Update 09.08.20: Apple’s recent lawsuits claim compensation from Epic Games and make counterclaim for “unfair enrichment” and “torture interference” between Apple and its customers.
The latest: Apple files counterclaims
Ahead of the first court hearing on September 28, Apple has filed a counterclaim against Epic Games. Apple claims “unfair enrichment” and claims Epic intended to disrupt Apple’s relationship with its customers. For that purpose, Apple seeks criminal damages from Epic Games.
The filing sings essentially the same song Apple has been singing since it all started: Apple̵
Epic is likely to respond with the same argument it has used since the lawsuit was filed last month: that the problem is not the quality of Apple’s App Store or related tools, but the mandatory nature of them and their associated business agreements. Developers have no choice but to participate if they hope to reach one billion users of what are now general-purpose computing devices.
On September 4, Epic had filed a formal request for a preliminary injunction for Apple to reintroduce Fortnite while the two companies fight against it in court (this was a longer, more formal version of the emergency ban previously requested).
Epic has until September 18 to submit a response. The first consultation is scheduled for 28 September 2020.
Fortnite may not be burning the App Store lists as it used to be, but it’s still one of the most popular games of all time, with tens of millions of players. We do not know how many of them play on mobile devices, but Epic Games (creator of Fortnite) is willing to gamble the entire market to defy Apple’s and Google’s rules for app stores in an escalation of an ongoing, industry-like antitrust battle.
If you do not know, Fortnite allows players to buy in-game items (outfits, dance steps, that sort of thing) with a virtual currency called the V-dollar. It is similar to gems, diamonds, energy and other virtual currencies used in so many other mobile or free games.
Epic Games just announced that V-dollars cost 20 percent less than they used to do. If you play the game on PC, Mac or console, boom – the price is just cheaper, period.
However, if you play on iOS or Android, it’s a little more complicated. When you buy a V-dollar, you are now presented with it alternatives. If you choose to buy through the App Store or Google Play Store, you pay the old price. Epic has added a new “Epic direct payment” option, which uses payment information linked to your Epic account (or allows you to enter new payment information) and gives you a 20 percent discount.
Epic Games is quite direct in its explanation of why the price is higher for those who buy through the App Store:
Apple and Google currently charge a 30% fee when using the Apple and Google payment options, and the price drop of up to 20% does not apply. If Apple or Google lower your payment fees in the future, Epic will transfer the savings to you.
A deliberate and direct violation
This is of course a direct violation of Apple’s rules for the app store. Section 3.1.1 of the App Store Review Policy states: If you sell something in your app or offer any kind of unlocked functionality, must use Apple’s processing in the payment of apps exclusively. The Google Play Store works in the same way, although it is possible to download and run Fortnite on an Android device directly or on Samsung devices through the Samsung app store.
Is this a privacy and security issue with protecting your payment information? Definitely not. Apple allows apps that sell physical goods and services in the real world to use their own payment processing. So apps from Starbucks to Amazon to Uber and beyond can have their own payment systems in place, and collect and store your payment information. Apple’s rule only applies to digital content, and even then it has exceptions for a certain class of applications it calls “reading” apps (like Kindle and Netflix). Hundreds of millions of iPhone and iPad users regularly use apps that include their own payment processing.
Fortnite’s obvious breaches of the App Store rules are no coincidence. Epic Games CEO Tim Sweeney has been a critical critic of Apple’s policies and rules on iOS, recently telling CNBC: “Apple has locked down and paralyzed the ecosystem by inventing an absolute monopoly on software distribution, on software revenue generation. “
Epic Games is deliberately provoking Apple and Google, just as companies are in the hot seat over antitrust allegations, both in the United States and around the world. The company faces several antitrust investigations in the EU, for example. Apple recently came under fire to prevent the distribution of both Microsoft’s xCloud gaming service and the live gaming features of Facebook Gaming.
Get popcorn out
Epic Games has taken off the glove and hit Apple over the face with it. Both Google and Apple are obligated to remove the app from their app stores, or else open the floodgates to all other apps that sell digital goods with their own payment processing, just as sellers of physical goods and services do.
This would completely remove one of the world’s most popular games with tens of millions of fans from iPhones and iPads. Those with Android phones will still be able to play by downloading the game directly from Epic, an option Apple users do not have.
When Apple inevitably removes Fortnite from the App Store, it will add fuel to the fire of Apple’s current antitrust issues. It will serve as another great example to draw for regulators and courts; a great demonstration of how Apple’s rules and policies harm not only companies that want to compete with it, but also customers.
Apple supports Fortnite from the App Store
As expected (some would say encouraged), Apple kicked Fortnite off the App Store a few hours after our first story. It issued the following statement to The Verge:
Today, Epic Games took the unfortunate step of violating the App Store guidelines, which are applied equally to all developers and designed to keep the store safe for our users. As a result, their Fortnite app has been removed from the store. Epic enabled a feature in its app that was not reviewed or approved by Apple, and they did so with the express intent to violate the App Store’s payment policy that applies to all developers selling digital goods or services.
Epic has had apps on the App Store for a decade, and has benefited from the App Store ecosystem – including tools, testing and distribution that Apple offers to all developers. Epic freely agreed to the App Store terms and conditions and we are pleased that they have built such a successful business on the App Store. The fact that their business interests now make them push for a special scheme does not change the fact that these guidelines create equal conditions for all developers and make the store safe for all users. We will do our utmost to work with Epic to resolve these breaches so that they can return Fortnite to the App Store.
As we noted in our first publication of this article, Epic Games’ actions seemed designed to provoke just that answer. Apple’s answers trot out the same canards we always hear: That the app store rules are used equally (only technically true, since the rules themselves specify classes of apps to which different rules apply), that they are designed to protect users (certainly difficult to argue when so many popular apps are allowed to include their own payment – how is it safer just because they do you sell physical goods?), and that the real recipient of the App Store has been Epic Games (ignoring Apple’s own advantage of having popular apps on its phones).
It also sets up a special straw man argument: that Epic Games wants special treatment. In fact, Epic Games has been very clear that it wants the opposite – it wants a change in the rules for everyone.
Epic Games jumps the trap
So that no one would doubt that this whole move was a deliberate provocation by Epic Games to cause a trap on Apple, the company announced the unveiling of an animated card “Nineteen Eighty-Fortnite” in the game reminiscent of Apple’s historic Macintosh ad from 1984. To say that the company expected the game to be taken down from the App Store is an understatement.
Epic Games is trying to paint Apple as the new IBM, the controlling “Big Brother” that Apple overturned in its 1984 Macintosh ad.
It’s not just a PR stunt either. Epic Games has filed a complaint for Injunctive Relief (PDF link) in the Northern District of California, alleging 10 violations of the Sherman Act and California law.
On August 17, Epic Games tweeted that the situation has escalated: “Apple removed Fortnite from the App Store and has informed Epic that on Friday 28. August, Apple will close all developer accounts and cut Epic from development tools for iOS and Mac. We ask the court to stop this retaliation. ”