Fortnite Takes on Apple and Google

• Apple and Google yanked Fortnite, one of the world's most popular games, from their respective app stores on Thursday after its maker Epic Games enabled a direct payment option in its Android and iOS apps alongside the existing method to bypass the standard 30% transaction fee.
• The reason? Epic discounted the price on V-Bucks, Fortnite's in-game currency, by 20% on all platforms, including Android and iOS, but with one caveat. To avail the "Fortnite Mega Drop," as Epic called the promotion, one had to choose a new payment method, called "Epic direct payment," rather than pay through the App Store or Google Play Store, in order to get the discount.
• "Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines," Apple said in a statement.
• After getting the boot from Android and iOS, Epic Games filed lawsuits against Apple and Google, accusing the companies of "anti-competitive restraints and monopolistic practices," in addition to claiming that Google forced OnePlus and LG to renege on a deal in which a special Fortnite launcher would come preinstalled on their smartphones.

• "Apple's removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the" market for in-app payments on iPhones, Epic said in its 62-page lawsuit.
• Underlying this lawsuit is the lucrative 30% cut of in-app purchases for digital goods and services that Apple has levied on individual transactions (not to mention accounting for a good chunk of its Services revenue), causing some third-party app developers to offset this loss by jacking up their iOS prices.
• Spotify famously increased its monthly subscription to US$ 13 from US$ 10 in 2014 to account for Apple's fee, before it discontinued the practice a year later when Apple debuted its own streaming service for US$ 10 a month. Now iOS customers wanting to use Netflix or Spotify will have to first sign up and subscribe directly through their websites.
• It bears noting that although the app has been removed from the Google Play Store, it continues to be available on Samsung Galaxy Store and can be sideloaded straight from Fortnite's website. That Apple maintains a tighter grip on iOS than Google does on Android is primarily the reason why the antitrust complaints against Apple's control of the App Store are heating up.

• Also worth pointing out is the fact that while iOS is nowhere closer to Android in terms of overall market share, Apple does benefit from having a monopoly on iOS. Apple is the sole guardian of both the App Store and iOS, the operating system that powers 1.5 billion devices across the globe. Viewed in that light, Apple's entire business model is designed to be anticompetitive.
• If anything, Apple's multiple roles as the owner of the platform, curator, and gatekeeper of the App Store has landed it in conflict with third-party apps that sell their ware on the digital storefront in direct competition to the iPhone maker's own growing roster of first-party services.
• On Friday, Facebook jumped into the fight against Apple — the second time in as many weeks — over its new Paid Online Events feature, which allows small businesses in 20 countries to charge Facebook users to attend online classes and events.
• "We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19. Unfortunately, they dismissed both our requests and SMBs will only be paid 70% of their hard-earned revenue," Facebook said.
• The latest development comes close on the heels of a similar showdown last week when it became apparent that Apple was blocking Microsoft's xCloud, Google's Stadia, Nvidia's GeForce Now and other cloud-gaming platforms from the App Store for reasons that "the company can't individually review games offered on streaming services," a rule that doesn't apply to non-gaming streaming services like Netflix, YouTube and Spotify.

• What's unsaid here of course is the 30% cut itself: How can Apple collect its fee when a game is being streaming instead of locally on their phones?
• But it's not just Apple and Google. Major game console makers like Microsoft, Sony and Nintendo also take a 30% cut of all microtransaction sales on their platforms. But as Ars Technica puts, the revenue models for mobile and consoles are completely different from one another.
• The timing of these complaints are no coincidence. The Big Tech companies are under more scrutiny than ever before for their alleged abuse of market power, including the E.U. which opened a formal investigation into Apple's App Store and Apple Pay practices back in June, leading major third-party services such as Spotify, ProtonMail, Tinder-owner Match Group, Hey and Kobo to challenge Apple's rules.
• The spat, ultimately, has put Apple between a rock and a hard place: if the iPhone maker bends its rules for Fortnite, it will open the floodgates for other developers to question the company's preferential treatment. But if it continues to stick to its policies, Apple risks providing easy fodder for antitrust investigators.

• Complicating the matter is the inconsistent enforcement of App Store guidelines. According to emails revealed during the recent tech antitrust hearing last month, Apple agreed to cut its typical 30% service fees in half in 2016 in order to entice Amazon to put Prime Video in the App Store. Then earlier this year, Apple completely waived its 30% cut for in-app purchases made from Amazon's Prime Video iOS and Apple TV apps.
• All of this only means Apple is reduced to a few options: slash the 30% cut it takes on every transaction, permit third-party apps to bundle their own payment solutions or enable purchases via Safari View Controller, and lastly allow apps to be downloaded from third-party storefronts à la Android. This would also effectively poke holes in its walled garden, causing it to lose its chokehold over the iOS ecosystem.
• "For developers, they can write their apps for Android, or Windows, or Xbox or PlayStation," Apple CEO Tim Cook said during the antitrust hearing, resisting the idea that the company steamrolls rivals on the App Store. David Heinemeier Hansson, the creator of Hey email app, tweeted this response: "Lol. Yeah, we should have written HEY for PlayStation. That was our mistake."
• Over the years, Apple and Google have successfully become the gatekeepers of the mobile ecosystem, with the duopoly maintained by Android and iOS leaving developers with little alternatives. Now that the Pandora's box is officially open, it will be interesting to see how all of this will play out. After all, the fate of mobile app stores is on the line.