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Fortnite' Kicked Off Apple and Google App Stores After Epic Games Moves to Bypass Fees -- 2nd Update

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08/13/2020 | 09:08pm EDT

By Sarah E. Needleman

Apple and Google yanked "Fortnite," one of the world's most popular videogames, from their app stores in an escalating battle over the fees they charge developers to distribute their software and process in-app purchases.

The conflict reflects growing pushback against Apple Inc.'s App Store and Alphabet Inc.'s Google Play store on how they operate. Other app makers, including Netflix Inc. and Spotify Technology SA, have also butted heads with Apple on developer fees. At stake is a global market for mobile apps that generates roughly $120 billion annually, according to App Annie Inc.

The decisions Thursday from Apple and Google preventing people from downloading or updating the "Fortnite" app came after the game's creator, closely held Epic Games Inc., rolled out a new way of making in-game purchases that circumvents the 30% cut tech giants take from digital transactions within apps. The survival game is free to download but generates revenue through purchases of items such as digital costumes and dance moves for players' avatars.

"Fortnite," which made its debut in 2017, has more than 350 million registered players world-wide, according to closely held Epic.

Apple and Google said they removed "Fortnite" because Epic's new payments feature violated their policies. Both said they are willing to work with Epic to be able to bring the game back to their stores.

"For game developers who choose to use the Play Store, we have consistent policies that are fair to developers and keep the store safe for users," Google said.

Google's decision only affected the game's download and updates from the Play Store, but it could still be accessible on Android devices through other marketplaces.

Epic's move was seen by many as a declaration of war against Apple and Google,

Epic Chief Executive Tim Sweeney has waged a yearslong public campaign against the App Store and Google Play store, saying their developer fees are exorbitant. On Thursday Epic released a video parody of Apple's "1984" commercial aired nationally during Super Bowl XVIII skewering International Business Machines Corp., and pushed users to promote the hashtag #FreeFortnite across the internet.

"We must all choose to fight a painful battle now, or accept an all-powerful middleman with unbounded ambition to extract tribute and limit innovation in the decades to come," Mr. Sweeney said in an interview.

Epic took the additional step of offering players 20% back on their in-game purchases over the past month. The discount was extended to purchases of V-bucks -- virtual currency "Fortnite" players can use for in-game purchases -- made on gaming consoles, PCs and Macs.

Epic sued Apple in U.S. District Court in California after "Fortnite"'s removal from the App Store, accusing the company of monopolistic behavior in how it distributes apps to devices and processes payments for digital content. Epic said it isn't seeking monetary damages from Apple but asked the court to issue an injunction to end Apple's "unreasonable and unlawful practices," according to the complaint. Mr. Sweeney declined to comment on whether Epic would sue Google as well.

Apple, the world's most valuable company by market capitalization, didn't comment on the lawsuit but did attack Epic for launching the payments feature without its approval.

"The fact that their business interests now lead them to push for a special arrangement does not change the fact that these guidelines create a level playing field for all developers and make the store safe for all users," Apple said in a statement.

Wedbush Securities analyst Dan Ives described Epic's action as a bold move and said the company was "testing the waters especially in light of the antitrust pressure that Apple has faced from the recent congressional hearings."

"If the lawsuit is successful, it would open up a Pandora's box for other app developers to make the same move," Mr. Ives said.

Last month, Apple CEO Tim Cook defended Apple's policies on its App Store during a more than five-hour-long congressional hearing with other tech company leaders. Before the hearing, Apple touted economic research it commissioned showing that the fees it collects from developers are in line with those charged by other app stores and videogame marketplaces. Both Apple and Google have argued the fees are necessary because of the services the stores provide, including security and safeguarding user privacy.

The European Union in June opened antitrust probes into Apple to determine whether the company's App Store and Apple Pay service violate competition laws.

Spotify last year filed an antitrust complaint in Europe against Apple accusing the tech giant of abusing the App Store to limit competition against Apple Music. In response to the lawsuit Apple said it wanted apps that compete with its services to thrive and that it approved and distributed app updates that helped expand Spotify's business.

Spotify on Thursday commended Epic for its move, saying, "Apple's unfair practices have disadvantaged competitors and deprived consumers for far too long."

Originally available only on computers and then consoles, "Fortnite" surged in users after launching on Apple's App Store in 2018. It made its debut on Google's Play store earlier this year after Epic gave up a yearslong battle with the company to get permission to include its own payment system inside "Fortnite" -- essentially the step Epic took Thursday. Previously, "Fortnite" was available on devices running Google's Android operating system independent of Google Play.

The "Fortnite" app has been installed 133.2 million times on Apple devices since its creation and has produced $1.2 billion in global App Store spending, according to research firm Sensor Tower Inc. Since launching on Google Play in April, the game has been installed roughly 11 million times and has generated nearly $10 million in global spending, the analytics firm said.

For the first seven months of this year, Apple's App Store generated nearly $39 billion in global revenue from in-app purchases, subscriptions and premium apps, while Google Play reached almost $21 billion, Sensor Tower said.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 1.51% 115.81 Delayed Quote.57.75%
SPOTIFY TECHNOLOGY S.A. 0.05% 242.57 Delayed Quote.62.20%
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