There’s no denying that Epic’s battle with Apple and Google over their app store commission rates is a big deal – just look at the sheer volume of social media traffic being dedicated to every twist and turn the story took in the space of a few hours.
And it’s also pretty clear that this is going to drag on for a long, long time. Lawsuits aren’t settled in weeks or months. We could be hearing about this fight for years to come.
That also means that iOS gamers won’t have access to Fortnite anymore, possibly for the duration of a long and bloody court case. Meanwhile, Android gamers can still directly install Fortnite, as long as they don’t mind jumping through some hoops.
It’s a clear loss to players, at least temporarily. But what’s the end goal for all of this? And why did every company immediately take the nuclear option straight off the bat? Let’s try to untangle some of this.
The facts
Here’s what we know: Around 5am ET on August 14th 2020, Epic permanently cut the price of V-Bucks bundles by 20 per cent across all platforms. The catch was that on mobile, players had to pay using a new “Epic direct pay” system.
About eight hours later, Apple pulled Fortnite from the App Store. Epic almost immediately shared a lawsuit it was filing against Apple for the removal, and began teasing a new video called “Nineteen Eighty Fortnite” to be shown in-game at 4pm ET.
The short animation is a direct reference to an advert Apple made in 1984 when it was introducing the Macintosh computer as a competitor to IBM.
Not long after this whole debacle, Google finally entered the battlefield and also removed Fortnite from Google Play. And, once again, Epic almost immediately announced plans to sue Google.
Why is Epic doing this?
A debate around app store commission rates has been raging on for years, but it’s been reaching something of a fever pitch lately.
The main driver of this is likely the US antitrust investigation, which revealed that Apple previously wanted to take 40 per cent commission from in-app subscriptions, and that it struck a deal with Amazon for more favourable rates on its Prime Video app.
It’s not difficult to understand why developers want a lower commission rate – less money going to Apple means more money in their pocket. And commission rates are something Epic is keenly interested in, with the firm putting its money where its mouth is and offering an 88/12 per cent split to the developer on its own Epic Games Store.
65-page legal documents aren’t drafted in an afternoon. Short films aren’t animated in an hour. Somebody at Epic wargamed this entire scenario, and the company came prepared for a fight.
With all the brewing tensions, it makes sense for Epic to launch its strike now, when governments and other bodies are already looking at Apple and considering if somebody needs to step in and force the firm to change its policies.
But why Epic? One could argue that the company is really one of very few who can launch this assault, thanks to a) having a lot of money behind it, and b) having revenue sources largely coming from outside of mobile.
Because while Fortnite is an undeniable success on iOS and Android – it’s already cleared $1 billion in mobile revenues in around two years – that’s practically pocket change compared to what the developer is no doubt making from its PC and console versions.
With no real skin in the mobile game, Epic can easily start waging a war with the platform holders, because if it loses, it just sinks back to its own store and focuses on other platforms, no harm, no foul.
And if it wins the fight, then not only does it get to be David taking down two Goliaths, but it’ll also benefit from a better revenue share on its already wildly-successful game – along with other developers.
On top of that, Epic Games remains a privately-held company. It has big-name investors it will need to answer to, but its value doesn’t rely on a volatile stock market. And, hey, it just closed a pretty big round of funding. If it was ever going to start a war, now is certainly the time.
Why did Apple go nuclear?
In the public eye, Apple has pretty much already set itself up for the bad guy role. As the Nineteen Eighty Fortnite video insinuates, it’s acting like a totalitarian government forcing its citizens (developers) to submit to one rule.
Immediately removing Fortnite from the App Store sends a clear message – it’s our way or the highway. Except that, as has already been shown in the antitrust investigations, sometimes a compromise can be made, if you’re the right company.
Presumably Epic is the right company, and no doubt it has been trying to negotiate with Apple for some time before deciding to circumvent the App Store’s commission rates.
