Leaf&Core

Epic Wins Small Victory Against Apple, But Loses the War

Danielle from Leaf and Core
Reading Time: 3 minutes.
Fortnite's V-Bucks buying screen on iPhone with an iPhone game controller

Fortnite’s V-Buck workaround lead to an App Store ban

Apple and Epic have been in a legal battle over whether or not Apple’s App Store policies are monopolistic in nature. As a recap, Epic added a way for users to bypass the 30% fee Apple collects on in-app purchases in Fortnite. This broke App Store guidelines. Apple kicked Epic off the App Store entirely after Epic refused to back down. Apple even counter-sued Epic for breaking their App Store contract.

It seems like both companies did something wrong here, and a California judge agreed. Judge Yvonne Gonzales Rogers decided that Epic must pay damages for breaking their contract with Apple. However, she also ruled that Apple unfairly blocks developers from discussing outside payment options. Therefore, Apple has to allow developers to tell users they can also pay for services outside of the app, avoiding Apple’s 30% fee and potentially getting a cheaper price.

Both Epic and Apple lost, but we win.

Epic’s Little Win

The judge’s ruling states that Apple isn’t unfairly monopolizing apps with the App Store or mandatory in-app purchase fees. Of course, on iOS, there’s nowhere else for app developers to go, and, when it comes to mobile operating systems, Apple and Google have a duopoly, but because Epic was selling digital goods outside of these ecosystems, there isn’t a direct monopoly, according to this ruling. However, the judge found that, by forcing all payments through the in-app system and not allowing companies to talk about buying in-app items, like subscriptions or in-app currency, outside of the app, then they were creating an unfair system.

Epic’s little win is that they’re allowed to tell users they can get a cheaper price by buying their in-game currency through Epic’s website, rather than the app. This applies to all developers. Developers can now tell customers they could save money by going to their website instead of buying items in the app. This means companies have a chance to both make more money and pass on savings to customers. For example, an app that has a $10/month subscription in-app could charge $8/month if the user signs up online instead of in the app. This allows them to keep $1/month from that first year of a subscription, where Apple charges 30%. The company could increase prices up to $9/month, still saving 5% in the 15% fees they would lose to Apple, and still saving the customer money each month over buying through Apple. By cutting out Apple, the middle man, everyone gets a better deal.

Except Apple, of course.

Indefinite App Store Ban

Unfortunately, Epic can’t take advantage of this situation. They had planned to re-submit Fortnite to the App Store after Apple updated their App Store guidelines in accordance with the ruling, but Apple won’t let them. Apple has decided to ban Epic from the App Store until the appeal process has finished. Epic could have potentially settled with this ruling and possibly regained entry to the App Store, guiding customers off the app for V-Bucks purchases. Instead, they’re appealing, and Apple says they won’t let Epic back on the store until the appeal process is finished. That could take up to five years. Still, Epic’s not happy yet.

A Win for All Developers (and Customers)

Apple had already been relaxing rules regarding payments outside of apps. In South Korea, a law blocks Apple from banning language suggesting users can get a better price outside of the app. In other markets, Apple had begun to relax this rule anyway. It’s possible their lawyers realized that this was the likely outcome of the U.S. case as well, and suggested Apple make changes in advance.

Still, developers aren’t happy. The App Store has massive problems with their review process, fraud, and the exorbitant fees associated with selling anything, including apps and in-app purchases, on iOS. The App Store is still the only place to actually make money on apps too. In part due to the nature of the operating system and unreliability of Google Play, few Android users are willing to pay for Android apps. It’s certainly related to the lower cost of entry on the Android platform, which means people may not have as much disposable income to buy apps, but the end result is the same: iOS is the only platform for developers to make any money.

This is a small win for developers, but the ecosystem is still broken. Apple still has too much control over the app market and all app profits. While Google and Apple maintain their mobile duopoly, users and developers have few options. That gives these two companies all the control they want. It’s no surprise they both decided to take similar fees from developers as a result.

But at least you might be able to save a few dollars outside of the app now, right?

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