- The first round in the Epic Games vs. Apple lawsuit over Fortnite will take place on Monday.
- It should be a win for Apple in what may turn out to be a long legal battle between the two companies.
- Epic has created this problem all on its own, and it’s now looking for the court to prevent Apple from enforcing App Store rules, when it could fix the problem by itself, by fixing the Fortnite app according to App Store rules.
- Epic is risking losing access to its Apple developer accounts and tools, which could lead to the complete removal of Fortnite, and affect other developers working licensing the Unreal tools.
Before I tell you why Epic should lose in this first phase of what might turn out to be a long fight with Apple, let’s just put a pin in Apple’s 30% cut the company takes from all the transactions happening in its apps. Epic is trying to make it sound like it’s all about that in its fight against Apple, but that’s only scratching the surface.
To recap, Epic a few days ago decided to push an update to its iOS and Android Fortnite apps that would offer buyers an extra means of payment for digital goods, Epic’s. Apple promptly banned Fortnite, and as soon as that happened, Epic sued Apple and released a mock commercial to rally gaming opinion in its favor in the ensuing fight. Google banned Fortnite as well, and Epic sued them either. These moves were calculated and prepared well ahead of Epic’s Fortnite update that got the app banned. In the days that followed, we learned that Apple didn’t just ban Fortnite from the App Store, it also gave Epic a fortnight to remove the secondary payment option in the app or risk having its entire developer account banned. Epic quickly followed with a temporary restraining order (TRO) motion asking the court to prevent Apple from going through with its plan to remove Epic’s access to developer tools and accounts in response to its breach of the App Store rules. Apple responded to that with its motion, showing the back and forth exchanges between Apple and Epic in the days preceding the Fortnite update and it the days that followed. Over the weekend, Epic responded to Apple, with Microsoft filing a declaration of support in favor of Epic. Phew!
This brings us to Monday when the motion hearing will take place. And that’s where Epic should be handed its first defeat against Apple, and where it will be forced to announce that the Fortnite iPhone app will be restored to the previous state, the one where in-app purchases (IAP) are only possible via Apple’s payment system.
If there’s one thing in all of this mess you need to read to understand where things are between Epic and Apple, that’s the email exchange that preceded the Fortnite ban and the emails that followed.
It all starts on June 30th with Epic’s head Tim Sweeney emailing Tim Cook, Phil Schiller, Craig Federighi, and Matt Fischer to ask Apple to allow Epic to introduce two things, a competing processing store, and its app store inside the App Store.
1) Competing payment processing options other than Apple payments, without Apple’s fees, in Fortnite and other Epic Games software distributed through the iOS App Store;
2) A competing Epic Games Store app available through the iOS App Store and through direct installation that has equal access to underlying operating system features for software installation and update as the iOS App Store itself has, including the ability to install and update software as seamlessly as the IOS App Store experience.
Sweeney gave Apple two weeks to reply, and Apple complied on July 10th, with a lengthy and detailed email from Apple’s general counsel Canon Pence, who explained why Epic’s requests couldn’t be accommodated, stressing on the enormous hypocrisy from Epic and Co. when it comes to handling App Store apps and payments.
Mr. Sweeney does not take issue with that model in his email -perhaps because Epic takes full advantage of it. Apple takes no cut from Epic’s in-app advertising, nor from sales of items, like skins and currency, that iOS app users obtain outside of the App Store. And, as already discussed, Apple charges nothing for enabling millions of iOS users to play Fortnite for free. Without IAP, however, Apple would have no practical or reliable way of collecting its commission on in-app digital sales. Indeed, the IAP requirement applies equally for the very same reason to the Mac App Store, which you regard as open and competitive.”