But Apple has to stand by its terms of service. If a game or app deliberately violates the rules, it needs to be taken down, no ifs, no buts. Especially if the developer of such an app is wildly flaunting its circumvention of the rules.
It’s worth noting, of course, that Epic clearly knew this would happen. 65-page legal documents aren’t drafted in an afternoon. Short films aren’t animated in an hour. Somebody at Epic wargamed this entire scenario, and the company came prepared for a fight.
Apple also doesn’t necessarily need Fortnite on the App Store. Even if Apple takes 30 per cent of that $1 billion the game has made on mobile (the actual figures are slightly more complex), that’s only $300 million. Tim Cook could lose that money down the back of the sofa and not blink.
Why did Google also go nuclear?
Google took a little longer to remove Fortnite from its store, but it was probably weighing up which allegiance to make in this fight.
Epic has firmly placed itself in the camp of the oppressed minority, struggling to make a buck under the thumb of The Man
If it sided with Epic, it would need to revamp its commission rates pretty sharpish. That would be a huge cost to Google, even if it would gain some points with the players. And it wouldn’t happen overnight, meaning Fortnite would stay off the store anyway while it was all sorted, or else come back with the Epic direct pay option intact, undermining the rest of the games on the service.
Taking the same stance as Apple realistically makes the most sense for Google. It keeps its commission rate, which saves a lot of time and money for now, and it’s probably not missing out on Fortnite revenues either – players can still get the game through Epic’s own app if they don’t mind side-loading an APK.
Google’s platform is already set up to be more open and allow developers to take their own route to delivering apps – even if it’s making it harder to avoid paying through Google Play, something Epic is quick to point out at every turn.
This means that Google won’t be under as much scrutiny as Apple from a public perspective, since Fortnite will still be playable on Android for the foreseeable future. Though Google will definitely be keeping a close eye on the Apple case, since if that firm loses, Google will also need to make changes to its store.
Who are the winners and losers?
Make no mistake – this is going to be a long, drawn-out process. You can be certain that none of the companies involved are going to back down at any point, until the courts decide who’s in the wrong here.
And right now, none of them are losing much. Sure, they’re all forfeiting Fortnite’s mobile revenues for a while, but as pointed out above, that’s not going to be a huge problem. And the legal fees behind this case will likely be astronomical – but Epic just raised a bunch of cash, so it’s got a bit of runway there.
Should Epic have its day in court and win, then it’s a big boon to mobile developers and publishers. Clawing back a few percentage points on a revenue share is a win no matter how you look at it, and if smaller studios can benefit from a titan like Epic winning that fight, then even better.
And if it loses, then you can be sure Fortnite will eventually find its way onto mobile stores again, with Epic grumbling about commission rates in its blog posts for years to come.
Right now, however, Fortnite mobile players are the biggest losers, especially on iOS. It just became a lot harder for them to play their game, and that is unlikely to change any time soon.
That’s going to stir up a lot of rage online, something Epic is banking on with its Nineteen Eighty Fortnite video and “#FreeFortnite” campaign – it’s firmly placed itself in the camp of the oppressed minority, struggling to make a buck under the thumb of The Man.
How many people see through this obvious facade is another question entirely. The public are a finicky bunch, and could go either way on this one. And if they do turn on Epic, that could be a disaster in the long run.
As for winners in the short-term, well, there’s no shortage of mobile battle royales out there. Expect to see Tencent and Garena kick up marketing for PUBG Mobile and Free Fire while this battle wages on, and it’d be very surprising if EA isn’t already stepping up production on Apex Legends’ mobile outing which is due for a soft launch this year.
Will Epic prevail and secure better commission rates, or will this whole thing be a huge waste of time for everyone involved as Apple retains its tight grip on the App Store? Only time will tell. But this amount of noise is going to attract attention from a lot of eyes, and both firms will no doubt be moving carefully as this dance begins to pick up speed.
