We’ve been spoiled by the Epic Games ($PRIVATE:EPICGAMES) v. Apple ($AAPL) lawsuit. While many legal squabbles between big companies get mired down in minutia and fine print, the battle between Epic Games and Apple over the App Store’s 30% fee on all app transactions comes equipped with a clear narrative. Epic frames itself and Fortnite as liberators, helping free other apps from Apple’s oppressive fees at no benefit to itself. Apple frames Epic as something of an ungrateful vassal, happy to benefit from the App Store but eager to scheme around it.
We even had our first bit of litigation just a month after the lawsuit was filed, giving us a taste of how the real deal might play out. Epic sought a temporary restraining order to prevent Apple from banning all users of its Unreal Engine from the App Store. Judge Yvonne Gonzalez Rogers agreed with Epic, but not without harsh words for both parties - she predicted that Epic’s methods would make it hard for them to see the lawsuit through, and chastised Apple for its significant fee.
The latest chapter in the saga came yesterday when Apple countersued Epic Games in a lengthy filing lambasting the company for its practices and narrative around the lawsuit. Apple’s 67-page suit has clearly taken note from Epic’s filing earlier this summer, which read more like a manifesto than a legal filing and called Apple “[the largest] technology monopolist in history.” Apple’s suit in return accuses Epic of “portraying itself as a modern corporate Robin Hood” and calling its initial trap for Apple a “Trojan Horse.”
What’s frustrating is that both parties are right, to an extent; Apple’s 30% fee is extreme and stifles growth, and Epic does simply want to sell more V-bucks to children. But their methods are questionable. Epic is in the wrong for weaponizing its young consumers and for playing the hero when it just wants more money. Apple is in the wrong for charging such a high fee and for not acknowledging that the app ecosystem is a two-way street.
Both filings have revealed a great deal both about the inner workings of the App Store and how successful Fortnite really is. Epic’s initial filing revealed that there are over 350 million Fortnite players, and Apple’s revealed that Epic has made around $600 million off the App store across Fortnite and its other titles. It’s likely Epic has made billions in revenue from Fortnite across its various platforms, and at a $17 billion valuation it can surely handle the loss of Fortnite for several months or even years as litigation plays out.
Apple’s filing, on the other hand, is revealing of their attitudes towards other app-makers in general. Yesterday’s filing went into detail as to the benefits of using the App Store and the suite of services provided to developers, and ultimately culminated in the line, “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.”
That hasn’t gone over so well with many app developers. Former CTO of Tumblr and developer Marco Arment harshly criticized the language, stating that the reason iOS devices are so successful is because of the third-party app ecosystem - not because of the hardware. Arment’s tweet was widely shared among app developers, and it’s easy to see why so many are rooting for Epic to win the suit even if they don’t approve of its methods. Developers see themselves as the driving force behind the success of the now over one billion iOS devices, and Apple is gatekeeping the audience they helped build behind a 30% fee.
It should be noted that Apple’s 30% fee is not unique. The Google Play Store (which has also removed Fornite for similar reasons) and Playstation Store also charge 30% fees. But what sets them apart from Apple is that Apple’s 30% fee is the gatekeeper to their billions of users. Apple is less concerned about the specifics of their squabble with Epic, and more concerned about an official ruling how they can and can’t regulate their own marketplace.
The above line, and Apple’s handling of the case in general, shows that Epic Games, despite being worth a fraction of Apple’s $2 trillion, is far better at messaging than their rival. Epic’s suit, in-game marketing campaign and #freefortnite contains carefully selected language about liberation and the good of all, casting Apple as a villain. CEO Tim Sweeny has been tweeting aggressively throughout the suit, invoking language similar to Martin Niemöller's "First They Came..." poem.
In response, Apple’s suit talks down to app developers in general and contains such lines as “Apple admits that its advertisement for the Macintosh was “breathtaking” and that its product was a “beneficial, revolutionary force” in the computing industry.” As if that didn't play into Epic's narrative enough already, Apple is also seeking monetary damages as part of their countersuit, whereas Epic has made a point to not seek damages at all. The restraining order hearing was also another blow in Epic’s favor, as Apple was seeking to potentially harm a huge market of app developers by banning access to Epic’s Unreal Engine altogether.
That’s where the hammer comes down. Both parties are set to meet in court on September 28, and we’ve already been treated to early litigation, but this is likely to be a long, protracted legal battle which will only negatively affect developers and consumers. Fortnite is the biggest game in the world, regardless of the loss of its App Store presence which made the game accessible to so many users. Epic will survive. Meanwhile, Apple is happy to flex its strength and will fight tooth and nail to keep the right to manage its own marketplace as it sees fit, which has already put the livelihood of smaller developers worth nowhere near even a fraction of the clashing titans at risk. An Epic Games victory is certainly better for the majority, but as long as the legal battle rages on, everyone loses.