Mr. Sweeney recently stated that “[i]t’s up to the creator of a thing to decide whether and how to sell their creation.” [….] We agree. It seems, however, that Epic wishes to make an exception for Apple and dictate the way that Apple designs its products, uses its property and serves its customers. Indeed, it appears that Mr. Sweeney wants to transform Apples iOS devices and ecosystem into an open platform… like the first Apple computers, where users had the freedom to write or install any software they wished.” […]
The App Store is not a public utility. Epic appears to want a rent-free store within the trusted App Store that Apple has built. Epic wants equal access” to Apple’s operating system and “seamless” interaction between your store and iOS, without recognizing that the seamlessness of the Apple experience is built on Apple’s ingenuity, innovation, and investment. Epic wants access to all of the Apple-provided tools like Metal, ARKit and other technologies and features. But you don’t want to pay. In fact you want to take those technologies and then charge others for access. Apple has invested billions of dollars to develop technologies and features that developers like Epic can use to make great apps as well as a safe and secure place for users to download these apps. Apple designs its products and services to make developers successful through the use of custom chips, cameras, operating system features, APIs, libraries, compilers, development tools, testing, interface libraries, simulators, security features, developer services, cloud services, and payment systems. These innovations are properly protected by intellectual property laws and Epic has no right to use them without a license from Apple. As a signatory to the Apple Developer Agreement and the Apple Developer Program License Agreement, Epic has acknowledged these IP rights (just as Epic s developers do the same with respect to Epic s intellectual property). See Apple Developer Program License Agreement § 2.5.
Not all gamers might get the fact that Epic has created this crisis fully knowing it would breach the contract, fully knowing what Apple’s responses could be, and full knowing that Apple will call its bluff. That’s why it had all those lawsuits on hand and the viral commercial. Whether it expected Apple to go for the nuclear option, that’s debatable, but the same email chain above proves that Apple’s response was swift. From the moment Epic released the update, Apple let the company know that it’s risking losing access to its developer tools, which can hinder app development for games based on the Unreal engine that Epic licenses to other game makers.
The same response also details another dishonest behavior from Epic that shouldn’t be ignored. Epic took advantage of Apple’s developer tools to quietly push an update to the App Store that turned on an IAP payment functionality that Apple would never approve. Epic has been cheating, and that’s a company that’s supposedly working for other developers. That’s a company that other developers should trust when dealing with a hypothetical Epic App Store inside the App Store that would be governed by Epic’s own rules.
Epic is not a helpless, innocent victim here.
Epic has been fighting this first salvo in public, hoping to mislead customers into thinking Epic is right, and that it’s doing all of this for their sake, and the good of other developers. That explains the anti-Apple commercial, the hashtag movement, and the Fortnite in-game event. But the court decision can’t and shouldn’t go in Epic’s favor. Epic breached a contract knowing the consequences and then sued Apple when the company took retaliatory action and filed a TRO when it realized how far Apple would go.
Gamers who are angry at Apple should realize that Epic is only going after its bottom line and take advantage of them to put pressure on Apple. That alone doesn’t make Epic right. Fortnite will probably be restored to the previous version this week because Epic can’t afford to lose all access to its developer tools, and the Fortnite revenue generated through iPhones and iPads. This will further prove how hypocritical the whole thing is.
And let’s not forget that Epic is paying the same 30% cut to Microsoft, Nintendo, and Sony for access to those console. But it doesn’t feel like those other three giant corporations should lower their cut.
Remember that pin from before? Let’s remove it now. Apple’s App Store cut is well-deserved for what Apple brought to the table, and I’ve explained that before. But the 30% percentage might indeed be too high. Developers and consumers could benefit from a lower rate, even if that shaves off profit from both Apple and Google. That’s a well-deserved debate that can and should go on. Epic could have sued Apple without creating this artificial conflict. It could have done it at any point in the past too, but it’s choosing this moment because of the antitrust investigations and complaints that Apple has to deal with or will have to deal with. Epic could have decided to take the higher ground if you will, where it wouldn’t have breached the App Store terms so that the Fortnite ban could go viral online. And maybe more gamers would have supported that call to action.
