Epic Games lawsuits against Apple and Google will be a battle of tech giants
Epic Games knew exactly what it was doing.
In a move timed a few weeks after Amazon, Facebook, Apple and Google were questioned on Capitol Hill about their market power, the Cary-based video game maker launched two lawsuits — against Apple and Google — challenging exactly that.
In a whirlwind of action on Thursday, Epic successfully goaded Apple and Google into kicking the hugely popular game Fortnite off their respective app stores. Epic, which has long railed against the 30% fee the companies charge for in-app purchases, had circumvented their payment systems in a new update of the game.
As soon as Fortnite was removed from the app stores, Epic filed lawsuits and spun out a flashy marketing campaign to paint Apple as a villain to the 350 million Fortnite players around the world.
The lawsuit made no bones about it: The goal was to set precedent on how the developer ecosystem operates. The company even enlisted Christine Varney, the former assistant attorney general of the antitrust division during the Obama administration, to lead its case. The inclusion of Varney, one of the leading minds in antitrust law, sends a signal that these lawsuits “should be taken seriously,” said Rebecca Haw Allensworth, a professor of antitrust at Vanderbilt Law School.
In its lawsuit against Apple, Epic wrote that it “is not seeking monetary compensation from this Court for the injuries it has suffered. Nor is Epic seeking favorable treatment for itself, a single company. Instead, Epic is seeking injunctive relief to allow fair competition in these two key markets that directly affect hundreds of millions of consumers and tens of thousands, if not more, of third-party app developers.“
The main thrust of the argument: The combination of the phone operating systems and their app stores unreasonably restricts distribution of apps and how payments can be processed in those apps.
Apple, for its part, contends the way it operates its App store creates “a level playing field for all developers and make(s) the store safe for all users.”
Epic Games CEO Tim Sweeney took to Twitter to say the lawsuit will be “a hell of a fight.”
Matt Perault, director of the Center for Science & Technology Policy at Duke University, said Epic’s legal challenge could further embolden U.S. and European regulators to take a more aggressive stance against the tech giants.
“By pursuing long-term injunctive relief rather than a short-term remedy or damages that would benefit only Epic, the company is showing its desire to change the landscape for the entire developer ecosystem,” Perault said. “(I)t’s possible that Epic’s actions will provide more momentum to antitrust regulators in the U.S. and Europe.”
Already, Perault noted, European regulators have launched an antitrust investigation into Apple after Spotify complained about the company’s 30% fee.
It was only a few years ago, Allensworth noted, that people talked about antitrust laws — first created in 1890 — as if they were dead. Now they’re very much top of mind for Big Tech.
The move isn’t without risk for Epic Games. The amount of money at play is significant — even if the company just raised $1.8 billion from investors.
Fortnite brought in an estimated $1.8 billion last year alone, according to Nielsen’s SuperData. And in the past two years, the game has been downloaded onto iPhones and iPads alone more than 133 million times, bringing in $1.2 billion, The New York Times reported, citing the analytics firm Sensor Tower. That would put Apple’s cut at around $360 million, according to Sensor Tower.
Now, new players of Fortnite will not be able to download the game on the App Store. And for those who already have it installed on their iPhone, they will not be able to update it — a fact that means it could eventually become obsolete as Apple upgrades its software. A new season of the game is expected to begin soon as well, meaning many users won’t be able to play it on their iPhone.
The problem isn’t as immediate for Android users, whose system allows for Fortnite to still be installed from the Epic Games store. Up until April, that was the only way to play the game on an Android phone, as Epic protested Google’s fees.
Google and Apple have more leverage than Epic, reckons Wall Street Journal columnist Dan Gallagher. “The two companies power nearly every smartphone in the world through their respective operating systems, and few if any will be throwing away their mobile phone in a fit of pique over a video game,” he wrote.
Allensworth said the lawsuit will be very hard for Epic to win. “It is hard to bring these cases unless there is such obvious evidence that competition is really constrained,” she said.
The question the courts will be looking at, she said, is whether Apple and Google’s actions represent money-seeking behaviors or are they actually trying to constrain a competitor from potentially challenging their monopoly.
But Epic, with its large following, could win in the court of public opinion.
“The antitrust laws are very open textured. It is very possible to change their interpretation over time,” Allensworth said. “You have got to be worried, if you are Apple, about shifting public perception trickling down into the interpretation of laws.”
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
