Epic's battle for control with Apple and Google
August 21, 2020 - The maker of the phenomenally successful video game, Fortnite is suing Apple and Google for what it claims are monopolistic business practices.
Epic Games has begun a huge legal battle with Apple and Google over the 30% cuts both companies take from game revenues earned through their online stores, believing the fee to be both outdated and unfair.
Historically, Nintendo introduced the 30% tariff in the 1980s when Namco and Hudson Soft wanted to bring their games, Pac-Man and Bomberman respectively, to the Nintendo Entertainment System (NES) games console. The percentage was composed to two elements: 10% for licensing (permission to be on the console), and 20% for Nintendo to manufacture the electronic cartridge, which would hold the game code and be inserted into the NES to allow play.
Apple co-founder Steve Jobs handed down a copycat 30% rule for app purchases in 2008 when he opened Apple's online App Store. Google subsequently copied the pricing structure for its own Android Google Play store when it opened three months later.
Current Apple CEO Tim Cook argues that his company provides security, development support, and the ability for small companies to reach an audience of a billion users for an annual fee of $99 to participate in its Developer Program.
Despite costly cartridges being superseded many years ago by cheap CD-ROMs, then Blu-ray Disks and now digital downloads, the 30% tax has remained in place across the board without much debate. Until now.
Despite Fortnite being a free-to-play download, it is a gaming behemoth, racking in excess of $1 billion a year from add-ons players can buy for their in-game characters.
Epic’s protest against the two technology giants escalated on August 13, 2020, when it granted Fortnite players direct access to buy add-ons — circumventing Apple and Google's payment systems and thereby denying them their 30% cut.
Both Apple and Google immediately yanked Fortnite from their stores, triggering Epic to retaliate the same day with separate lawsuits against them both, saying they were using their market muscle to impose the unfair charge – referencing rising antitrust pressures on Apple and Google.
Apple has told Epic that if it does not reinstate the in-app payment system, it will have its Apple Developer Program account terminated on August 28, 2020.
As gaming industry profits continue to soar, the decision on how they are divided among developers and platform creators has never been greater.
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