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What else is there to do for fun during a pandemic but play video games? That is why video games have never been more popular, and perhaps none more so than Fortnite: Battle Royale. The free-to-play game has had hundreds of millions of players worldwide since it debuted in 2017 and continues to see unparalleled success.
Fortnite makes its money from in-game purchases, microtransactions, and a subscription option. In 2019, Epic Games brought in $1.8 billion from players. A cross-platform game, it can be played anywhere consumers play games, including iOS and Android smartphones.
It is from that base of support and money that Epic Games, the maker of Fortnite, is challenging Apple and Google's dominance of the app marketplace.
Epic Games recently offered gamers the chance to do an end-run around the tech giants' proprietary purchase systems, which take 30-40% of sales, and instead make direct purchases. Epic Games then immediately lowered the cost of their game purchases. Reducing prices, it turns out, is a good way to generate support for your company's legal position.
Apple and Google both booted Fortnite for violating their respective terms of service, which explicitly prohibit developers from doing this. Epic Games, clearly spoiling for a fight, quickly filed separate lawsuits against both Apple and Google for violating antitrust laws.
This is not the first time Apple has been accused of holding a monopoly. In the most recent example, lawmakers in D.C. questioned Apple extensively over whether its App Store is anticompetitive. According to Reuters, developers are extremely reliant on the App Store, with 70% of app revenue coming from the App Store.
In its complaint, filed in the U.S. District Court for the Northern District of California, Epic Games alleges that Apple violates the Sherman Act and the Cartwright Act, a California antitrust law, by monopolizing app purchases on iOS devices. There is no alternative to the App Store on iOS devices. Apple is seeing a coordinated and strong attack on its so-called "Apple tax."
Epic Games made similar complaints against Google, alleging Google Play monopolizes app downloading. However, Epic Games has perhaps a more difficult claim against Google Play. For example, while Apple requires all apps to be downloaded on iOS devices through the App Store, Google allows several stores to operate on its platform. However, Google does make it much, much easier to use Google Play on Android phones.
As one example, Epic Games referred to a previous plan to have OnePlus smartphones include an Epic Games app on their phones, which would bypass the Google Play store available on all Android OS smartphones. However, OnePlus pulled out of the deal after pressure from Google, according to the complaint. Google also encourages Android smartphone providers to use Google Play as the default and puts up security warnings for any other app provider.
Epic Games alleges that the two tech giants' monopolies cost consumers through anticompetitive fees, which Epic Games sought to prove when it immediately lowered its prices after allowing direct purchases from gamers. Fortnite is not seeking damages, instead asking the two tech giants to enable third-party app providers greater access to the marketplace. Should Fortnite prevail, both Apple and Google could be forced to make way for alternative app stores and lose some of the revenue they enjoy from their market dominance.
Epic Games has certainly made bold and confident moves so far. While the legal case appears strong, if the two companies do not settle protracted litigation is almost a certainty. Meanwhile, the long-term prospects for where (and how much) we can purchase that Fishstick skin we so desperately need remains unclear.
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