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Business Unusual

Epic, Apple and Google, who is the bad guy?

19 August 2020 7:15 PM

You be the judge and consider the potential arguments and outcomes

Here are some of the arguments that will form part of the discussion around the upcoming court case to determine if Apple and Google have to change the fees policy or if Epic will be made to take it or leave it. The implications are significant for more than just the three companies involved.

Google and Apple are unfair to charge 30% fees

Charging a fee for access to a marketplace is common practice, the more specialised the greater the cost, but when the marketplace is either the only one of really big, charging a large sum for not that much support is hard to justify.

Apple introduced the fee for any sales or charges for apps distributed via their App Store in 2008. Until then phone makers created all the apps on the phone and you used the basic web browser for everything else. Apple reckoned they could get better apps by allowing 3rd party developers to create something they either had not thought about or did not specialise in. An early example was the torch app. The iPhone had a camera and a flash and developers could create apps to use the hardware on the phone. The torch app was very popular and for the early developers would have had many use their app. Most were free, some included showing ads which would earn revenue for the makers. Apple would check that the apps were not doing anything that would harm the phone or defraud the user. If the app earned no money Apple would not charge anything, but if the app did charge users then Apple would get 30%.

Many of the most popular apps are free and so don’t incur fees and Apple has millions of apps that are submitted and updated that all need to be reviewed to give users peace of mind that the app is safe.

For some apps though the fee does add up. Spotify is a large music streaming company and is unlikely to submit an app that would be harmful to Apple users but if you sign up on the app then 30% of the subscription each month goes to Apple, they don;t have to do anything.

When Spotify considered increasing the subscription via iOS, Apple happened to sell its own streaming music service at a price to undercut Spotify.

With Fortnite the revenue generated earns Apple millions of dollars a month. Apple is hardly having to spend millions to ensure the app is safe.

Google opted to use the same fee when they launched the Play Store and it uses the same model as Apple. They verify the apps don’t do things they are not allowed to or don’t expressly say they will do. There are many more apps in the Play store as there are many more Android phones but the issue is the same for games like Fortnite they pay for a service they effectively don’t use. However, because Android is open source, you can download apps from the phone manufacturers app store or an alternative option. In this way Fortnite is not compelled to use the Play Store.

Epic is at fault

While mobile fans of Fortnite will welcome lower costs to buy the currency to personalise their character in the game, they may prefer to pay more but still have access to the game. While mobile users generate a lot of revenue, many more play the game and don’t buy anything. Epic has forced Apple and Google’s hand to remove the game from their stores which given the time it may take to resolve the court case could see many miss out on being able to play it if they have not downloaded it and will not be able to update it if they have already downloaded it.

Epic is no stranger to playing both sides of the field, the game is heavily based on other games and was at one point sued by the maker of PlayerUnknown Battleground the game that was the first major commercial release of this genre and was built using Epic Games Unreal Engine.

The lawsuit was dropped but Epic is likely to get into more conflicts as it now not only provides the game engine for game developers but also a game store where they sell the games and take a cut of those sales.

After being kicked out the mobile stores, they released an ad that was meant to spoof Apple’s 1984 ad about monopolistic control and setting themselves up as the underdogs and outsiders. The ad called for fans to use the #FreeFortnite on social media which would certainly suggest that it would attract the interest of players on other platforms and even those that don’t play to join their cause.

Having the ad and lawsuit ready to go so soon after having been removed from the stores means Epic pushed Apple and Google to kick them off and did it now when there is scrutiny from the US Congress and other regulators about how Apple and Google use their dominance.

They are also not claiming damages in the case which means it is only about how justified asking 30% is not trying to show how it hurt only Epic Games.

Epic Games is much smaller than Google and Apple, but considering they have a large investment from Tencent then this becomes a much bigger battle.

Read: How Business Unusual covered Fortnite when it first hit the headlines in 2018

They all have a case to answer

While Apple has suggested they are looking to find a solution to avoid the court case, Epic Games says that Apply will stop their developer access which would affect how any of their games would work on any Apple platform.

Apple continues to grow having passed the $2 trillion market cap, it has been shifting from being focused on hardware to building out the services it offers. It has welcomed 3rd parties to help build an audience on their platforms and then became a direct competitor. That original torch app proved popular enough that Apple simply created its own version built into the operation system, who would download an app to do something the phone does anyway. Camera app developers showcased just how much could be done with the camera and Apple began to offer those options part of the camera. In some respects that is fair to give users better access to the best user experience. Developers would be able to benefit from being able to make their ideas a reality even if they will eventually become part of the phone.

It looks like the court case will cause Apple and Google to review their fees or rather create something like a cap for the amount of revenue a developer would have to pay per month or year which for small earners help Apple offset the costs to manage the store for the benefit of users while not harming any developer who has a hit.

19 August 2020 7:15 PM

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