Brief:

• Epic Games, the creator of the hugely popular videogame “Fortnite,” is launching its own mobile app store to take on Google. Its app store aims to let developers keep more of the money generated from download fees and subscriptions, The Wall Street Journal reported.

• Epic will let developers keep 88% of the revenue from download fees, compared with the standard 70% that Apple and Google allow. Epic this month introduced the first version of its virtual store for PC and Mac games, pushing competitor Steam to revise its fee structure in response, the newspaper reported.

• Epic said it will soon start selling games for Android devices and other open platforms. The company bypassed the Google Play store to distribute “Fortnite” last year, saving itself millions of dollars in fees. “Fortunite” has more than 200 million registered players who have generated more than $1 billion in revenue so far, according to the Journal.

Insight:

Google is likely to feel more direct competition from Epic Games than Apple, which maintains a more closely guarded system of distributing apps to its devices. Still, Epic’s fee structure may pressure Google to reduce its fees and compel Apple to respond with cuts. Google and Apple want to cultivate a healthy app economy that gives developers greater incentives to create innovative apps and content that increases the value of their devices.

But the tech giants have managed to alienate developers like Epic’s founder and CEO Tim Sweeney, who has described the fees paid to Apple and Google as a “parasitic loss.” Apple and Google may face greater regulatory scrutiny for having collusive policies that arguably stifle competition and innovation. Apple and Google-parent Alphabet earn about 5% of their annual revenues from their app stores, according to consensus estimates from Visible Alpha cited by the Journal.

Epic’s plans to develop an app store come as Netflix stops letting new users pay for a subscription to its video-streaming service in its iOS app, eliminating a source of revenue for Apple. The potential damage to Apple appears to be limited, possibly reducing its App Store revenue by 1% this year, according to estimates by Macquarie analyst Ben Schachter cited by The Wall Street Journal.