Epic Games challenges Google’s fee structure for in-app purchases, calls it illegal
Epic Games, the popular Cary-based video game maker, is trying to force Google to change its payment structure for in-app purchases, a policy that eats into the profits Epic can make from popular games like Fortnite.
Calling Google’s policy of taking a 30% cut of in-app purchases illegal, Epic is asking the tech giant to approve a new version of Fortnite on the Google Play app store that would allow Epic to keep all the revenue from in-app purchases.
While Fortnite is free to download, the company makes money from players who pay to customize their characters’ weapons, appearance and signature dance moves. Up to this point, to play Fortnite on Android-supported phones, players had to download the game from Epic’s website rather than the more popular Google Play store.
Epic has objected to the payment structure previously, and company CEO Tim Sweeney said in a statement he hopes this practice changes across the smartphone industry.
“Epic doesn’t seek a special exception for ourselves; rather we expect to see a general change to smartphone industry practices in this regard,” Sweeney said.
“We have asked that Google not enforce its publicly stated expectation that products distributed through Google Play use Google’s payment service for in-app purchase,” Sweeney added. “We believe this form of tying of a mandatory payment service with a 30% fee is illegal in the case of a distribution platform with over 50% market share.”
Apple also takes a 30% cut from sales within its app store, The Wall Street Journal reported. Fortnite is also available through Apple’s app store, and The Wall Street Journal reported that Apple takes a 30% cut from Epic.
A spokesman for Epic said the company “has been discussing our technical and business desires for open platforms with Apple.”
In the case of Apple, the music streaming service Spotify filed an antitrust complaint in Europe over the company’s app payment structure, saying it stifled competition. In general, the U.S. Department of Justice and a number of state attorneys general, including North Carolina Attorney General Josh Stein, have been looking closely at the amount of power tech giants wield on the market.
Sweeney, speaking from his preferred medium of Twitter, noted this has the potential to be a big decision for the tech industry.
“Please be patient and give Google time to deliberate on what is certainly a major decision for the future of the tech industry: whether platforms support ecosystems open to fair competition, or are resource monopolies granting special rights and privileges for themselves,” he tweeted Thursday evening.
In a subsequent tweet, he added that he thought the app stores would eventually make changes, but, “The big decision is whether it will be done now by great software engineers, or a bit later by courts and regulators throughout a prolonged period of industry malaise.”
Like Google, Epic has its own game-download platform where game developers can sell their games to consumers. But it only collects 12% of sales from those games, and it allows them to use their own in-game payment system if they wish, Epic said.
Google said in a statement that it expects Epic to follow its terms.
“Android enables multiple app stores and choices for developers to distribute apps,” a Google spokesperson said. “Google Play has a business model and billing policy that allow us to invest in our platform and tools to help developers build successful businesses while keeping users safe. We welcome any developer that recognizes the value of Google Play and expect them to participate under the same terms as other developers”
Created in 2017, Fortnite has become a sensation among young video game players, attracting more than 250 million active players. The game’s popularity has pushed the company’s valuation to $15 billion, as of last year, The News & Observer previously reported.
It has also allowed the company to grow its presence in Cary. In October, Epic said it would be adding a new building to its campus on Crossroads Boulevard, making room for up to another 2,000 employees, the N&O reported.
The video game maker has more than 1,000 employees worldwide, including hundreds in Cary. It has more than 100 open positions for its Cary campus listed on its website. The company also has a significant presence in California, a state that has a large presence of other video game companies.
Founded in 1991, Epic Games made a name for itself with games such as Gears of War and Shadow Complex. But the success of Fortnite has given the company even more heft with which to influence the video game industry.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published December 13, 2019 at 3:33 PM.
