If you are in any way at all a gamer, there is very little chance you haven’t heard about Fortnite’s recent split from Apple. I’m barely a gamer, and even I heard about it. I’m thrilled I heard about it before my son did because It gives me some time to figure out if I can transfer his account from his iPad to the Nintendo switch.
1) What happened – Epic Games (Fortnite’s Parent company) decided to set up a separate in a game payment system that bypassed Apple’s payment system. When payments went through Apple, they would take a cut of any payments made, which is around 30%. This surcharge is baked into any contract that they have with any of the companies that provide apps on the app store, which have in-game purchases. Doing this, in my opinion (which I admit I have no legal background) is a breach of contract. Because of this, Apple has taken Fortnite off the app store. People who have the game on their devices can still play it, they cannot update, and any purchases made are required to go through Apple’s payment system to make any in-app purchases. Epic tried this with the Google store as well. Apple claims to be working with Epic to resolve the issue, and this will continue for a while, I would assume.
2) What this could mean – Epic claims that they are not trying to get around Apple’s sir charge for themselves, but to make it so that their players can keep their own money. They are also claiming that iOS is imposing a monopoly on game companies who want to provide games to iOS users who can’t afford the 30% fee. If the lawsuit that is currently being issued from Epic to Apple is successful, then it could be the very first chink in Apple’s armour and could cause the whole of the app store to be overhauled. If Epic is allowed back into the app store without paying the operating fees, it will open the floodgates for every other game with in-app purchase capability to get the same discount. Because the App Store is a massive revenue machine for Apple, loosing the 30% off the top would be a massive body blow for Apple.
3) My thoughts – Let me go slowly here…The lawsuit will not be successful. Let’s look at the narrow issue of the 30% sir-charge for a second. When Epic signed a legally binding contract, they were aware of the sir-charge, and (i would assume) knew that if they wanted to make in-app purchases that it would have to go through the App Store. In Epic’s Statement (Which looks like my eight-year-old son wrote it), they use the term “Unlawfully” in each of the four paragraphs. When 99.999% of businesses engage in a contract, they stick to the terms of the agreement. They don’t blatantly break the terms of the deal and then walk to the press and claim it was the other party’s fault, like what Epic is doing. Now to look at the supposed “monopoly” that Epic is claiming that Apple has over what is or is not allowed on their app store, Epic is also, in my humble opinion, off base. Yes, it’s true, Apple has sole control over who can operate on their app store, and to do so, the providers of Apps must comply with apple’s terms and conditions. My question is, “who cares?” When you enter into, as an example, a lease to be a retailer in a shopping mall, there are terms and conditions under which you have to operate. The App Store is no different. Companies that provide apps that want to work in these digital shopping malls must comply with the rules.
What Fortnite is trying to do is bend the Gaming industry to their will. By attempting to get established platforms to play by their rules, they will run the table. This is, to a degree, not unheard of. Apple went to the Music Industry at the beginning of the 2000s and pitched how the iTunes store was going to work and told the music industry, which had been around for a while, how it would work. I think Apple was successful because they had already established iTunes as a music platform that the music industry could jump onto. Epic has the game, but no platform.
For a different perspective on this, I spoke to a developer friend of mine. From what I was able to get from him, Epic’s argument is that because they don’t work off the servers that Apple provides, they are essentially using the app store to get customers into their space. To follow my “retailers in a mall” analogy, it would be like hanging a sign in a mall and the customers having to go to another store, but having to pay full rent all the same. It’s an understandable point to be clear, and the problem between developers and the platforms they work off is a much bigger and longer argument, but I won’t get into that here. For me, the central argument is that they tried to circumvent their contract with Apple.
As this story has developed (and it’s taken me a few weeks to figure out my position on this one), a lot has happened. We learned that FaceBook is taking a stance in attempting to put notification for any purchases done through Facebook, saying that they don’t take a cut, but was disallowed by Apple as it violated their terms of service.
I get what Apple’s trying to do; they are trying to hold onto their profit margins that they have established through the app store. They are also trying to maintain a standard of quality and security by getting everyone to operate off their servers. On the other hand, I feel like there could be a better way of handling this than simply drawing a hard line in the sand. Apple isn’t alone in charging a small fortune to developers who want to operate off their platform. Google takes the same as Apple at 30% off the top of their in-game purchases, and Microsoft takes 25%. While the Court has essentially sent both Epic and Apple back to their corners by stating that Epic shouldn’t have created, it’s payment platform circumventing the app store and saying that Apple can’t remove Epic in retribution, but the battle has only just begun. With Fortnite off the app store entirely now and other apps starting to grumble about the app store overhead, it will be interesting to see how this battle goes. If the developers win, there could be a (pun intended) Epic dismantling of the various app stores, where anyone with a server could put an app up for purchase. This could mean a massive blow to Apple’s bottom line but could also mean that if Apple can no longer appropriately vet what’s being put on the app store, there could be Cybersecurity issues like we’ve never seen before. If the platforms win, then we will forever be at the whim of however much they want to charge developers for their products, which will get passed along to the users themselves.
SIDE NOTE: In writing this post, my son did ask about the most recent update to Fortnite on his iPad. I had to explain roughly what was happening, and his reaction was classic.
Whose side are you on?
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