Published Tuesday 8th September 2020
Back in August, Apple decided to remove Fortnite, one of the world’s most popular and successful video games, from its App Store. On the surface, the story seemed inconsequential to anybody who wasn’t a fan of the game. Dig a little deeper, though, and this action unearths a much broader issue that could affect large swathes of the business world.
An argument over in-game currency has developed into a heated court battle that will be long and drawn out. However, if the makers of Fortnite can win their dispute, it could revolutionise how mobile app stores are run, further opening up this lucrative market.
Epic Vs Apple: What Happened?
The dispute between Epic Games – the makers of Fortnite – and Apple centres around the purchasing of in-game currency in mobile games.
Currently, Apple takes a 30% cut on all in-app purchases made through its compulsory payment system. In August this year, Fortnite offered its players discounted in-game currency if it was instead purchased directly from Epic Games.
Apple’s rules state that apps must only use their payment system, so the move by Fortnite led to the hugely-popular game being removed from the App Store. Minutes after the ban was announced, Epic Games filed a pre-planned legal complaint against the technology giant, accusing them of monopolistic practices concerning its App Store.
Big Tech’s Monopoly Problem
Epic Games is far from the first company to take issue with Apple’s practices when it comes to the digital marketplace. However, it is arguably the biggest, with billions in annual revenue. Perhaps more crucially, the majority of that revenue does not actually come from its Apple App.
There is growing optimism that Epic Game’s dramatic, pre-planned and well-staged action could be the final straw for Apple’s shaking defence.
In 2019, Spotify made a similar move, forcing iOS users to pay one-third more to subscribe to their music service compared to web users. The decision was a political one, soon followed by a court ruling which has now morphed into an ongoing EU antitrust investigation. Spotify has publicly backed this latest action by Epic Games.
However, Apple is far from the only culprit in this challenge against technology ‘ecosystem’ monopolies. Fortnite has also been removed from the Google Play Store for the same breach, although certain permitted circumnavigations make this a less critical decision for Android users.
Concerns about big technology monopolies are nothing new, but there is fresh attention being placed on them. Earlier this year, the United States’ Federal Trade Commission (FTC) expanded its investigation into antitrust practices by Apple, Facebook, Google, Amazon and Microsoft by demanding details of their acquisitions over the past ten years. According to critics, the ‘Big Five’ have made over 400 takeovers during that time, buying out any innovators that break into their slice of the digital world.
Amazon is a particular example with links to the current digital debate. Like Apple, Amazon offers an unparalleled online market and takes advantage of this offering by setting rules and commissions. Unsurprisingly, Amazon is also under investigation from the European Commission.
What Could Change Mean for Digital Businesses?
We’ve been here before with big tech, but perhaps not to this extent. There is a growing belief that Apple may be fighting a losing battle against Epic Games. If that’s the case, this could be the crack in the Big Five’s dam that has been taken as standard over the last decade.
In a best-case scenario, decisions could lead to autonomous digital marketplaces where commissions are significantly reduced, which could allow many more companies to be price competitive online. This freedom could broaden the scope of the digital market even further, unlocking opportunities for business large and small across various industries.
Ultimately, if Epic Games wins, the whole makeup of online marketplaces could become unrecognisable compared to today.
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