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Friday, September 17, 2021

In judge’s Epic Games against Apple, both sides lose and win App Store Payments: A Guide

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“Fortnite,” by Epic Games. (Bigstock Photo)

Federal Judge ruled that Apple cannot prohibit developers offering independent payment options through the iOS App Store. The judge did not declare Apple a monopoly. This was a key point in Epic Games’ suit.

This is the brief version of the judgment on Epic Games against Apple, which was handed down in Northern California District Court Friday morning. Both parties got someof their desired results, which may lead to big changes in the way modern mobile marketplaces operate.

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The injunction allows developers to create iOS apps stores without having to use Apple’s payment systems. Apple cannot delist, or penalize app developers who offer payment options that allow customers to pay the maker directly.

These changes will take effect for 90 days, and then cease to be effective until December 9, unless a higher court stops them.

Judge Yvonne Gonzalez Rogers didn’t rule for Epic’s claim that Apple’s control over the App Store qualifies it as a monopoly. Although Epic was found guilty of “anti-competitive behavior” in California, the judge ruled in Epic’s favor. However, Apple’s process were not deemed monopolistic.

North Carolina-based Epic Games, which has offices in Bellevue, Wash., originally filed its suit against Apple in August 2020, Testimony during a May trial divulged a lot of information that would ordinarily be kept under wraps, such as Microsoft’s profit margins on individual Xbox sales, which made it a big story in tech circles.

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Epic, the main publisher and developer of the free-to-play Fortnite game as well as Unreal Engine software, is Epic. Fortnite is free to download and play on any of the available platforms. However, Fortnite players can purchase additional V-Bucks (in-game currency) for real money.

You can exchange V-Bucks in-game to get exclusive cosmetic items such as character animations and outfits. V-Bucks are the main way Fortnite earns money. Epic reported that V-Bucks brought in nearly $9 billion in 2018 and 2019.

“Fortnite” characters in Seattle Sounders FC uniforms. (Epic Games Image)

Both the App Store as well Google Play have the current terms that both storesfronts receive a 30% automatic cut of any revenue generated within or by apps. A further part of the Terms of Service was that any app making in-game purchases like V-Bucks had to use the payment system of the storefront.

That 30/70 split, which was the industry standard for years across all digital storefronts, has historically rubbed Epic CEO Tim Sweeney the wrong way. It was a non-trivial part of why the Epic Games Store, launched in 2019, offers an 88/12 split to developers instead.

Epic implemented a 20 percent price drop on V-Bucks in August 2020 as part of its larger “Project Liberty” plan. However, this was only available to players who purchased Fortnite directly from Epic. The lower price would not be available to users who purchased through Apple or Google.

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As one would expect, both Apple and Google removed Fortnite from their respective stores. Epic filed separate lawsuits against the companies alleging antitrust behavior and anticompetitive conduct.

The Google lawsuit has ended up being a story all its own, which has revealed a startling amount of crazy accusations against Google. The case has yet to go to trial.

In contrast, the Apple suit may have started the demolition of the iOS garden’s walls. Apple has previously used its control over the store’s rules to create some incredibly specific policies, such as those that it used last year to keep Microsoft from directly launching an Apple version of the Xbox Game Pass.

Other large companies may now be able to bring their apps directly onto the iOS market without having to go through Apple’s system. CNBC reported that Apple stock plunged 2% on Friday due to the ruling.

This is hard to view as a win for either company. Epic had tried to get Apple to loosen its restrictions completely, but that didn’t happen. In the judgment, it was found that “Project Liberty”, a sale of iPhones and iPads to be illegally violated Apple’s terms. Epic must pay Apple 30% of V-Bucks it sold on iOS last August to now. This amounts to more than $3.5 million.

It did however open up the possibility for large players to bypass Apple completely for iOS products. In-app purchase can be made for mobile games, like Valve’s Dota Underlords. This could allow players to get cheaper rates or other benefits if they go direct to the developer. Apple may lose billions of dollars. Epic made some of all this.

An Epic spokesperson reportedly told NPR late on Friday morning that the company plans to appeal the decision.

Publited Fri, 10 Sep 2021 at 22:25.04 +0000

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