Apple's New App Store Fee Changes Make Epic’s Anti-Competitive Claims Shakier

Apple's New App Store Fee Changes Make Epic’s Anti-Competitive Claims Shakier

The Fortnite maker's legal battle with Apple is centered on the App Store's 30% fee. Now, for many companies, that'll be halved.

This morning, Apple announced a major App Store policy change that surely has every tech and games reporter in the world refreshing Epic Games CEO Tim Sweeney's Twitter feed to see how he'll respond. In August, after openly flaunting App Store policy with Fortnite and seeing the game taken down as a result, Epic filed a suit against Apple wherein it characterizes App Store exclusivity and its 30% fee as anti-competitive. With today's reveal of a new "Small Business Program" that halves that fee for many developers, Apple is clearly waiting to see if Epic will take the change as a victory or keep up the fight.

Apple outlines the new program as follows: for any iOS app developer who makes up to $1 million on the App Store in 2020, effective Jan. 1, 2021 they'll be able to qualify for a program and a reduced 15% fee for the following year. In the event a developer then crosses $1 million in app sales and/or in-app purchases the following year, the 30% fee will then take effect again on earnings past the threshold. Developers can then requalify for the program again later if their business in a preceding year dips back below $1 million.

This, Apple says, will "benefit the vast majority of developers who sell digital goods and services on the store[.]" According to data collected by Sensor Tower in 2019, as of last year the top 100 mobile game publishers on the iOS App Store made an average of $70 million in revenue per quarter—meanwhile, the thousands of game developers on iOS that don't get close breaching to the top charts could stand to benefit plenty from this change.

In the suit filed in August, Epic said that if it wasn't for Apple's "illegal restraints," it would seek to "provide a competing app store on iOS devices," one that Epic would presumably distinguish from the App Store by offering a more generous fee structure. That would mirror Epic's approach to competing against Steam with the Epic Games Store on PC and Mac.

Epic's complaint against Apple seeks injunctive relief and frames Apple's policies as broadly anti-competitive—i.e., rather than seeking a payout from Apple, Epic aims to force a policy change on the basis of its claims that Apple is acting as a monopoly. This also explains why Epic's concurrent lawsuit with Google after Fortnite's removal from Google Play is different; the 30% fee is functionally the same, but since Google does allow for sideloading of apps on Android, its practices are already more open than Apple's.

"Earlier this year, an independent study by the Analysis Group found that Apple's commission structure is in the mainstream for app distribution and gaming platforms," writes Apple in its announcement of the new reduced fee program. Indeed, a 30% fee structure isn't just embraced by Apple and Google; it's also the norm with digital sales on Nintendo, Xbox, and PlayStation consoles.

This goes to explain why Apple's policy change is potentially bad news for Epic's chances of getting what it wants in this legal battle: by reducing fees for so many developers, Apple is instituting a change that makes the App Store look competitive relative to other platforms. While iOS is still a walled garden and, as it stands, Epic can't put out its own equivalent of the App Store on it, this makes publishing on the Apple App Store more attractive to small developers across all categories.

With the support of Microsoft and other large developers behind it, though, Epic may continue the fight. So far, as the matter concerns Fortnite's iOS removal, Epic was unsuccessful in making Apple restore the game to the App Store. Just last week, Apple's claim of theft regarding Fortnite's brief payment processing change was dismissed in court.

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Mathew Olson

Reporter

Mathew Olson is a writer formerly of Digg, where he blogged and reported about all things under the umbrella of internet culture (including games, of course). He lives in New York, grew up under rain clouds and the influence of numerous games studios in the Pacific Northwest, and will talk your ear off about Half-Life mods, Talking Heads or Twin Peaks if you let him.

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