses Apple, which means the company doesn’t get to take its cut. In addition, the popular game made the price of its V-Bucks virtual currency 20 percent cheaper if players buy them through the new system in an effort to highlight the fact that Apple takes a cut of all in-game purchases. We’ll get back to that in a moment because that’s obviously the entire point.
As a result–and, as you might expect–Apple banned Fortnite from its App Store. In a statement, Apple said:
Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines. We will make every effort to work with Epic to resolve these violations so they can return Fortnite to the App Store.
Not long after, Google did the same (for the same reason). Clearly, that was the response Epic expected because it promptly filed separate lawsuits against both companies, claiming that they are monopolies and exert unfair control over their respective App Stores.
The game maker had an entire PR campaign ready to roll out as soon as the ban came, even running a parody of Apple’s infamous 1984 ad, this time pointing out that Apple has become the machine (a point I’ve actually made a few times).
There’s no other way to say it: Epic Games clearly baited both tech giants into banning Fortnite for the purpose of generating customer outrage and to then file lawsuits. I think it’s fair to say that both companies got played. But there’s actually a bigger point here.
I don’t think there’s any chance Epic Games will win here. At least, not in court. That doesn’t mean that the company doesn’t have a point, but it’s clearly choosing an aggressive tactic to try and force Apple and Google into giving it what it wants. This doesn’t seem like the way to do that.
Besides, it’s hard to make the claim that Apple and Google have monopoly power over Epic when Fortnite is still available on Windows, macOS, Xbox, PlayStation, and Nintendo Switch. For that matter, you can still load apps on to Android devices through what is known as sideloading. In fact, for almost two years, that was the only way to get Fortnite on Android after Epic pulled it from the Google Play store in 2018.
That said, this is really about Apple. iOS devices (iPhones and iPads) are clearly an important platform for Fortnite, which, according to Sensor Tower, has been downloaded 133 million times on those devices. It also estimates that it has generated $1.2 billion in those in-game purchases for Epic. You can see why it might give it the motivation to cut out Apple, which it clearly sees as a middleman.
And Apple has come under scrutiny in the last few months as developers (some of them in very public ways) push back against the level of control the company exerts over the App Store. Apple has argued that control is how it ensures that apps are safe and protect user privacy. Developers argue it’s all about making sure Apple gets paid. In the case of Fortnite, it’s getting paid a lot. Thirty percent of $1.2 billion is real money.
At the same time, that real money is the only thing you need to know about why Epic isn’t going to win this battle. Litigation like this could take years. Epic made $4.2 billion in revenue last year. Is the company really willing to pass up a major chunk of that going forward while it litigates the issue?
That means all of this is a PR stunt. Yes, Apple and Google fell for it, but neither really had a choice: Epic clearly violated the terms of their App Stores. If you’re going to build your business on someone else’s platform, you have to play by their rules. And that platform happens to be extremely profitable for Apple, meaning it’s not likely to back down.
You might not like those rules–and I’ve argued several times that Apple’s rules put them on the wrong side of innovation–but let’s be honest, Fortnite needs Apple more than Apple needs Fortnite. In the long run, that’s all that matters. Fortnite might have come to play, but it’s not clear to me this is a game it can win.