Epic Games sues Apple, Google after they pull 'Fortnite' from app stores

Brief:

Apple and Google removed the hit video game "Fortnite" from their app stores after the game's publisher, Epic Games, introduced a payment plan that was against their rules. Epic responded with lawsuits that accused Apple and Google of violating U.S. antitrust law and abusing their power over the distribution of apps, CNN reported.
Apple requires software developers to hand over 30% of the in-app payments they receive from people who use apps downloaded from the App Store, a fee that matches the Google Play store for Android devices. Epic began offering discounts of as much 20% to Apple and Android users who paid directly instead of through the app stores, according to Bloomberg.
As part of the dustup, Epic released a short film called "Nineteen Eighty-Fortnite" that mocks Apple's famous "1984" ad that preceded the introduction of the Macintosh computer. Epic's film emulates imagery from Apple's ad that originally pledged "1984 won't be like '1984,'" a reference to George Orwell's dystopian novel about the perils of totalitarianism, and shows a #FreeFortnite hashtag.

Insight:

For Apple and Google, Epic's moves may be worrisome amid multiple antitrust investigations into their possibly anti-competitive business practices.

Epic, which is partly owned by Chinese technology giant Tencent and is estimated to be worth up to $17.3 billion following recent funding rounds, has the resources to put up a meaningful fight as it looks to push back against app store payment policies that it views as unfair. "Fortnite" at the same time commands a massive audience of over 350 million registered users who could be frustrated with the sudden app store removals, a backlash Epic is explicitly egging on through marketing.

Epic anticipated that Apple and Google would remove "Fortnite" from their app stores, as seen with its immediate filing of lawsuits against the tech titans and a publicity campaign designed to parody Apple. The games developer has been vocal in its criticism of Apple and Google in recent years, describing their fee structures as a tax, but Thursday's developments mark a significant escalation in tensions between the firms. At press time, the "Nineteen Eighty-Fortnite" video had racked over 1.9 million hits on YouTube.

While Google faces scrutiny on multiple fronts, including its dominance in the programmatic advertising market, Apple's control of the App Store is a focal point for antitrust investigators. It's still too early to tell whether Apple and Google will be compelled to change their app store policies and fees, which don't apply to mobile marketers who advertise in apps. However, lower fees would help app developers increase their revenue from in-app payments and downloads.

"Fornite" mostly generates revenue from in-game payments by players who buy customized content. Players have spent more than $1 billion on "Fortnite" through the App Store and Google Play since the game's release, researcher Sensor Tower estimated in May. Seventy-one percent of people who play battle royale games like "Fortnite" do so on a console, followed by 17% on PC and 12% on mobile, per Newzoo data cited by Business of Apps.

It's not clear how many people play "Fortnite" on iOS devices, which Apple tightly controls through its App Store policies. While Google Play is the biggest app store for Android devices, the mobile operating system is more open than iOS, letting Epic offer "Fortnite" directly through its own app store.

For other developers that market apps through the App Store and Google Play, Epic's willingness to take on Apple and Google may resonate. Companies both large and small are making a more concentrated push to put pressure on Apple to change its ways.

Facebook for six months tried to get Apple's approval for its Facebook Gaming app, but Apple refused the social network from offering an app that would allow people to play in-app games. Facebook this month introduced Facebook Gaming without games, only gaming videos. Audio streaming company Spotify also has criticized Apple's fee structure for allegedly favoring rival service Apple Music. Like video streaming company Netflix, Spotify introduced a way for subscribers to pay directly instead of through the App Store. Match Group, which runs dating app Tinder, and e-commerce company Rakuten also have criticized Apple for its policies.