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Epic’s legal battle with Apple over ‘Fortnite’ could prove to be costly

Published Sep 9th, 2020 12:14AM EDT
Fortnite iPhone Download
Image: Epic Games

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  • Apple kicked Fortnite off the App Store last month after Epic Games allowed users to make direct payments for in-game transactions.
  • Some have estimated that Fortnite’s removal from the App Store could end up costing Epic Games an average of $26 million in lost revenue per month.
  • Apple today filed a countersuit against Epic Games alleging breach of contract. Apple also alleges it has suffered damages from lost revenue stemming from Epic bypassing Apple’s 30% cut on in-app transactions.

When Epic Games decided to incorporate a direct payment option into the iOS version of Fortnite last month, it knew exactly what it was doing. Playing right into Epic’s hands, Apple swiftly kicked Fortnite off the App Store whereupon Epic immediately filed a lawsuit against Apple and released a video spoof of Apple’s iconic 1984 commercial.

In the weeks since, Apple and Epic Games have been duking it out in court over a variety of issues. Most recently, Epic filed for a preliminary injunction in an effort to keep Fortnite on the App Store while the case makes its way through the legal system.

Given the immense popularity of Fortnite, it’s no secret that the app’s removal is costing Epic Games a whole a lot in terms of both revenue and daily active users. Epic itself touched on this in its recent filing and noted the following:

Daily active users on iOS have declined by over 60% since Fortnite’s removal from the App Store. And removal already has resulted in a loss of goodwill and irreparable damage to Epic’s reputation. The continued loss of Fortnite as a gathering place for users on all platforms will lead Epic’s customers to defect. Epic may never see these users again.

As to a specific dollar amount, a report from Buy Shares estimates that Epic Games will lose around $26 million in average monthly revenue due to its ongoing legal spat with Apple:

Between January and August this year, Epic Games’ highest revenue was from the App Store at an estimated $191.42 million compared to $101.48 million from Google Play. Based on Sensor Tower data we have determined that the App Store accounts for 65.46% of all in-app purchases globally in H1, 2020. Our estimation, therefore, filtered the cumulative revenue for Fortnite on Google Play and Apple App Store by using our finding of 65.46% when comparing Google Play and App Store revenue.

Compounding matters is that Epic Games today was hit with a countersuit from Apple. The suit alleges that Apple has incurred damages as a result of users being able to bypass Apple’s in-app payment system and pay Epic directly for micro-transactions.

“Epic’s lawsuit is nothing more than a basic disagreement over money,” Apple’s suit reads in part. “Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.”

“For years,” the suit adds, “Epic took advantage of everything the ‌App Store‌ had to offer. It availed itself of the tools, technology, software, marketing opportunities, and customer reach that Apple provided so that it could bring games like Infinity Blade and Fortnite to Apple customers all over the world. It enjoyed the tremendous resources that Apple pours into its ‌App Store‌ to constantly innovate and create new opportunities for developers and experiences for customers, as well as to review and approve every app, keeping the ‌App Store‌ safe and secure for customers and developers alike.”

Apple argues that Epic Games is in breach of its iOS developer contract and asked the court for a permanent injunction that would prevent Epic from accepting payments from users directly.

Yoni Heisler Contributing Writer

Yoni Heisler has been writing about Apple and the tech industry at large with over 15 years of experience. A life long expert Mac user and Apple expert, his writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and TUAW.

When not analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions.