Unless you've spent this week under a rock, it's highly unlikely that you missed a huge falling-out between Apple, Google, and Epic Games. It all started on August 13 when we reported on an Epic Games announcement regarding a new way to pay on the Fortnite store on mobile. The new Epic direct payment feature promised users a cool 20% saving on V-bucks if you bought them directly from Epic, instead of through the App Store's secure payment system. It didn't take long for everyone to realise that this was a flagrant breach of both Apple and Google's respective marketplace rules and guidelines, probably intentional, and definitely really strange.
Many cynics were quick to speculate that Fortnite had struck some sort of deal with Apple, and that there was no way that Fortnite and Epic could've updated its iOS app without Apple's approval to do this. There was, of course, no such deal. In time, it became clear that Epic had intentionally, and knowingly, breached Apple's App Store guidelines for the sole purpose of baiting Apple (and Google) into removing Fortnite from both the App Store and Google Play.
Turns out that Epic's plan in breaching these App Store rules was far more cringeworthy and tragic than we could have ever first imagined. Naturally, Apple reacted to the move by removing Fortnite from its App Store, stating that Epic had violated the App Store guidelines "that are applied equally to every developer and designed to keep the store safe for our users." It was at this moment, Epic pounced. In a clearly premeditated move, it immediately announced that it was filing a freshly-cooked, 65-page lawsuit against Apple in California, and began teasing a spoof of Apple's 1984 commercial titled 'Nineteen Eighty-Fortnite'. (Hilarious, right?) Google got a similar lawsuit a few hours later, but no spoof video. You can read the full sequence of events here.
Epic contrasts Apple's own policy directly with its Mac ecosystem, which it describes as an open market where users can install software from a variety of stores, or the developer itself without coughing up 30% of the proceeds to Apple. Epic would like you to think that it is taking up the cause of Apple's downtrodden, overlooked developers who have spent far too long paying Apple too much money for the privilege of being on Apple's App Store, with no hope of an alternative or reprieve in sight. And in a sense, they are correct.
It is not new thinking to suggest that Apple's App Store is not perfect, nor that it is particularly fair to many developers who offer paid apps and chargeable services through the marketplace. Before WWDC, we caught up with some developers to hear about some of their grievances with Apple and its App Store, of which there are many. Shovelware, paid adverts for searches, the seemingly arbitrary and fairly steep 30% cut, the fact that if you want to develop apps for iOS you must sell them through Apple's App Store. These complaints are well known, and developers are right to seek more favorable terms for the distribution of apps through the App Store. But this Epic Games stunt is not that.
Goliath vs Goliath
Epic's lawsuit against Apple is comprehensive, it includes histories of products, the App Store and such, and countless listings of grievances, etc. Epic says that Apple's restrictions on iOS software are "unlawful and unreasonable", and constitute a "stranglehold on the ecosystem." This all sounds very noble, and Epic even says that it isn't seeking any monetary damages from Apple, only an "end to Apple's dominance over key technology markets" and more competition on the App Store, so that small developers like Epic Games can start turning a profit from indie titles like Fortnite.
Epic's end game is written clear as day on pages five and six of the lawsuit:
Epic wants to create its own "App Store" for iOS, giving developers an alternative platform to host their games and software on, in the spirit of competition and fairness. Which sounds fine, unless you actually stop and think about it.
Remember that time Epic started a hostile takeover of the PC gaming market by paying developers millions of dollars to keep their games exclusive to the Epic Games Store? Well, this sounds a lot like that.
Epic Games store for iOS?
If Epic got its way, it would have an "Epic Games Store" on iOS, an alternative App Store marketplace where you could download iOS software for your iPhone or iPad. Who would set all the rules and regulations that govern that store? Why Epic Games of course! Who would handle all the payments, and gatekeep which apps would be allowed, or not allowed, on the store? Epic Games. Who would take the cut of revenue from the sale of software and in-app purchases? You guessed it, Epic Games. Epic isn't mad that Apple has an App Store with guidelines and a fairly high revenue cut, it's mad that you're paying that money to Apple, and not to Epic. Epic Games is a company earning billions of dollars in revenue, that would simply like to add more billions to those billions of dollars.
