Unless you've spent this week under a rock, it's highly unlikely that you missed a huge falling-out between Apple, Google, and Epic Games. It all started on August 13 when we reported on an Epic Games announcement regarding a new way to pay on the Fortnite store on mobile. The new Epic direct payment feature promised users a cool 20% saving on V-bucks if you bought them directly from Epic, instead of through the App Store's secure payment system. It didn't take long for everyone to realise that this was a flagrant breach of both Apple and Google's respective marketplace rules and guidelines, probably intentional, and definitely really strange.
Many cynics were quick to speculate that Fortnite had struck some sort of deal with Apple, and that there was no way that Fortnite and Epic could've updated its iOS app without Apple's approval to do this. There was, of course, no such deal. In time, it became clear that Epic had intentionally, and knowingly, breached Apple's App Store guidelines for the sole purpose of baiting Apple (and Google) into removing Fortnite from both the App Store and Google Play.
Why?
Turns out that Epic's plan in breaching these App Store rules was far more cringeworthy and tragic than we could have ever first imagined. Naturally, Apple reacted to the move by removing Fortnite from its App Store, stating that Epic had violated the App Store guidelines "that are applied equally to every developer and designed to keep the store safe for our users." It was at this moment, Epic pounced. In a clearly premeditated move, it immediately announced that it was filing a freshly-cooked, 65-page lawsuit against Apple in California, and began teasing a spoof of Apple's 1984 commercial titled 'Nineteen Eighty-Fortnite'. (Hilarious, right?) Google got a similar lawsuit a few hours later, but no spoof video. You can read the full sequence of events here.
Our demands
Epic's lawsuit is straight forward enough:
This case concerns Apple's use of a series of anti-competitive restraints and monopolistic practices in markets for (i) the distribution of software applications ("apps") to users of mobile computing devices like smartphones and tablets, and (ii) the processing of consumers' payments for digital content used within iOS mobile apps ("in-app content"). Apple imposes unreasonable and unlawful restraints to completely monopolize both markets and prevent software developers from reaching the over one billion users of its mobile devices (e.g., iPhone and iPad) unless they go through a single store controlled by Apple, the App Store, where Apple exacts an oppressive 30% tax on the sale of every app. Apple also requires software developers who wish to sell digital in-app content to those consumers to use a single payment processing option offered by Apple, In-App Purchase, which likewise carries a 30% tax.
Epic contrasts Apple's own policy directly with its Mac ecosystem, which it describes as an open market where users can install software from a variety of stores, or the developer itself without coughing up 30% of the proceeds to Apple. Epic would like you to think that it is taking up the cause of Apple's downtrodden, overlooked developers who have spent far too long paying Apple too much money for the privilege of being on Apple's App Store, with no hope of an alternative or reprieve in sight. And in a sense, they are correct.
"Walled garden"
It is not new thinking to suggest that Apple's App Store is not perfect, nor that it is particularly fair to many developers who offer paid apps and chargeable services through the marketplace. Before WWDC, we caught up with some developers to hear about some of their grievances with Apple and its App Store, of which there are many. Shovelware, paid adverts for searches, the seemingly arbitrary and fairly steep 30% cut, the fact that if you want to develop apps for iOS you must sell them through Apple's App Store. These complaints are well known, and developers are right to seek more favorable terms for the distribution of apps through the App Store. But this Epic Games stunt is not that.
Goliath vs Goliath
Epic's lawsuit against Apple is comprehensive, it includes histories of products, the App Store and such, and countless listings of grievances, etc. Epic says that Apple's restrictions on iOS software are "unlawful and unreasonable", and constitute a "stranglehold on the ecosystem." This all sounds very noble, and Epic even says that it isn't seeking any monetary damages from Apple, only an "end to Apple's dominance over key technology markets" and more competition on the App Store, so that small developers like Epic Games can start turning a profit from indie titles like Fortnite.
The truth
Epic's end game is written clear as day on pages five and six of the lawsuit:
But for Apple's illegal restraints, Epic would provide a competing app store on iOS devices, which would allow iOS users to download apps in an innovative, curated store and would provide users the choice to use Epic's or another third-party's in-app payment processing tool. Apple's anti-competitive conduct has also injured Epic in its capacity as an app developer by forcing Epic to distribute its app exclusively through the App Store and exclusively use Apple's payment processing services. As a result, Epic is forced, like so many other developers, to charge higher prices on its users' in-app purchases on Fortnite in order to pay Apple's 30% tax.
Epic wants to create its own "App Store" for iOS, giving developers an alternative platform to host their games and software on, in the spirit of competition and fairness. Which sounds fine, unless you actually stop and think about it.
Remember that time Epic started a hostile takeover of the PC gaming market by paying developers millions of dollars to keep their games exclusive to the Epic Games Store? Well, this sounds a lot like that.
Epic Games store for iOS?
If Epic got its way, it would have an "Epic Games Store" on iOS, an alternative App Store marketplace where you could download iOS software for your iPhone or iPad. Who would set all the rules and regulations that govern that store? Why Epic Games of course! Who would handle all the payments, and gatekeep which apps would be allowed, or not allowed, on the store? Epic Games. Who would take the cut of revenue from the sale of software and in-app purchases? You guessed it, Epic Games. Epic isn't mad that Apple has an App Store with guidelines and a fairly high revenue cut, it's mad that you're paying that money to Apple, and not to Epic. Epic Games is a company earning billions of dollars in revenue, that would simply like to add more billions to those billions of dollars.
