AAPL Apple Inc

By Sarah E. Needleman 

Apple Inc. removed "Fortnite" from its App Store just hours after the game's creator unveiled a new payment system that appeared to violate the technology giant's rules.

Epic Games Inc. on Thursday said it launched its own payment system in the "Fortnite" app for devices from Apple and Alphabet Inc.-owned Google, giving players the option to buy digital goods for up to 20% less than what those companies would charge. The discount was also available for in-game purchases on gaming consoles and personal computers. The survival game is free to play and generates revenue through sales of such items.

In a statement Epic said it was planning legal action in response to Apple blocking the app on iOS devices.

Apple's App Store, which analysts estimate generates about $15 billion in annual revenue, takes a 30% cut of sales from developers. It is the only app store available on more than 900 million iPhones world-wide, though the Google Play Store, which also takes 30% of app sales, has a larger share of the U.S. and global smartphone market.

Both Apple and Google have faced scrutiny from legislators and developers over their app store fees. The companies have argued in defense of their business models, saying the fees are necessary because of the services the stores provide, including security and safeguarding user privacy. Apple said last month a study it commissioned found that the 30% fee was in line with other app stores and videogame marketplaces.

"Epic agreed to the App Store terms and guidelines freely," Apple said Thursday. "The fact that their 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."

Google didn't immediately respond to requests for comment.

With its new payment system for the "Fortnite" app, Epic is engaging in a high-stakes showdown with the ubiquitous app marketplaces. Chief Executive Tim Sweeney has been among the highest-profile critics of the 30% fee.

"They come off the top, before funding any developer costs," Mr. Sweeney said in a tweet last month. "As a result, Apple and Google make more profit from most developers' games than the developers themselves. That is terribly unfair and exploitative."

Originally available only on computers and later consoles, "Fortnite" surged in users after launching on Apple's App Store in 2018. It debuted on Google's Play store earlier this year after Epic gave up a yearslong battle with the company to get permission to include its own payment system inside "Fortnite" -- which is essentially what Epic is doing now. Previously, "Fortnite" was available on devices running Google's Android operating system independent of Google Play.

"Fortnite," which made its debut in 2017, now has more than 350 million registered players, according to closely held Epic.

For the first seven months of 2020, Apple's App Store generated nearly $39 billion in global revenue from in-app purchases, subscriptions and premium apps, while Google Play reached almost $21 billion in revenue, according to research firm Sensor Tower Inc.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

August 13, 2020 16:35 ET (20:35 GMT)

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