Epic really loves competition. Not.
Watching as the CEO of Epic Games tweet about competition and fairness is one of the most ironic things I have ever seen. In 2017, Tim Sweeney gave an interview to PC Gamer. On the topic of Microsft's UWP he said this:
Fast forward to 2020, and Epic Games runs a PC gaming market place, the Epic Games Store, which literally pays developers millions of dollars so that they will launch their games exclusively through Epic Games and not rival platforms, notably, Steam. In September 2019, it emerged that Digital Brothers took 9.49 million euro from Epic Games in an exclusivity deal:
Digital Bros, parent company of 505 Games, has disclosed that they received a payment of 9.49 million euro from Epic Games for Control.
Which I would imagine is for exclusivity.
55% of that payment going to 505 Games.
Report here: https://t.co/ocmbIQeOfJDigital Bros, parent company of 505 Games, has disclosed that they received a payment of 9.49 million euro from Epic Games for Control.
Which I would imagine is for exclusivity.
55% of that payment going to 505 Games.
Report here: https://t.co/ocmbIQeOfJ— Daniel Ahmad (@ZhugeEX) September 20, 2019September 20, 2019
Epic Games touts its highly favorable commission on developer sales, just 12% compared to 30% that rival Valve takes from sales through Steam. At first glance, this sounds really good for developers, except that in the case of exclusive games, developers are being cut off from something like 85% of the PC gaming market by submitting to Epic's exclusivity rules. It doesn't matter how good the revenue share is if the company taking it won't let you sell on the biggest audience on the market, presumably slashing your profits in the process. Not to mention Epic's own game store has almost none of the features of its Steam rival:
It’s important to remember that Epic’s pricing structure is just as arbitrary and insubstantial as Apple’s and Google’s 30% cut. Maybe even moreso. They’re basically selling “air” with zero product or fixed inventory costs.It’s important to remember that Epic’s pricing structure is just as arbitrary and insubstantial as Apple’s and Google’s 30% cut. Maybe even moreso. They’re basically selling “air” with zero product or fixed inventory costs.— Jesse Hollington (@jhollington) August 14, 2020August 14, 2020
Epic is so heavy-handed in its aggressive push to swipe exclusive titles that Metro: Exodus was announced as an Epic Games exclusive just two weeks before launch, by which time it already had a product page on Steam, and many users had already paid for the pre-order. Yes, that sounds exactly like the kind of fair and open competition that would make mobile app marketplaces more enjoyable.
The whole thesis here is that stores should be free to compete, and gamers and developers should be free to use stores of their choosing, which is exactly what is happening here today.The whole thesis here is that stores should be free to compete, and gamers and developers should be free to use stores of their choosing, which is exactly what is happening here today.— Tim Sweeney (@TimSweeneyEpic) January 30, 2019January 30, 2019
"Developers should be free to use stores of their choosing says a company that pays developers to not be free to use stores of their choosing.*
There's no doubt a single App Store presents competition problems to developers, they are very much at the mercy of Apple when it comes to the terms and conditions they have to play by if they want their software on iOS. The solution to this is to seek more favorable terms, lobbying Apple to treat its developers more fairly, through legislation if necessary. The solution is not a billion-dollar corporation adding another app store to mix, especially not one with a track record like Epic Games.
If Epic Games was allowed to create an App Store on iOS, would it start paying developers millions of dollars to launch software and games exclusively through the Epic App Store, forcing customers to use its own payments methods to access certain software, submitting to their terms and taking the cut of customer spending for itself? If it's PC track record is anything to go by, then yes.
