How Fortnite ended up at war with Apple over the ‘app tax’

Linda J. Dodson

Epic is no struggling start-up. Founded in 1992, it is now one of the world’s most influential gaming companies. Fortnite is free to download and play, but brings in billions of dollars a year through the sale of cosmetic items for its colourful avatars.

It also has its own software portal for buying games on computers, and owns the Unreal engine, one of the most widely-used pieces of software for making games. Last week it became worth $17.3bn (£13.2bn) after a $1.8bn funding round. This size and breadth is what gives it the firepower for what is likely to be a lengthy and damaging legal duel with Apple.

Epic’s plans had been carefully laid. On Thursday morning, an update to the company’s iPhone and Android apps began offering gamers buying Fornite’s virtual currency a discount if they bypassed the Apple and Google payments systems that charge a 30pc fee. The move was a clear violation of both Apple and Google’s rules, and within hours, Fortnite had been removed from the App Store. 

“Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users. As a result their Fortnite app has been removed from the store,” Apple said. Google’s Android Play Store later followed, although unlike the iPhone, Android phones have alternative ways of installing the game.

Apple’s move may have just been a case of enforcing its own rules, but it played into Epic’s plans perfectly. Minutes later, it took the nuclear option, lodging a 62-page lawsuit against Apple in California that accused the company of imposing “unreasonable and unlawful restraints” to enforce two separate monopolies. Epic argued that Apple’s practice of only allowing iPhone apps to be installed through its own App Store hurt consumers and rivals, and that the control over the store was also illegal. It is not seeking monetary damages, but wants a court to force Apple to allow alternative app stores, and to be allowed to avoid Apple’s payments fees.

Developers have grumbled for years about the App Store’s fees, but pressure is now growing. Last year, Spotify launched a campaign against Apple, saying the so-called tax is anti-competitive, since Apple’s own music streaming service does not have to pay it. When Hey, an email app from software company Basecamp, refused to use the App Store’s payments system, Apple was put on the defensive. Cloud gaming services from Microsoft and Google, which use smartphones as a link to high-performance games being streamed from a computer server, have been blocked by Apple.

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