Much has been said about Epic Games and its spat with Apple over the last year. But last week the proceedings concluded (at least for now) and while the dust has still to settle, it’s become clear that Epic isn’t going to get what it wanted. Apple for its part will also have to make some concessions but won on 9 of 10 claims.
What did Epic want?
Put simply Epic wanted the court system to force Apple to enable sideloading of Apps, to allow third-party App Stores on the iPhone, facilitate third party payment processing for in-app purchases and allow Developers to signpost customers to direct payment options and offers inside Apps (such as via the developers own website).
To force the issue, Epic breached its contract with Apple by surreptitiously installed a third party payment system inside its popular gaming App Fortnite. Apple retaliated by removing the App. Epic planned for this launching a legal battle that claimed Apple was in breach of laws designed to prevent Monopoly power and provide greater choice to consumers. At the same time Epic prepared a social media marketing campaign against Apple (and Google but mostly aimed at Apple) called ‘Free Fortnite’. The campaign included an elaborate parody of Apple’s famous 1984 Super Bowl advert.
What did Epic get?
Epic was not able to convincingly prove their case that Apple is a monopoly. In the simplest terms, the Judge presiding over the case concluded that this was because Epic did not provide compelling enough evidence. Furthermore, the judge declared Apple’s market share in mobile operating systems is below a certain (but undefined) threshold to be considered a Monopoly.
Epic did succeed in one claim. Namely, Apple will be required to allow developers to direct consumers to third party payment options. The Judge found Apple to be illegally enforcing ‘Anti-Steering’ rules. Apple may choose to appeal this ruling however it’s notable that Apple had already started to move in this direction at the end of August and before the judgement. It isn’t clear at the moment however if Apple will need to allow third-party payment systems within apps or simply allow developers to redirect customers.
To give developers even more flexibility to reach their customers, Apple is also clarifying that developers can use communications, such as email, to share information about payment methods outside of their iOS app. As always, developers will not pay Apple a commission on any purchases taking place outside of their app or the App Store. Users must consent to the communication and have the right to opt out.Apple Media Relations
Epic was also landed with a hefty fine. When they breached their contract with Apple by enabling a third party payment system, they denied Apple the 30% commission it was entitled to collect on in-app purchases made while the third party system was in place. Epic will have to pay damages to Apple amounting to the commissions that they would have been owed in this time.
What didn’t Epic get?
Pretty much everything they wanted. Namely, Apple will not be required to change their App distribution model, enable third-party App Stores, enable sideloading or reduce their commission. Perhaps more alarmingly for Epic is that Judge Rogers sides with Apple on one critical point surrounding their developer account.
When Epic breached their contract with Apple, Apple terminated their entire developer account including the tools they use to develop the industry-wide unreal gaming engine. The Judge awarded Epic a temporary injunction against Apple preventing them from doing this while the case was investigated. Following the conclusion of the case, Judge Rogers ruled that Apple was entitled to do this and that the injunction is not enforceable 90 days from the end of the case. It remains to be seen if Apple will terminate Epic’s developer account. It would send shockwaves across the industry. But if one thing is true about Apple and Tim Cook, they hate being blackmailed. Have your popcorn ready….
The CEO of Epic Games was not happy about the outcome of the case.
Today’s ruling isn’t a win for developers or for consumers. Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers.Tim Sweeney
Fortnite will return to the iOS App Store when and where Epic can offer in-app payment in fair competition with Apple in-app payment, passing along the savings to consumers.
Of course, Epic can choose to withhold Fortnite from the iOS platform but in reality, Apple gets to decide if/when it will allow Fortnite back on the store. For its part the Cupertino tech giant stated it will happily reinstate Epic’s developer account if they come into compliance with all other App Store rules that apply to all developers on the App Store.
Epic Games didn’t get what it wanted. It lost billions of dollars in revenue in this case. It did manage to force Apple to change its rule on anti-steering. Although both sides are likely to appeal. I can’t imagine Judge Rogers will be willing to change the outcome. It was a long case with an equally long and considered response that took several months. Both sides have had to accept concessions but I think this case will have implications on similar suits around the world. Apple may not have had a resounding victory but has largely come out unscathed.
Featured image via Epic Games.