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Epic Can Battle Apple Without the Collateral Damage

Epic Can Battle Apple Without the Collateral Damage

Wednesday, 23 September, 2020 - 05:15

Everyone has an agenda. That’s especially true for corporations like Apple Inc. and Fortnite-maker Epic Games Inc. But while the two powerful technology companies jockey back and forth in their continuing public battle, they need to recognize their brinksmanship has a severe cost. Not only is it affecting their own businesses, but it is taking a significant toll on their customers and developer partners as well.


The fight began earlier this month when Epic unilaterally updated its Fortnite app to circumvent Apple App Store’s in-app payment system and 30% commission fees. A flurry of punitive actions and court filings followed between the two companies. Apple removed the game from its App Store, prompting Epic to file an antitrust lawsuit and release a parody video of the tech giant’s famous 1984 ad. Soon afterward, Apple told Epic it intended to cut off the company’s access to developer tools on Aug. 28, effectively shutting down its ability to offer updates to its Unreal Engine software, which is used widely by third-party developers to build their games. Late Monday, US District Judge Yvonne Gonzalez Rogers issued a split decision. She allowed Apple to keep Fortnite out of its App Store but ruled the company cannot revoke Epic’s access to developer tools. Her restraining order is provisional until a preliminary injunction hearing to be held on Sept. 28.


Despite Epic’s good versus evil narrative of defying the App Store monopoly for the little guy, reality is a bit more complicated. First, Apple’s 30% fee structure is similar to the commission rates of other industry players — including all the top video game console digital stores. Further, Epic CEO Tim Sweeney has said, “At the most basic level, we’re fighting for the freedom of people who bought smartphones to install apps from sources of their choosing, the freedom for creators of apps to distribute them as they choose, and the freedom of both groups to do business directly.” So while the App Store’s onerous fee structure gets much of the attention, Epic is also asking Apple to allow other app stores on its platform. Coincidentally, Epic is a purveyor of its own digital game store on Windows-based computers and would most likely love to have its own store on iPhones and iPads as well. That makes its “FreeFortnite” rallying call a bit suspect, when gamers may not know all the nuances behind the decisions.


Sure, Epic is well within its rights to pursue it long-term business goals, but it should not be at the expense of its partners. The company’s actions mean that millions of gamers will most likely lose access to Fortnite on Apple platforms after the next game update. And it risks long-lasting damage to its Unreal Engine business. Yes, the judge has for the moment restrained Apple from shutting off Epic’s access to critical developer tools, but the ruling is only temporary. Even Epic’s counsel admitted during Monday’s hearing developers were “fleeing” because of the current uncertainty. Risking the livelihoods of developer partners that rely on Epic’s game-engine platform is not smart business.


And for what? Apple is right saying Epic could have sued without breaking the App Store rules. The smartphone maker has repeatedly said if the game publisher returned to the “status quo before Epic installed its ‘hotfix’ that turned into its hot mess,” it would be reinstated into the App Store. The fact that Epic had its lawsuit and parody video ready to go points to how the company broke Apple’s guidelines as a calculated strategy to draw public attention.


That is not to say Apple has been entirely forthright, either. Last Friday, the company said that Epic wanted a “special deal,” but Sweeney’s June 30 email disclosed in court filings clearly shows he asked for his concessions to be made available to all iOS developers. In addition, Apple’s threats to cut off Epic’s Unreal Engine is clearly retaliatory and will most likely come under regulatory scrutiny. Finally, I’m sympathetic to many of the criticisms over App Store’s business practices. In June, I wrote how Apple should proactively offer the same negotiated deal terms it has provided to Amazon.com Inc. to all developers in addition to abandoning its blatantly anticompetitive restrictions such as forbidding links and descriptions to external purchasing web pages.


Epic has a point about Apple’s App Store and its fee structure, but at the end of the day its recent actions aren’t worth the suffering they entail, especially because the legal case will most likely take years to conclude. For the sake of its customers and developer partners, Epic should revise its strategy. It can pursue its battle with Apple without all the collateral damage.


Bloomberg


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