Apple countersues Epic Games, accuses Fortnite creator of stealing millions in fees
Tech giant Apple countersued Epic Games on Tuesday, accusing the the Cary-based maker of Fortnite of stealing millions of dollars worth of fees with its attempt to circumvent Apple’s 30% cut of in-app purchases.
The move is the latest in the high-profile legal fight between the two, after Epic Games attempted to get around Apple’s mandatory fee on in-app purchases by introducing its own payment system within Fortnite. Apple claimed this breached its contract with Epic and quickly kicked the game out of the App Store.
Epic responded with an antitrust lawsuit against Apple that could have large ramifications in the tech industry.
A similar showdown is occurring with Google as well, with Epic Games CEO Tim Sweeney saying the lawsuits aren’t about monetary compensation for Epic, but rather widespread relief against what he views as anti-competitive stances by Apple and Google, two companies that control app distribution on iPhone and Android phones.
Epic Games makes Fortnite available for free to users. It makes money when players buy upgrades or customizations within the game — though Apple and Google have taken a 30% cut from those purchases.
On Tuesday, Apple filed a counterclaim against Epic’s move to thwart its in-app purchasing fee, saying it has caused real harm to Apple and was essentially an act of robbery. The counterclaim was first reported by The Wall Street Journal.
“Epic’s flagrant disregard for its contractual commitments and other misconduct has caused significant harm to Apple,” the company wrote in its claim. “Epic has reaped millions of dollars in in-app purchases through its unauthorized external purchase mechanism, thereby diverting to itself commissions that Apple was entitled to possess under the License Agreement. This is theft, period.”
Apple said in its claim that it is seeking restitution of all earnings, profits, compensation and other “ill-gotten gains” obtained by Epic from its contract breach. The company did not give an exact dollar amount.
In a statement, Epic said it was attempting to give Fortnite players on iOS a choice in how it payed for in-app purchases.
“Apple retaliated by blocking Fortnite updates on iOS devices and threatening to prevent Epic from creating software for all Apple devices — not just on Fortnite but all of our games, and Unreal Engine too,” the company said in a statement. “Apple is asking that Epic revert Fortnite to exclusively use Apple payments. Their proposal is an invitation for Epic to collude with Apple to maintain their monopoly over in-app payments on iOS, suppressing free market competition and inflating prices. As a matter of principle, we won’t participate in this scheme.”
The move comes after Epic asked a judge for the second time to reinstate Fornite on the App Store. The company’s new season of Fortnite, which must be downloaded to play, is currently unavailable to players who use Apple products, like the iPhone or iPad. The update was expected to be popular, as it allowed Fornite players to play as Marvel superhero characters.
In August, a judge had originally ruled that Apple could maintain its ban on Fornite — though she additionally ruled that Apple couldn’t retaliate against Epic’s Unreal Engine accounts with Apple.
Unreal Engine is a popular 3-D visualization tool that many developers use. It is the backbone of not just Fortnite but many other video games, and it is used in several industries, ranging from architecture to motion pictures. The judge ruled that Apple’s termination of Unreal Engine accounts would have hurt too many third parties not related to the lawsuit over Fortnite’s in-app purchases.
In last week’s motion, Epic revealed that around a third of Fornite’s 350 million registered users play the game via Apple’s App Store. Epic said this showed that Apple was irreparably harming the company.
In Tuesday’s filing, Apple said that, “by all accounts, Epic has taken advantage of Apple’s support and services more than any other app developer for the past two years. ... But sometime before June 2020, things changed. Epic decided that it would like to reap the benefits of the App Store without paying anything for them.”
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 September 8, 2020 at 5:17 PM.
