In Battle Royale against Apple, Spotify and Match Group throw support behind ‘Fortnite’-developer Epic Games

“Fortnite” creator Epic Games is geared up for a bona fide dust-up against Big Tech, and it is winning the support of other prominent app developers in the process. Spotify and Match Group recently issued statements in support of Epic, which filed suit against Apple and Google late Thursday alleging monopolistic practices. The tech giants, which represent the world’s two dominant smartphone operating systems, pulled “Fortnite” from their app stores for violating their rules on in-app payments after Epic tried offering discounts on in-game currency for players who bypassed Apple and Google with their purchases.

Match Group fully supports Epic Games’ efforts to show how Apple uses its dominant position and unfair policies to hurt consumers, app developers, and entrepreneurs. Regulators across the globe have expressed similar concerns and are examining what some describe as “Apple’s arbitrary practices”. Spotify applauds Epic Games’ decision to take a stand against Apple and shed further light on Apple’s abuse of its dominant position.

The streaming music giant argued in its Thursday statement that Apple’s unfair practices have disadvantaged competitors and deprived consumers for far too long. Facebook joined in on the criticism that Apple did not waive its 30% fee or allow Facebook to use its own payments tool on a new feature that the social-media giant was rolling out to allow businesses to host virtual events. Google also is not waiving the fee but will allow Facebook to use its own payment processing tool, and Facebook is not taking a revenue cut from this feature.

Microsoft weighed in even before the Epic saga after Apple determined that the company could not list its xCloud game streaming service in the App Store because Apple would not be able to review all of the games made available through the service.

Microsoft argued that Apple consistently treats gaming apps differently, applying more lenient rules to non-gaming apps even when they include interactive content. Both Apple and Google keep as much as 30% of all purchases of digital goods made in apps that were downloaded through their app stores, a practice that has garnered increasing pushback from developers and government officials. Spotify filed an antitrust complaint against Apple in Europe last year, arguing that the company’s App Store payment policies made it difficult for other apps to effectively compete against Apple Music.

Regulators are looking into Apple’s App Store practices, which were also a focus of a House of Representatives antitrust hearing last month. Lawmakers questioned Apple Chief Executive Tim Cook on the company’s App Store “take rates” and what would prevent the company from increasing its cut of App Store-related purchases down the line. Apple said in a Thursday statement following “Fortnite”’s removal that its App Store guidelines are designed to keep the store safe for its users and that the company will make every effort to work with Epic to resolve these violations so they can return “Fortnite” to the App Store.

Match Group, which operates Tinder and other dating apps, could be a prime beneficiary of more developer-friendly app store practices. In general, developers pay Apple a 30% cut of digital service revenue for the first year of a recurring subscription and 15% for all remaining years, but many dating app users are not signing on to paid plans for multiple years, meaning Match may be paying the full 30% more often than some other developers. Apple shares have gained 48% over the past three months as the Dow Jones Industrial Average has risen 18%.

It is easy to roll your eyes at Epic Games’ “Nineteen Eighty-Fortnite” ad, which parodies a 1984 Apple commercial about the company’s fight against a monopoly.

Apple is the most valuable company in the world, surely it can live with taking a smaller commission from products sold on its storefront. Everything about this sucks. It is a sentiment echoed on social media, where some folks posit that in a slap fight between two tech giants, the only real winner is the corrupting tendrils of capitalism. After all, this issue comes down to money, and making more of it.

But that skeptical narrative also flattens what else is at stake in the legal battle between Epic Games and Apple. The language of the lawsuit is revealing. In it, Epic says it does not want monetary compensation from the proceedings. Nor is Epic seeking favorable treatment for itself, a single company. Many folks worry that this tussle will just end with Apple easing up on Epic Games while ignoring everyone else, but Epic’s lawsuit explicitly says the company does not want special treatment that is not afforded to others.

Instead, Epic is seeking injunctive relief to allow fair competition in these two key markets that directly affect hundreds of millions of consumers and tens of thousands, if not more, of third-party app developers. Epic’s complaint against Google reads similarly, with Epic stating that it is not seeking favorable treatment for itself, but rather, a more open environment for everybody. Obviously, winning this battle would mean that Epic Games makes more money, which would be favorable to the company.

But the implications of the lawsuit could be more far-reaching for the gaming industry at large, especially when it comes to smaller game developers.

If Apple or any major storefront took less than its usual 30% cut for apps and in-app purchases, it could make a world of a difference for indie developers. The percentage that Apple takes is pretty standard on digital storefronts, like Steam or the Nintendo eShop. But mobile devices are more ubiquitous than dedicated gaming hardware, and seeing a notoriously stubborn company budge on something like this could help sway other storefronts to reconsider their commissions, too.

One recent viral tweet by game developer Emma Maassen posits that if storefronts took a smaller revenue share, like the 12% that Epic Games takes on its own storefront, that extra income would have allowed her studio Kitsune Games to develop a new title without crowdfunding. The replies to the tweet include other indies sharing similar opportunities that would have become possible with more equitable revenue sharing models across the gaming industry. The amount of extra stuff indie developers could add to their games would be insane.

On platforms like Steam, the more you sell, the better you are rewarded. The revenue share can go down to 20%. Arguably, a smaller developer needs that extra money more than a blockbuster studio. The stakes of a smaller fee are higher for the little guy, which typically does not get to influence what these numbers look like. Epic almost seems like it is taking up the mantle for them.

