Implications of the Epic vs. Apple litigation

On Behalf of | Jun 28, 2021 | Business Litigation |

The commercial litigation of Apple vs. Epic Games concluded on 24 May 2020. As both sides await the court’s decision, the tech industry is bracing itself for the potential fallout a decision could bring. 

Background

Apple currently takes a 30% cut on all third-party apps and in-app purchases paid for through its App Store. Developers seeking to access customers on Apple’s iOS agree to Apple’s terms and conditions. 

However, Epic activated a hidden code within their gaming app, Fortnite, that let users bypass the App Store purchase process. Apple promptly banned Fortnite from the App Store on 13 August 2020. Epic, expecting this, filed an antitrust lawsuit against Apple that same day. It alleged that Apple’s rules block competition, control the markets, and suffocates innovation. 

Apple struck back with a countersuit alleging that Epic fabricated a crisis to avoid paying Apple its 30% commission. And in September, Apple filed a breach of contract lawsuit against Epic Games. 

Apple’s perspective

Apple maintains that the 30% commission it charges developers helps keep the App Store safe, secure, and private. The 30% fee on Apple’s iOS is on par with the commission Google charges on the Google Play Store on its Android devices. Apple accuses Epic of wanting to have access to its IP and the customers Apple serves on it for free. 

Epic’s Perspective

Epic Games agrees. The company says it wants to see the iOS operate more like the way the Windows operating system works. There, users can buy and sell software in and out of the Microsoft Store. In the lawsuit, Epic argues that iOS is an unavoidable operating system for mobile app developers. And since Apple is the gatekeeper of this marketplace, it cannot legally create rules for third-party apps that are unfair and anti-competitive. 

Where they are now

Epic and Apple have each received small victories in this litigation so far. Last August, the judge allowed Apple to keep Epic’s ban in place but restrained Apple from banning Epic from developer tools.

A final ruling in Epic’s favor could enable app developers to market apps directly to the consumer on Apple and, by implication, Google devices. This situation would translate to more money for developers and possibly more choices for consumers. But others fear that such a ruling could make the iOS less secure and more prone to malware. A threat that Apple warns, its iOS is vulnerable to every day. 

Some observers speculate that the court may issue a compromise ruling to the two tech giants. But whatever the outcome, the fight is just beginning for Apple. Epic opened another similar litigation against Apple and Google in the UK. And the Justice Department is currently conducting an antitrust investigation into Apple’s App Store rules and requirements. 

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