Pay To Play: Apple v Epic Games proceedings begin in court
May 18, 2021
3 min read
What's going on here?
The anticipated court case involving Apple and Epic Games has begun proceedings over whether the tech giant’s App Store is unfair on developers, as a 30% “Apple Tax” is imposed on them.
What does this mean?
The App Store is one of Apple’s most lucrative platforms as Epic Games argues its terms are unfair for developers. In August 2020, Epic Games introduced a new system into one of their games, Fortnite, which allowed the developers to bypass the 30% commission charged by Apple with customers being able to make use of in-app purchases. This broke the terms of the App Store and consequently, Epic Games was removed from the App Store. Following this, Epic Games proceeded with a lawsuit against Apple.
The developer has put forward that Apple has imposed extortionate and excessive commission charges and believes that the control Apple has over the App Store is anti-competitive. Epic Games have also pointed out that if they are unwilling to pay the commission charges, then where else are they supposed to sell their products? As the customer reach that products such as the iPhone and iPad bring to developers amounts to billions, it is no surprise that Epic Games has decided to challenge Apple’s control and they are not the only developer who has expressed concerns as Spotify, Match and Tile have also spoken out. Epic Games have described the platform as a “walled garden”, however, Apple is fighting back with arguments of its own, stating that the commission covers its role in payments as well as the administration and safeguarding of the App Store. Tim Cook, CEO of Apple is also set to testify for the first time suggesting that this case is of monumental importance to Apple and could have further implications for the Tech industry if the judgment sways in favour of Epic Games.
What's the big picture effect?
Apple is not the only tech giant to have control over an App Store or similar app purchase platform, as companies like Google, PlayStation and Xbox hold similar control. A judgment in Epic Games’ favour could change some of the central governing principles surrounding the control of the App Store which Apple argue has not changed since its introduction in 2008. Apple has made it clear it can set charges as it likes because it owns the App Store and the charges imposed are industry standard for gaming. Similar charges are imposed by popular platforms including Google Play and Steam. However, Epic Games are not looking for damages but rather changes to Apple’s practices, which would set a precedent for other platforms to change. This would cause a significant loss in the profit that Apple makes from developers.
Apple has disclosed that its payment system is fair to smaller developers with 83% of apps and 76% of games on the App Store being free of charge. The developers that fall into these statistics would not be paying the 30% commission. Apple further stated that the charge is the top rate and in fact, the majority of developers pay no more than 15% in charges. Apple also implements an app vetting procedure to ensure the authenticity of developers’ apps and this costs money to effectively carry out. It is clear there is a range of arguments being made by both parties and the outcome will have a significant impact on how purchase platforms operate across the tech and gaming industry.
It is thought that Epic Games has been planning its attack on Apple through “Project Liberty” over the past two years, suggesting this is a calculated move from Epic Games to escape the supposedly unfair grip of Apple. Epic Games have also mocked Apple through releasing a parody of their classic 1984 Apple Mac advert, suggesting that Epic Games is also running a bold PR campaign to back their lawsuit. The significance surrounding this case is huge and both parties have presented strong arguments around the validity of the commission charge and its anti-competitive nature. The question that remains is whether developers should be subject to high commission charges for using platforms such as the App Store?
Report written by Harry Grice
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