Epic Games vs Apple

Epic Games is a Video game and Software developer and publisher that is based in Carry, North Carolina. Epic Games is most well known for its video game which took over the world by storm, Fortnite. Fortnite is a Battle Royale style game with over 250 million active players. Epic Games also owns and develops a popular game engine called Unreal Engine, which developers use to make games.

During April of 2018, Epic Games released Fortnite to the iOS operating system present in Apple devices and later released it to the Android operating system. Many players were rejoiced at this announcement as it made Fortnite more accessible to a wider playerbase.

Since Fortnite was free-to-play, Epic Games employed a different strategy to make money; by the method of Microtransactions. As explained in the article on the website Investopedia, “The monetization occurs when the player wants to acquire additions, dubbed "costumes" and "skins," which they have to purchase. The game also includes a unique feature called the "Battle Pass," which costs about $9.50 for a quarterly subscription. The quarterly fee gives the purchasing player exclusive access to the game’s system updates–like changes to the map and character features–that a free player does not get.”

On the topic of monetization, Apple and Google follow a ‘revenue sharing’ system in which the distribution of revenue takes place. How it works is Apple and Google take a 30% cut of the revenue that the apps make that are published on their store. They have their own payment services respectively which is meant to be used for any in-app purchase.

In mid-2020, Tim Sweeney, co-founder and CEO of Epic Games, decided to reiterate his stance on the 30% cut taken by Apple and Google. He had questioned the need for digital storefronts to take a 30% revenue cut when a revenue cut of 8% would be sufficient to run any digital storefront profitably. He also expressed that the higher revenue cut made more sense in consoles where there is an enormus investment in hardware and are often sold below the cost to produce.

On August 13th, 2020 Epic Games had updated Fortnite across all mobile platforms to reduce the price of their in-game currency by 20% if purcashed directly from Epic Games. In just a few hours, Apple and Google both removed Fortnite from their respective stores as this move by Epic Games violated their terms of service.

Epic Games immediately filed a lawsuit against Apple and Google for antitrust and anticompetitive behaviour. In response to the lawsuit, Google allowed Fortnite to stay on its operating system, Android; but did not allow it to be on their digital store.

Apple on the other hand, had informed Epic Games that they would revoke their access to developer accounts and tools for iOS and MacOS. This meant that the development of the game engine Unreal Engine would be affected and this would impact all developers who use the Unreal Engine to have their games on Apple devices.

After a court hearing on August 24th, 2020 the Judge had called a consensus stating that Epic Games should still be allowed to have developer licenses to develop Unreal Engine but should not be allowed to have Fortnite on the App Store. This move came into action on August 28th 2020.

References

https://www.investopedia.com/tech/how-does-fortnite-make-money/