Epic vs. Apple lurches on, this time about antisteering compliance
Epic Games has convinced a US District Court to order a hearing over its assertion that Apple is failing to comply with the games company's one App Store victory.
Fortnite on an iPhone
The long-running legal case of Fortnite developer Epic Games versus Apple appeared to suddenly resolve in December 2023, but legal cases don't seem to ever end completely. While Apple won on practically every count, it lost over an anti-steering accusation, the issue that it prevented developers from informing customers of alternative payment options.
Apple formally told the court in January 2024 that it was complying with the order and would now allow developers to inform users. The company has been criticized, however, for imposing stipulations that mean the new rules are little better than the original ones.
Consequently, Epic Games has been accusing Apple of effective non-compliance. Now the US District Court of the Northern District of California has ruled that there are sufficient grounds for an evidentiary hearing to determine whether Apple is fully complying.
In a filing, the court said that Epic Games "has made a sufficient preliminary showing" that Apple's response to the anti-steering mandate undermines the sprit of the injuction.
The court has now ordered Epic Games and Apple to return for a hearing on May 8, 2024. Epic Games has been asking for the court to hold Apple in contempt, to correctly update its policies, and to remove all of its new anti-steering provisions.
The return for an evidentiary hearing does not mean that the court agrees with Epic Games. It means that the court believes there is reasonable grounds to investigate further.
"To succeed on such a motion," says the court, "Epic Games must show, by clear and convincing evidence, that (1) Apple violated the injunction, (2) its violation was 'beyond substantial compliance,' and (3) its conduct was 'not based on any good faith and reasonable interpretation of the injunction.'"
The hearing follows Apple's unsuccessful urging of the court to ignore Epic's contempt of court complaint.
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Comments
Epic Games - NOPE! Lost millions (billions?) in potential revenue from sales.
Apple - NOPE! Lost millions (billions?) in potential revenue from sales.
Everyone - NOPE! Don't get to play Fortnite on our iDevices.
Congratulations! It's been a lose/lose/lose situation for everyone!
Apple just ban them permanently.
Epic got the courts to force Apple to allow linking to alternative payment sources but Apple says they are still going to charge a commission even when an external payment is used. If this anti-steering provision prevented having to pay a commission, Epic could just put Fortnite back on Apple's App Store (if they were allowed to).
Epic thinks it's unreasonable to allow a commission this way but they charge a commission on their own products and services. If a game uses Unreal Engine, developers don't process transactions via an Epic payment system but developers are required to pay a commission for using their game engine. Epic doesn't want to pay Apple for using their ecosystem.
Truth be told, I don't think Epic really has a vendetta out for Apple's commissions (though imo it isn't unreasonable to think it's unreasonable, 30% is quite the cut). I see it more as Epic trying to piggyback on the current "anti-Apple" climate ever since the EU, US and now Japan have took jabs at Apple.
https://twitter.com/TimSweeneyEpic/status/1750589570880516402
He keeps calling Apple's and Google's 30% fee (over $1m) a transaction fee/tax when it's not, it's a commission. He does this deliberately to make people think the fees are excessive vs credit card transaction fees that are usually under 5%. He tried to use external links from the app to avoid this commission and was removed from the store.
In the above post, he says that Apple's commission on external links (which subtract the transaction cost of the amount due) are 'taxes on payments they don't process'.
Further down the comment, he makes it clear, they want to be a competitor store to Apple and not pay anything for their own software distribution while charging a commission themselves for people using their store. They want a free ride on Apple's store and platform like many developers have gotten used to doing on Mac and Windows. Mobile is a different platform with different rules e.g higher level of security required and companies like Epic don't like those rules and want to dictate what they are for their own benefit.
They (and their major investor Tencent) want to take a portion of Apple's business they built over decades away from them by charging a lower commission on their own platform, leaving them with the costs of running the store and trying to get politicians to force Apple to let them.
A 30% commission is high but is a standard fee in the industry and Apple doesn't set the prices in the store. If Epic wants to sell V-Bucks for $4.99 and doesn't like Apple taking $1.50, then they charge 4.99 x 10 / 7 = roughly $6.99, then they get $6.99 x 0.7 = $4.89.
Part of Sweeney's motivation is the metaverse-type apps (like Fortnite), which they see as being similar to how the internet works so processing IAP commissions in a metaverse app would be like processing commissions for every browser transaction:
https://medium.com/gamemakers/the-economy-of-the-metaverse-interview-with-epic-ceo-tim-sweeney-1822eed01ddf
When asked about the fee they'd charge for a metaverse, he acknowledges that a 12% fee might be too low as the servers would be expensive to run. Hmm, like Apple's servers that serve 1.5 billion customers maybe. But he guesses that Apple's costs are somewhere nearer 5% and he suggests Apple should only just cover their costs, again having the arrogance to think he should have the right to dictate how other companies run their business. There's no reason Apple should operate near break-even just to benefit his company.
He tries to justify this with his argument about competition deciding the fee amount but it's not fair competition. His company didn't build the platform, doesn't build the multi-billion dollar data centers worldwide or hire the staff to keep the whole ecosystem running, he just wants to throw in a payment link with a lower fee and pretend that's competing on the same level. And he knows this, he doesn't expect game platforms to remove their app store exclusivity because he accepts there are investments beyond the storefront but just guesses that Apple doesn't have the same investments.