Epic really loves competition. Not.
Watching as the CEO of Epic Games tweet about competition and fairness is one of the most ironic things I have ever seen. In 2017, Tim Sweeney gave an interview to PC Gamer. On the topic of Microsft's UWP he said this:
The thing that I feel is incredibly important for the future of the industry is that the PC platform remains open, so that any user without any friction can install applications from any developer, and ensure that no company, Microsoft or anybody else, can insert themselves by force as the universal middleman, and force developers to sell through them instead of selling directly to customers.
Fast forward to 2020, and Epic Games runs a PC gaming market place, the Epic Games Store, which literally pays developers millions of dollars so that they will launch their games exclusively through Epic Games and not rival platforms, notably, Steam. In September 2019, it emerged that Digital Brothers took 9.49 million euro from Epic Games in an exclusivity deal:
Digital Bros, parent company of 505 Games, has disclosed that they received a payment of 9.49 million euro from Epic Games for Control.
Which I would imagine is for exclusivity.
55% of that payment going to 505 Games.
Report here: https://t.co/ocmbIQeOfJDigital Bros, parent company of 505 Games, has disclosed that they received a payment of 9.49 million euro from Epic Games for Control.
Which I would imagine is for exclusivity.
55% of that payment going to 505 Games.
Report here: https://t.co/ocmbIQeOfJ— Daniel Ahmad (@ZhugeEX) September 20, 2019September 20, 2019
Epic Games touts its highly favorable commission on developer sales, just 12% compared to 30% that rival Valve takes from sales through Steam. At first glance, this sounds really good for developers, except that in the case of exclusive games, developers are being cut off from something like 85% of the PC gaming market by submitting to Epic's exclusivity rules. It doesn't matter how good the revenue share is if the company taking it won't let you sell on the biggest audience on the market, presumably slashing your profits in the process. Not to mention Epic's own game store has almost none of the features of its Steam rival:
It’s important to remember that Epic’s pricing structure is just as arbitrary and insubstantial as Apple’s and Google’s 30% cut. Maybe even moreso. They’re basically selling “air” with zero product or fixed inventory costs.It’s important to remember that Epic’s pricing structure is just as arbitrary and insubstantial as Apple’s and Google’s 30% cut. Maybe even moreso. They’re basically selling “air” with zero product or fixed inventory costs.— Jesse Hollington (@jhollington) August 14, 2020August 14, 2020
Epic is so heavy-handed in its aggressive push to swipe exclusive titles that Metro: Exodus was announced as an Epic Games exclusive just two weeks before launch, by which time it already had a product page on Steam, and many users had already paid for the pre-order. Yes, that sounds exactly like the kind of fair and open competition that would make mobile app marketplaces more enjoyable.
The whole thesis here is that stores should be free to compete, and gamers and developers should be free to use stores of their choosing, which is exactly what is happening here today.The whole thesis here is that stores should be free to compete, and gamers and developers should be free to use stores of their choosing, which is exactly what is happening here today.— Tim Sweeney (@TimSweeneyEpic) January 30, 2019January 30, 2019
"Developers should be free to use stores of their choosing says a company that pays developers to not be free to use stores of their choosing.*
There's no doubt a single App Store presents competition problems to developers, they are very much at the mercy of Apple when it comes to the terms and conditions they have to play by if they want their software on iOS. The solution to this is to seek more favorable terms, lobbying Apple to treat its developers more fairly, through legislation if necessary. The solution is not a billion-dollar corporation adding another app store to mix, especially not one with a track record like Epic Games.
If Epic Games was allowed to create an App Store on iOS, would it start paying developers millions of dollars to launch software and games exclusively through the Epic App Store, forcing customers to use its own payments methods to access certain software, submitting to their terms and taking the cut of customer spending for itself? If it's PC track record is anything to go by, then yes.
One App Store is better
There are other benefits too, a single, secure payment system for all apps is more convenient and safer, and is by far and away the best user experience for the vast, vast majority of iPhone users. One example, imagine having to update your bank card details in multiple app stores every time you got a new one. Worse still, imagine how many app stores there would be if third-parties were allowed to create them. As Benedict Evans puts it:
Apple is often capricious, arbitrary and inept in how it moderates the store, and rent-seeking in how it manages App Store payments. But the principle of a sandboxed store and a unified payment system are very good for users and, actually, developers.Apple is often capricious, arbitrary and inept in how it moderates the store, and rent-seeking in how it manages App Store payments. But the principle of a sandboxed store and a unified payment system are very good for users and, actually, developers.— Benedict Evans (@benedictevans) August 14, 2020August 14, 2020
Beyond payments, the App Store stands as a protector between iOS users and software in so many aspects, security, data protection, resource usage, and more. Evans continues:
Over 4bn people have a smartphone today. If you remove Apple and Google judgment from the process, and make those 4bn people solely responsible for deciding what software should be allowed to do what with those phones and their data... that would not be good.
Summing up
As I've already mentioned, there's plenty we could do to make the iOS App Store a more competitive, fair and open place that treats developers more fairly, and rewards them more consistently for making great apps and I'll happily discuss ways to make Apple's App Store a fair place for all until the cows come home. But I will not humor any more drivel from one of the most anti-competitive companies on the scene masquerading as some kind of messiah to downtrodden developers whilst buying off games for millions of dollars in exclusivity deals because it can't actually handle real competition.