But Epic does seem to be walking the walk.

Beyond offering a better revenue sharing model on its own storefront than other major players, Epic has been making other progressive strides that help smaller developers across the board. Earlier this year, the battle royale maker announced that anyone using its proprietary Unreal Engine would no longer have to pay royalties on the first $1 million in revenue, a move that only affects indies. This is on top of offering $100 million in grants to people using the Unreal Engine in novel ways, including the improvement of open-source tools that help the community at large.

In practice, Epic appears to uphold the idea that a rising tide lifts all boats. A smaller revenue share might mean fewer profits for gatekeepers in the short term, but if it empowers creators to make and do more, the long-term tail is better for everyone involved. It is a generous philosophy that has become rare to see within tech. We live in a world where Facebook has destabilized democracy, Google has previously held contracts with the government to improve weapons, food delivery services like Grubhub can contribute to the destruction of small businesses, and Uber threatens livelihoods.

Algorithms tuned for engagement and expansion regularly betray everyday people. Google’s old motto, “Do not be evil”, now seems like a joke. To see a company like Epic Games not just pick a fight but act righteous about what it stands for seems wrong in a world where tech giants repeatedly fail us. Corporations do not act like they want what is best for everyone, not anymore.

More than any big, modern tech company Epic Games seems like the personal vehicle of an optimist who believes in something bigger than itself, even if it is unrealistic or foolhardy.

Epic Games will not be the only party that stands to benefit. Following its removal from the Apple App Store, Fortnite has also been kicked off of the Google Play Store for Android. Earlier today, Epic Games snuck in an update for both the iPhone and Android versions of the game that allowed users to pay Epic directly for in-app purchases instead of using the officially sanctioned system for both platforms.

What followed was a wild ride, Apple kicked Fortnite off the App Store, then Epic sued Apple, and finally there was an in-game video parodying Apple’s own 1984 commercial, positioning Apple itself as the monopolist. Now, Google is in the conversation. As with Apple, Google requires that games use the Google Play system for in-app purchases. Although the Play Store’s rules are somewhat more lax than Apple’s when it comes to in-app purchases, Google does draw the line at games.

It is quite clear-cut, developers offering products within a game downloaded on Google Play or providing access to game content must use Google Play In-app Billing as the method of payment. Google’s system takes a 30 percent cut, just as Apple’s does. Epic’s update earlier today ran afoul of that rule, and while Google took longer to make a decision to ban Fortnite over it than Apple, both companies reached the same conclusion.

The open Android ecosystem lets developers distribute apps through multiple app stores.

For game developers who choose to use the Play Store, Google has consistent policies that are fair to developers and keep the store safe for users. While Fortnite remains available on Android, Google can no longer make it available on Play because Fortnite violates Google’s policies. However, Google welcomes the opportunity to continue its discussions with Epic and bring Fortnite back to Google Play.

Android is an open ecosystem that allows multiple stores and that Google Play’s policies need to apply equally to all developers. Google has no problem with those other stores existing nor with Epic distributing its game on them. You can still install Fortnite on Android, however. Epic itself points visitors to its website, where they can either download Fortnite through the Epic Games app or via the Samsung Galaxy Store on Samsung devices.

This is different from iPhone and iPad, where it is now impossible to install the game if you had not already done so. Epic has a history of tussling with Google over this Play Store rule. In August 2018, Epic pulled Fortnite from the Google Play Store and began distributing it directly. That is only possible because Android allows installs from third-party sources, though it does make that process seem a bit dangerous because of the security warnings that appear when you do.

Eighteen months later, Epic capitulated and put Fortnite back into the Google Play Store, though not without some very angry rhetoric about it.

Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store. An app as popular as Fortnite being installed via other means, specifically other stores, has the potential to lessen the centrality of the Google Play Store on Android, and maybe increase fragmentation. There are already competing stores, Samsung is pushing its own store heavily on its Android devices, for example.

But in general, the Google Play Store has been the go-to software source for most people. Epic is already actively encouraging users to also use the version that comes from Samsung’s store, telling users that they can get the discount that started this whole mess if they do. You will find that V-Bucks and real-money offers are now discounted by up to 20% through the Epic Games app at epicgames.com and the Samsung Galaxy Store.

If Epic can get users in the habit of using other stores, that could mean users will start to want to use other stores for other app installs. If you have used any recent Samsung Galaxy phone, you have seen it offer the option to handle the installs for some major apps. It could mean that Google may be able skirt a monopoly issue with its decision, it would argue that there is real competition for app stores on Android.

For just one other gaming-related example, look to Microsoft. Microsoft’s upcoming Game Pass Ultimate streaming service xCloud will be available both on Google Play and on Samsung’s Galaxy Store.

If you install xCloud via Google Play, you will not be able to purchase DLC content for Xbox games because of that 30 percent cut. If you happen to install it via Samsung’s store, however, you are able to make in-app purchases. Microsoft’s vision is to bring a complete, full-featured experience with in-app purchase capabilities to app stores. However, Microsoft is complying with all store policies and do not offer in-app purchases in some stores at this time.

To access complete, in-app purchase capabilities, Samsung customers can download the Xbox Game Pass app from the Galaxy Store. SK Telecom customers can also get a complete experience through ONE Store. Meanwhile, Microsoft’s game streaming service is not allowed on the iPhone at all, and Microsoft is not happy about that, either. Given Epic’s outsized response to Apple’s ban, it is a sure bet that the company will have a response to Google as well.