Apple stumbled into a nasty legal battle that could reshape the way the iOS deals with apps. It started when Apple stated it had no plans to ever allow cloud gaming services from its rivals at Google and Microsoft on the iOS ecosystem. The next escalation happened when Apple banned the popular game Fortnite from the App store after a rule violating update. In today’s post, we’ll discuss why this could have significant implications for all the apps in the App Store.
Epic Games Ready
Epic filed an antitrust lawsuit against Apple almost immediately after Fortnite was removed. The speed in which the suit was filed indicates Epic was prepared for the move and anticipated Apple’s response. Additionally, Epic prepared a well-choreographed social media campaign against Apple. It released a video mocking Apple’s iconic 1984 commercial. The video plays Apple’s original messaging of being the underdog and now casts it as the giant it once fought.
Apple has a lot at stake with the recent moves. Banning cloud gaming and the ever-popular Fortnite runs the risk of alienating the young generation of mobile-based gamers. These users could opt for other platforms and services that Apple doesn’t have as much control over. Apple is placing its bet that users will stick with its platform regardless of the bans.
Cloud Gaming Threat
Cloud gaming works on a subscription-based model. Users pay a monthly fee to access a library of games that can be played on any platform. This is similar to how Netflix operates with movies and TV shows. It eliminates the need to buy each game individually. Most expected the move to ban cloud gaming by Apple.
Apple justified the move stating that cloud gaming services offer access to a library of games that Apple cannot review individually. In order for a developer to get an app on the App Store, it must be submitted for inspection. Additionally, it needs to be subject to user reviews and findable in the search results. Apple states that movies, music, and TV shows aren’t subject to this, but games are because they contain software that could violate content guidelines.
They don’t mention that forcing apps to use the App Store allows Apple to collect its 30% fee. Cloud gaming services allow games to live outside of Apple’s digital marketplace. Apple doesn’t want its users spending their money in a place where they cannot control.
Shortly after Apple’s announcement on cloud gaming, Epic updated the Fortnite app. The update included an in-app payment system, bypassing Apple’s cut. It took an additional step of lowering all prices for in-app purchases by 20%, stating it was passing the savings on to the consumer. Once Apple removed the app, Epic is claiming that there is evidence of consumer harm. Epic used this ‘harm’ to start the #FreeFortnite campaign to aggravate users in joining the campaign against Apple.
Epic’s Endgame
In its lawsuit against Apple and a similar one filed against Google, Epic claims Apple is violating antitrust laws with the App Store and the rules governing it. Epic is not seeking any monetary rulings in the matter. It wants the App Store to be broken up or, at a minimum, can use its own payment system.
At the most basic level, we’re fighting for the freedom of people who bought smartphones to install apps from sources of their choosing, the freedom for creators of apps to distribute them as they choose, and the freedom of both groups to do business directly.
— Tim Sweeney (@TimSweeneyEpic) August 14, 2020
Apple’s Issue With Cloud Gaming
After Apple announced it would not allow cloud gaming services, Microsoft responded swiftly. In a statement Microsoft said:
“Apple stands alone as the only general-purpose platform to deny consumers from cloud gaming and game subscription services like Xbox Game Pass. And it consistently treats gaming apps differently, applying more lenient rules to non-gaming apps even when they include interactive content,”
Microsoft’s stance isn’t entirely untrue. For example, Netflix and Spotify pay 15% instead of the customary 30% ‘Apple Tax.’ Apple also recently allowed Amazon to not pay the percentage for movie sales and TV rentals. Apple’s logic makes sense in a world where each game needs to be downloaded to each device, but cloud gaming will erode that justification. Multiple news outlets requested a further explanation from Apple on what rules cloud gaming violate. Apple has yet to respond.
The Outcome?
Above all, this is a developing chapter in a long-standing story. Most believe that Apple doesn’t want to lose its grip over its ecosystem. Cloud gaming also poses a threat to one of Apple’s significant sources of revenue. For example, why would a developer go through the trouble of making an game specifically for the iPhone when it could make a universal game and deal with Microsoft or Google’s cloud platform. After all, cloud services enable access from anywhere on any device.
Apple is currently facing two antitrust investigations in the European Union, primarily due to different apps paying different fees for access to the App Store. In the past, Apple didn’t have to fight these battles; most game developers weren’t big enough to make a stand. Currently, Microsoft, Google, Epic Games, and Facebook are all taking a stand one way or another against Apple.
We’ll update this post as new information becomes available. The outcome of the Epic suit and EU investigations might result in major changes to the App Store. If you found this article interesting or helpful, check out our posts!