By Sarah E. Needleman
Apple and Google yanked "Fortnite," one of the world's most
popular videogames, from their app stores in an escalating battle
over the fees they charge developers to distribute their software
and process in-app purchases.
The conflict reflects growing pushback against Apple Inc.'s App
Store and Alphabet Inc.'s Google Play store on how they operate.
Other app makers, including Netflix Inc. and Spotify Technology SA,
have also butted heads with Apple on developer fees. At stake is a
global market for mobile apps that generates roughly $120 billion
annually, according to App Annie Inc.
The decisions Thursday from Apple and Google preventing people
from downloading or updating the "Fortnite" app came after the
game's creator, closely held Epic Games Inc., rolled out a new way
of making in-game purchases that circumvents the 30% cut tech
giants take from digital transactions within apps. The survival
game is free to download but generates revenue through purchases of
items such as digital costumes and dance moves for players'
avatars.
"Fortnite," which made its debut in 2017, has more than 350
million registered players world-wide, according to closely held
Epic.
Apple and Google said they removed "Fortnite" because Epic's new
payments feature violated their policies. Both said they are
willing to work with Epic to be able to bring the game back to
their stores.
"For game developers who choose to use the Play Store, we have
consistent policies that are fair to developers and keep the store
safe for users," Google said.
Google's decision only affected the game's download and updates
from the Play Store, but it could still be accessible on Android
devices through other marketplaces.
Epic's move was seen by many as a declaration of war against
Apple and Google,
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" commercial aired nationally during Super
Bowl XVIII skewering International Business Machines Corp., and
pushed users to promote the hashtag #FreeFortnite across the
internet.
"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
an interview.
Epic 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 for in-game purchases -- made on gaming consoles,
PCs and Macs.
Epic sued Apple in U.S. District Court in California after
"Fortnite"'s removal from the App Store, accusing the company 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 complaint. Mr. Sweeney declined to comment on
whether Epic would sue Google as well.
Apple, the world's most valuable company by market
capitalization, 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 CEO Tim Cook defended Apple's policies on its
App Store during a more than five-hour-long congressional hearing
with other tech company leaders. Before 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 user privacy.
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
Spotify's business.
Spotify on Thursday 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 made its debut 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 Google Play.
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 spending, according to research firm Sensor Tower
Inc. Since launching on Google Play in April, the game has been
installed roughly 11 million times and has generated nearly $10
million in global spending, the analytics firm said.
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.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
August 13, 2020 21:07 ET (01:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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