One App Store is better
There are other benefits too, a single, secure payment system for all apps is more convenient and safer, and is by far and away the best user experience for the vast, vast majority of iPhone users. One example, imagine having to update your bank card details in multiple app stores every time you got a new one. Worse still, imagine how many app stores there would be if third-parties were allowed to create them. As Benedict Evans puts it:
Apple is often capricious, arbitrary and inept in how it moderates the store, and rent-seeking in how it manages App Store payments. But the principle of a sandboxed store and a unified payment system are very good for users and, actually, developers.Apple is often capricious, arbitrary and inept in how it moderates the store, and rent-seeking in how it manages App Store payments. But the principle of a sandboxed store and a unified payment system are very good for users and, actually, developers.— Benedict Evans (@benedictevans) August 14, 2020August 14, 2020
Beyond payments, the App Store stands as a protector between iOS users and software in so many aspects, security, data protection, resource usage, and more. Evans continues:
As I've already mentioned, there's plenty we could do to make the iOS App Store a more competitive, fair and open place that treats developers more fairly, and rewards them more consistently for making great apps and I'll happily discuss ways to make Apple's App Store a fair place for all until the cows come home. But I will not humor any more drivel from one of the most anti-competitive companies on the scene masquerading as some kind of messiah to downtrodden developers whilst buying off games for millions of dollars in exclusivity deals because it can't actually handle real competition.
Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design.
Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple.
I find this entire article pretty tough to take seriously. Is Epic grandstanding the same way any “upstart” company that actually makes millions of dollars would (see: Tesla)? Yes. Is there any precedent for Apple getting away with maintaining absolute control over what applications are “approved” to run on their computing devices and taking a guaranteed cut from every single sale (even INSIDE of those approved apps)? Absolutely not. We’ve been through this with Windows and I can’t believe Apple has gotten away with it for so long all in the name of something wholly subjective like “user experience.” Apple isn’t special compared to other tech companies and I shouldn’t have to jailbreak a phone to install something Apple doesn’t like. Epic’s business strategy doesn’t impact the argument in any substantive way.
Apple must be broken up into a thousand tiny pieces. Any other company would have been broken up 10 years ago!
No chance, that shouldn't and won't happen, Epic Games is playing the victim when their intentions are that instead of paying Apple which is far more secure, Epic Games wants players to use their inferior and insecure payment system for their own App Store so I totally agree with this article which states that Apple isn't perfect and should be doing more to help developers.
This article ... is totally ridiculous and hypocritical. As well as false. 1. "They just want you to give your money to Epic instead of Apple." The same is true of Apple when they use scare tactics against Google's products and services. Remember Tim Cook's scaremongering about Google invading your privacy, accessing your data, threatening your security in his infamous "Apple sells you products but with Google you are the product" speech? Or Phil Schiller's claim that (heavily low income and minority) public school kids who use Chromebooks instead of iPads ARE GOING TO FAIL IN LIFE? This very site was 100% in Cook's corner back then. (It did not mention Schiller's comments at all.) It looks like you Apple guys can dish it out but can't take it. Which is exactly what Epic Games pointed out with their 1984 ad, as Apple is now far more profitable, powerful, influential and pervasive than IBM ever was. 2. "the Epic Games Store, which literally pays developers millions of dollars so that they will launch their games exclusively through Epic Games and not rival platforms" Ummm ... Apple does the same. Not only do they pay tons to keep apps and features away from Android, but they buy formerly multiplatform products and services and make them Apple exclusives (Dark Sky, Beats Music). Not that there is anything WRONG with this but it is hypocritical coming from this site. 3. "One example, imagine having to update your bank card details in multiple app stores every time you got a new one. Worse still, imagine how many app stores there would be if third-parties were allowed to create them. " Yeah, this is so wrong. Let me explain it to you. I already subscribe to Amazon Prime and use Samsung Pay (because it supports MST which neither Apple Pay or Google Pay supports). Because of this, my payment details ARE ALREADY THERE for the Samsung Galaxy App Store and the Amazon Prime App Store. Even if I didn't? No problem: because you have the option of using your