Fortnite maker sues Apple after removal of game from App Store


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© Reuters. FILE PHOTO: An attendee stops to text next to Epic Games Fortnite sign at E3, the annual video games expo revealing the latest in gaming software and hardware in Los Angeles

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By Stephen Nellis and Munsif Vengattil

(Reuters) – Apple Inc (O:) on Thursday removed popular video game “Fortnite” from its App Store for violating the company’s in-app payment guidelines, prompting developer Epic Games to sue the iPhone maker seeking to end its in-app payment practices.

Apple cited a direct payment feature rolled out on the Fortnite app earlier on Thursday as the violation.

Epic filed a lawsuit in federal court seeking no money from Apple but rather an injunction that would end many of the company’s practices related to the App Store, which is the only way to distribute native software onto most iPhones.

“Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation. Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear,” Epic said in its lawsuit, filed in the Northern District of California.

Epic also attacked Apple on social media, launching a campaign with the hashtag #FreeFortnite, urging players to seek refunds from Apple if they lose access to the game, and creating a parody https://www.youtube.com/watch?v=euiSHuaw6Q4 of Apple’s famous https://www.youtube.com/watch?v=VtvjbmoDx-I “1984” television ad.

In the parody, which quickly garnered hundreds of thousands of views, a female Fortnite fighter hurls a unicorn-shaped club to smash a screen on which an Apple-headed character speaks of “the anniversary of the platform unification directives.”

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Apple takes a cut of between 15% and 30% for most app subscriptions and payments made inside apps, though there are some exceptions for companies that already have a credit card on file for iPhone customers if they also offer an in-app payment that would benefit Apple. Analysts believe games are the biggest contributor to spending inside the App Store, which is in turn the largest component of Apple’s $46.3 billion-per-year services segment.

In a statement, Apple said Fortnite had been removed because Epic had launched the payment feature with the “express intent of violating the App Store guidelines” after having had apps in the store for a decade.

“The fact that their (Epic) 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,” Apple said in a statement.

Apple was among the major American technology companies to come under anti-competition scrutiny in a hearing before lawmakers last month. During the hearing, Apple Chief Executive Tim Cook argued that Apple is not anti-competitive because it does not have majority market share in any markets where it operates, including mobile phones, where devices powered by Alphabet Inc’s (O:) Android have greater market share.

Epic’s lawsuit, however, argues that app distribution and in-app payments for Apple devices constitute their own distinct market for anti-competition purposes because Apple users rarely leave its “sticky” ecosystem, according to Epic’s filing.

Epic’s free-to-play battle-royal videogame “Fortnite” has reached massive popularity among young gamers since its launch in 2017, and competes with Tencent Holdings (HK:)’ “PlayerUnknown’s Battlegrounds”. The title’s removal from the App Store means that new players will not be able to download it and that exiting players cannot receive updates, but the game should continue to work on devices where it is already installed.

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Epic Games does not disclose how many iOS users “Fortnite” has. Many fans play the game primarily on PCs or gaming consoles while using their mobile phones as a backup, but iPhone users generate far more revenue for Epic.

In both Apple’s App Store and Google’s Play Store, “Fornite” had about 2 million downloads in July 2020, according to mobile analytics firm SensorTower. But Apple users spent about $34 million while Android users spent only $2 million, according to SensorTower data.

In a statement, Spotify Technology SA, a streaming music rival to Apple that has filed an antitrust complaint against the iPhone maker in Europe, applauded Epic’s move.

“Apple’s unfair practices have disadvantaged competitors and deprived consumers for far too long,” Spotify said. “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.”





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