By Sarah E. Needleman
Apple Inc. and "Fortnite" maker Epic Games Inc. are embroiled in
a battle over the fees that app stores charge developers, a clash
that pits the powerful tech giant against the creator of one of the
world's most popular videogames.
The conflict reflects growing pushback against the app platforms
of Apple and Alphabet Inc.'s Google. Other app makers, including
Netflix Inc. and Spotify Technology SA, have also clashed with
Apple over its developer fees. At stake is a global market for
mobile apps that by some estimates generates roughly $85 billion
annually excluding China.
Apple on Thursday yanked the Fortnite app from its App Store,
restricting game downloads and updates on Apple devices, after Epic
rolled out a new way of making in-game purchases that circumvents
the 30% cut Apple takes from digital transactions within apps.
Apple said it removed "Fortnite" because Epic launched the payments
feature without its approval.
"Fortnite," which made its debut in 2017, has more than 350
million registered players world-wide, according to closely held
Epic. The survival game is free to download but generates revenue
through in-game purchases of add-on items such as digital costumes
and dance moves for players' avatars.
Epic's new payment system was also made available on devices
with Google Play, an apparent violation of Google's rules. Google
hadn't removed "Fortnite" from its store as of Thursday afternoon.
The company didn't respond to requests for comment.
Epic's move was seen by many as a tacit declaration of war
against Apple and Google, as the company took the additional step
of offering players 20% back on their in-game purchases over the
past month. The discount was extended to purchases of V-bucks --
virtual currency "Fortnite" players can use to buy character
costumes, dance moves and other perks -- made on gaming consoles,
PCs and Macs.
Epic Chief Executive Tim Sweeney has waged a yearslong public
campaign against the App Store and Google Play store, saying their
developer fees are exorbitant. On Thursday Epic released a video
parody of Apple's 1984 Super Bowl commercial skewering PC behemoth
IBM and pushed users to promote the hashtag #FreeFortnite across
"We must all choose to fight a painful battle now, or accept an
all-powerful middleman with unbounded ambition to extract tribute
and limit innovation in the decades to come," Mr. Sweeney said in
Epic sued Apple in U.S. District Court in California after
"Fortnite"'s removal from the App Store, accusing the world's most
valuable company by market capitalization of monopolistic behavior
in how it distributes apps to devices and processes payments for
digital content. Epic said it isn't seeking monetary damages from
Apple but asked the court to issue an injunction to end Apple's
"unreasonable and unlawful practices," according to the
Apple didn't comment on the lawsuit but did attack Epic for
launching the payments feature without its approval.
"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," Apple said in a statement.
Wedbush Securities analyst Dan Ives described Epic's action as a
bold move and said the company was "testing the waters especially
in light of the antitrust pressure that Apple has faced from the
recent congressional hearings."
"If the lawsuit is successful, it would open up a Pandora's box
for other app developers to make the same move," Mr. Ives said.
Last month, Apple Chief Executive Tim Cook defended Apple's
policies on its App Store during a more than five-hour-long
congressional hearing with other tech company leaders. Prior to the
hearing, Apple touted economic research it commissioned showing
that the fees it collects from developers are in line with those
charged by other app stores and videogame marketplaces. Both Apple
and Google have argued the fees are necessary because of the
services the stores provide, including security and safeguarding
The European Union in June opened antitrust probes into Apple to
determine whether the company's App Store and Apple Pay service
violate competition laws.
Spotify last year filed an antitrust complaint in Europe against
Apple accusing the tech giant of abusing the App Store to limit
competition against Apple Music. In response to the lawsuit Apple
said it wanted apps that compete with its services to thrive and
that it approved and distributed app updates that helped expand
A spokesman for the music-streaming company commended Epic for
its move, saying "Apple's unfair practices have disadvantaged
competitors and deprived consumers for far too long."
Originally available only on computers and then 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" -- essentially
the step Epic took Thursday. Previously, "Fortnite" was available
on devices running Google's Android operating system independent of
The "Fortnite" app has been installed 133.2 million times on
Apple devices since its creation and has produced $1.2 billion in
global App Store revenue, according to research firm Sensor Tower
For the first seven months of this year, 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, Sensor Tower said.
Mobile games make up the largest portion of the global
videogame-software market, according to Newzoo BV. The analytics
firm estimates mobile games will yield about $77.2 billion in
revenue this year, compared with $45.2 billion for console games
and $36.9 billion for computer games.
Write to Sarah E. Needleman at firstname.lastname@example.org
(END) Dow Jones Newswires
August 13, 2020 19:43 ET (23:43 GMT)
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