Epic Games files antitrust lawsuit against Google and Apple challenging in-app payment policies

With Google and Apple removing “Fortnite”, a popular video game from their app stores for violating their in-app payment guidelines, game developer Epic Games has filed federal antitrust lawsuits challenging these very rules in court.

Both, Google and Apple have cited the direct payment feature on the Fortnite app as a violation of their app store policy.

Epic’s lawsuit does not seek any monetary compensation, but rather injunctions that would end such practices in their app stores.

“Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation. Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear,” said Epic in its lawsuit.

Epic has filed the antitrust lawsuit in the Northern District of California.

The game maker has adopted a multi-pronged strategy against the tech giants: it has attacked Cupertino on social media with the launch of a hashtag campaign #FreeFortnite, wherein it urges players to seek refunds from Apple if they lose access to the game, at the same time it has also mocked Apple with a parody of its famous “1984” television ad.

The parody which saw viewership in hundreds of thousands, sees a female Fortnite fighter hurling a unicorn-shaped club to smash a screen on which an Apple-headed character speaks of “the anniversary of the platform unification directives.”

Apple gets A 15% to 30% cut for most app subscriptions and payments made inside apps, with some exceptions for in-app payments, all of which benefit Apple. According to analysts, games are the biggest contributors to Apple’s App Store, which in turn is the largest component of Apple’s $46.3 billion-per-year services segment.

“Fortnite had been removed because Epic had launched the payment feature with the express intent of violating the App Store guidelines” said Apple. Epic has had games in Apple’s App Store since a decade.

“The fact that their (Epic) business interests now lead them to push for a special arrangement does not change the fact that these guidelines create a level playing field for all developers and make the store safe for all users,” said Apple in a statement.

Google has also removed “Fortnite” from its Play Store; it did not respond to requests for comments on the lawsuit.

With regard to the removal of the game from its App Store, Google’s spokesman Dan Jackson said, “We welcome the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play”.

Incidentally, both, Apple and Google were among the U.S. tech companies that came under anti-competition scrutiny by lawmakers in July 2020. During the hearing, Tim Cook, Apple’s CEO had argued that Apple is not anti-competitive since it does not have a majority market share in any markets where it operates, including mobile phones, where Alphabet Inc’s Android operating system dominates.

According to Epic’s filing in its lawsuit, the game maker has argued, Apple’s app distribution and in-app payments for its own devices constitute their own distinct market for anti-competition purposes since Apple users rarely leave its “sticky” ecosystem.

Since its launch in 2017, Epic’s video game “Fortnite” has gained immense popularity and competes with Tencent Holdings’ “PlayerUnknown’s Battlegrounds”.

With the removal of the game from App Stores, new players will not be able to download the game and existing players will not be able to receive updates. The game should however continue to work on devices where it is already installed.

Epic Games did not disclose how many of its users are on Apple’s eco system.

According to mobile analytics firm, SensorTower, as of the end of July, “Fortnite” had around 2 million downloads in both Apple’s App Store and Google’s Play Store. Apple users had spent $34 million while Android users spent $2 million, according to SensorTower data.

Users who want to download and play the game can do so using non-Google stores such as Samsung Electronics Co Ltd’s App Store, said Epic in a blog post earlier on Thursday.

“Epic is not seeking any monetary relief, but rather only an order enjoining Google from continuing to impose its anti-competitive conduct on the Android ecosystem,” said the company in its lawsuit.

Applauding the move, Spotify Technology SA, which had also filed an antitrust complaint against Apple in Europe, said, “Apple’s unfair practices have disadvantaged competitors and deprived consumers for far too long”.

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