accounts like PayPal and Google Pay when using third party app stores. Including the Epic Store, which supports PayPal. No one, not even the most ardent Apple fan, has Apple Pay as their sole online payment method. Paypal and the other alternate online payment methods can easily be used to make purchases from the alternate app stores and you guys know it. You don't want to use it because you don't trust it? Fine. But there is nothing wrong with offering the choice to people who do. To put it another way ... if you use PayPal for online purchases on macOS, then using PayPal to purchase items from the Epic Store on your iPad WHICH CONNECTS TO THE SAME ISP USING THE SAME WI-FI CONNECTION THAT YOUR MACBOOK AIR DOES IS EXACTLY THE SAME FROM A SECURITY AND PRIVACY PERSPECTIVE. In other words, there is no basis for claiming that a single app store is needed on iOS for security, privacy and convenience without making the claim that macOS is insecure, has privacy issues and is cumbersome. Maybe you can tell yourself that about Android, Windows and ChromeOS - and you Apple guys do - but are you going to say the same about macOS? Do not get me wrong. I am not siding with Epic Games here. In fact, nothing would make me happier than Epic following the example of Nvidia and Razer (as well as several other Android OEMs) by creating their own Android gaming-focused line of devices (phone, tablet, TV set top box) that would have Epic, xCloud, Stadia, GeForce Now and Steam Link pre-loaded. Or they could come out with a similar Windows 10 device, as several companies have prototypes for Windows-based Nintendo Switch form factor devices including but not limited to the Dell Project UFO.) That is the solution to their "problems" and unlike other companies who tried and failed, they actually have the resources and brand name to pull it off. That would be much preferable to suing Apple. (Though I am an Android guy, I am actually more amenable to their suing Google because Google CLAIMS to be an open platform.) I am just pointing out that the arguments that you are making are hypocritical - as Apple has made their versions of them at their own competitors - as well as factually incorrect.
Tim Cook was right about both Google and Facebook. This article speaks the truth, I'd have more sympathy if Epic Games were a small developer but they're not and are just mad because they want Fortnite players to be paying them instead of Apple.
This article is spot on the money, and I am emphasizing the word “money“. Oh, and any comparisons between Apple and Microsoft of the 1990s is totally inappropriate. Apple is not a monopoly in any market segment in which it operates. Apple does make more profit than any other company in the tech realm, but that is not the definition of monopoly. It probably does engender a lot of sour grapes and envy among other denizens of the tech corporate world, however.
You know what your getting when you buy Apple products. You don't like their rules then go buy Android/PC. You have a choice-make it and be happy. Frankly if this game that important stay away from Apple. I'm sure Google or Epic will always have your back.
The barriers to entry are so high to creating an entire hardware/software platform that having just 2 or 3 competitors who can easily signal to each other the implicitly agreed upon prices and terms (think airline competition) is arguably not sufficiently competitive to avoid monopolistic effects on consumers. But the high barriers to entry also mean that Apple is providing a lot of value to app developers who don't have to build, integrate, or acquire their own dev tools and dev support (e.g. Xcode, framework libraries, etc.), they don't have to host their own landing pages and web sites and ratings/reviews (App Store does that for you), they don't have to build or integrate their own payment processing, etc. But the developers do have some options including hybrid native/web apps, third party libraries to use in app building, etc.
A future Epic App Store is a red-herring. The real motivation, I suspect is a future Epic payment processing system that would allow Epic to compete with Apple Pay, PayPal, etc. It would get existing Epic customers without any marginal customer acquisition cost, while PayPal, Venmo, etc. have no built-in customer base; they had to build their customer base organically. Starbucks has a built-in customer base but limits its payment processing to use only for Starbucks stores. Epic seeks to adopt the Chinese model of WeChat.
Apple store payment structure, "...developers earn 70% of subscription sales for the first subscription year, and Apple collects a 30% commission. After the first year, the developer earns 85% for all successive years that the user remains a subscriber, and Apple collects a 15% commission. "
So there probably are many in-app subscriptions where Epic is collecting 85%, not 70%. Fortnite was release the iOS App on April 2, 2018 https://www.apple.com/ios/app-store/principles-practices/#mn_p
You are correct RE the drop after the first year. However, pretty sure this only applies to subscriptions, not one-time purchases.
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