A battle royale seems to be brewing between tech titans Apple and Google and wildly popular game Fortnite. Epic Games, publisher of Fortnite, is making the first major challenge to Apple’s dominant distribution system, its App Store.
At issue is how players pay for weapon and outfit upgrades for their in-game personas. Apple and Google both require a cut for players using iOS and Android devices, essentially cutting into how much Epic takes in on those devices unlike other gaming platforms.
Epic, based in Cary, North Carolina, kicked off its offensive Thursday by announcing a direct payment option for mobile players, which would give them a discount compared to buying through the iOS app. Soon after that, the game was no longer available to download via Apple’s App Stores.
In response, Epic Games filed suit in U.S. District Court in California, claiming Apple has set “unreasonable restraints” over how it handles in-app payments.
“Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation,” reads an excerpt from the complaint, which is embedded below. “Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear.”
While other major tech players including Netflix, Spotify and Amazon have raised issues about Apple’s 30% fee for revenue from most app developers, this is the first legal challenge, says Daniel Ives, an analyst and managing director with Wedbush Securities.
“This is the first major shot across the bow, especially given Epic and Fortnite, they have such a massive following,” Ives said. “This is going to be a battle royale and investors as well as developers are watching closely to see how this all plays out and also to see Apple’s next move.”
The payment system would allow mobile players to perform transactions on Fortnite without going through the App Store or Google Play. The publisher said mobile players get 20% discounts when paying directly to Epic.
“Currently, when using Apple and Google payment options, Apple and Google collect a 30% fee, and the up to 20% price drop does not apply,” reads a post from Epic Games published Thursday. “If Apple or Google lower their fees on payments in the future, Epic will pass along the savings to you.”
Google removed Fortnite from the Google Play store a few hours later on Thursday.
“The open Android ecosystem lets developers distribute apps through multiple app 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 in a statement send to USA TODAY. “While Fortnite remains available on Android, we can no longer make it available on Play because it violates our policies. However, we welcome the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play.”
Epic Games also filed a similar suit against Google on Thursday. In the complaint, Epic charged that “Google was founded as an exciting young company with a unique motto: “Don’t Be Evil” … Twenty-two years later, Google has relegated its motto to nearly an afterthought, and is using its size to do evil upon competitors, innovators, customers, and users in a slew of markets it has grown to monopolize.”
Launched in 2017, Fortnite features a battle royale format where 100 players compete to survive as the last player standing on a remote island. Since then, the game has amassed a huge following of 350 million players, and is available on multiple platforms.
Players typically purchase items such as outfits or gear on Fortnite using an in-game currency called V-Bucks. Starting Thursday, players could purchase 1,000 V-Bucks from PC or home video game consoles for $7.99. When buying through Apple’s App Store and Google Play, the same purchase costs $9.99.
In a statement to USA TODAY, Apple confirmed Fortnite’s removal from the App Store for violating its guidelines.
“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services,” Apple said in a statement.
Epic Games also teased a new short titled “Nineteen Eighty-Fortnite,” which appears to spoof Apple’s classic “1984” ad.
“Epic Games has defied the App Store Monopoly,” reads a message at the end of the parody ad. “In retaliation, Apple is blocking Fortnite from a billion devices. Join the fight to stop 2020 from becoming ‘1984.’”
Epic says in its complaint that it wants the court to issue an injunction “prohibiting Apple’s anti-competitive conduct and mandating that Apple take all necessary steps to cease unlawful conduct and to restore competition.”
In its statement, Apple said it will work with Epic to help bring Fortnite back to the App Store.
“Epic agreed to the App Store terms and guidelines freely and we’re glad they’ve built such a successful business on the App Store,” reads Apple’s statement. “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.”
In 2019, Netflix pulled iTunes billing from its iOS app, requiring subscribers pay Netflix directly. Spotify opted out of in-app purchases, too, in 2016, and filed an antitrust complaint against Apple in the European Union. Amazon and Apple, which began to compete as streaming TV providers and device makers, have butted heads, too, until last year, the Apple TV app arrived on Amazon Fire TV apps. Prior to that, Amazon began selling Apple TV devices online, too.
“We applaud Epic Games’ decision to take a stand against Apple and shed further light on Apple’s abuse of its dominant position,” Spotify said in a statement sent to USA TODAY. “Apple’s unfair practices have disadvantaged competitors and deprived consumers for far too long. The stakes for consumers and app developers large and small couldn’t be higher and ensuring that the iOS platform operates competitively and fairly is an urgent task with far-reaching implications.”
Epic’s action comes two weeks, Ives noted, after Apple CEO Tim Cook and the CEOs of other tech giants, Google’s parent company Alphabet, Amazon and Facebook, appeared before a House Judiciary subcommittee in a hearing about potential antitrust regulation.
“It’s not a surprise that Epic and Fortnite went after this especially given the antitrust (interest in Congress) … with the focus on the app store,” he said. “If Epic and Fortnite are successful in this push, it could open up Pandora’s box for others.”
Follow Brett Molina & Mike Snider on Twitter: @brettmolina23 & @MikeSnider.