I’m not a fan of corporate politics and even less so commercial law, but I’ve been following the ongoing court case between video game developer Epic and Apple with keen interest because the outcome of the case could have a massive impact on the rest of the industry and how similar app stores are run in the future.
For those unaware of the current litigation actions, Epic is taking Apple to court over what they call abusive practices in controlling all the money made via apps on the Apple eco-system. That’s not just initial purchases, but plenty of the in-game transactions too. Epic, which owns the massively popular Fortnite along with the Epic Games Store on Windows PC’s, claims that Apple is behaving in a monopolistic way by not allowing the company to release its own store on Apple’s iOS devices, while also saying Apple’s high fees are abusive.
It’s an argument which has its merits, but on the same terms, Apple is also entitled to have a claim to fees earned on an ecosystem it created and continues to maintain, even if the fees are perhaps a little high. What makes the case interesting though is that it is actually about so much more than just these two giants, but fundamentally the whole model of app stores that permeate the industry, including the likes of Microsoft’s Xbox and Sony’s PlayStation stores.
As The Verge reveals, Apple is arguing that its model is simply the same as followed by every other gaming company who controls the digital purposes on their consoles, with Epic arguing that there is a difference. When called up to testify, Microsoft’s Xbox business development head Lori Wright acknowledged the similarity in the different models and ecosystems, but shared how the scale of usage and the bigger investment in hardware that the company sells at a loss make it a more necessary model for them to follow, which Apple doesn’t need to:
If Epic prevails, other ecosystems will fall too… You are basically building a piece of hardware to do a specific thing. The Xbox is designed to give you a gaming experience. People buy an Xbox because they want to play games… [With an iPhone] You’re buying it to do a wide variety of things, and that changes every day as new ideas are getting created. It can do a bunch of things already, and it has the aperture to do a bunch more things.
Both companies make a valid point. Microsoft’s model (which is similar to Sony’s PlayStation and Nintendo’s own digital store) is perhaps a more tailored experience operating at a lower scale that requires a bigger investment from the company in both hardware and software and therefore entitles them to justify the fees they do. However, with there still being similarities in their models, Apple can also argue that what applies to them may need to apply to others.
Epic believes it’s the big profits that Apple generates as a result of their high prices and lower investment (Apple makes a profit off of iPhone sales directly and operates on a larger scale) that requires the company to be held to greater account. Epic also argues that the same doesn’t apply to its own app store or Valve’s Steam, because neither is dependent on specific hardware and that both are open to competing against the other whereas Apple only allows its own App store to be used. Even Google’s Android device allows for the use of a different app store.
So depending on which way this case goes, we could either see app stores, in general, become increasingly regulated with lower fees and ways to make them more open to competition, or we will see just arguments over what a suitable amount of profit is to make off of a service. Whatever the outcome of this case, it’s likely we could see big changes across app stores in general and the consequences could be quite far-reaching across the industry as a whole.
Last Updated: May 12, 2021