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The Apple vs Epic Games Verdict: Apple Wins Antitrust, Epic’s Motion for Alternative in-app Payments Succeeds

Who will win? Apple or Epic Games? Will Apple Have to Unlock Fortnite?

While Epic keeps putting up a brave front, it’s evident that they have little chance of winning and in light of recent happenings, Apple is not only going to come out on top, but richer at the end of it too. It’s not the first time that developers have cried foul at policies formulated by platform creators that they see as overbearing, but the fact remains that if you are selling your services by leveraging an ecosystem created by others, there’s no getting away with bypassing terms and conditions that you yourself had accepted.

How Epic Games’ battle with Apple could reshape the antitrust fight?

This brings us to the question of what can you, as a developer, do if you find yourself balking at regulations imposed by giant corporations such as Apple and Google. For small businesses and individuals, the choice to start an independent content distribution platform is tough. Multinational organizations such as Microsoft and Samsung have tried their hands at it and failed. In addition to significant expenses, the onus of marketing it and incentivizing other developers to host their content on it can be a daunting task. Unless you are a prolific developer creating a whole bunch of new content, having a platform to just host what you create can make little sense as well.

However, for a company such as Epic Games, with several hits under their belt and a phenomenon such as Fortnite, the idea of developing their own distribution platform similar to companies such as EA and Ubisoft wouldn’t be too outlandish. Epic is a company that has garnered millions of loyal players worldwide who engage with their titles and the prospect of getting access to them at a lower starting price and cheaper in-app purchases has a great potential to succeed. What’s more, if they really want to take the fight to Apple, they can even try to lure other game developers to publish on their platform, promising them a more rewarding experience.

At [x]cube LABS, we were recently strategizing with a global gaming giant on just such a project. The company, a well-recognized and highly respected name which has produced many titles we grew up playing, was mulling the idea of starting their own store for distributing games. With our in-depth research on consumer demands and elaborate projections comparing ROIs that can be achieved by releasing games on their own store vs third party platforms, the verdict was in favor of going with a platform of their own. In addition to being in charge of strategizing their own policies, the organization will also be able to provide fans of their games a far superior experience with innovative features that we are in the process of detailing.

Latest Developments

Things didn’t turn out so great for Epic in the long run, but looks like the movement they started has led to Apple making some considerations under pressure. The Cupertino giant has announced that it will slash the fees it charges to app developers by half (from 30% to 15%) in case the developers failed to gross $1 Million and above in App store revenues. This change will come into effect from January 1, 2021 and will surely be a major relief for smaller developers who were rallying behind Epic to keep up the antitrust pressure.

Per the latest data from Sensor Tower, a vast majority of developers (97%) they track on the App store generate less than $1 Million in annual revenue. When asked if this development was a result of mounting pressure from such developers emboldened by the Epic lawsuit, Apple refused to divulge any detail.

The Verdict

It’s been over a year, and we have a verdict. While the ruling favors Apple on most of the motions, Epic’s relentless pursuits bore some fruit as well.

In an 185-page ruling, the court dismissed Epic’s appeal to declare Apple an illegal monopolist. While it acknowledged that Apple owns a significant market share, it observed that the Cupertino giant did not get there by any disputed means, and that success cannot be termed illegal.

Epic will also have to pay Apple 30% of the in-app revenue they have collected through the direct payment system they had introduced to bypass Apple’s cut. Between August and October 2020, Epic made $12,167,719 through this method before Apple removed Fortnite from the App store. Epic will also have to pay Apple 30% of all revenue that they collected from November 2020 to the date of the verdict. Additionally, the judge ruled that Apple’s removal of Fortnite was valid per the rules, and it’s up to Apple whether they want to reinstate the game at a future date.

However, to Apple, the court did direct some reprimands as it concluded that “Apple’s anti-steering provisions hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.”

The court also declared that Apple’s “anti-steering restrictions artificially increase Apple’s market power by preventing developers from communicating about lower prices on other platforms.”

The judge passed a permanent injunction to forbid Apple from restricting developers in their efforts to add direct payment methods, external links and other calls to action within apps.

Now it remains to be seen whether Apple complies with these rulings or we will see this saga continue.

Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers. https://t.co/cGTBxThnsP

— Tim Sweeney (@TimSweeneyEpic) September 10, 2021

Conclusion

The ongoing battle between Apple and Epic may have fired shots that are reverberating around the worldwide developer community, but the fact is, being who they are, Epic will be in far better shape even if they lose. For others, however, the prospect of reaching global audiences through the App and Play Stores is far too lucrative to risk raising voices against the behemoths that control them. However, if you’re like Epic and are feeling increasingly boxed in by stricter rules by the day, give starting your own distribution platform a thought.