Apple and Epic Games Continue to Wage Legal War

Apple and Epic Games Continue to Wage Legal War
The Siliconreview
05 October, 2020

The Apple corporation continues to make the news, and the news is not only about the vaunted stock split. Apple continues its public "war of words" with Epic Game's Fortnite over the payment scheme. Apple's iOS App Store recently booted the game from its platform. And Apple was not alone in the decision to sanction the game and its creator. Google also levied sanctioned against Fortnite.

However, Epic Games appears unwilling to back down with its legal challenges. Apple won't back down in its defense of App Store policies. Eventually, the courts will likely render a decision settling the matter.

The Cause of the Controversy and Litigation

Apple's complaint about Epic Games is straight-forward. Apple feels that Epic Games wishes to circumvent App Store policies and deny Apple a cut of expected revenue. Apple's statement about the company blasted Epic Games for its attempt to come off as the "little guy" fighting a powerful corporation. Apple points out that Epic Games is a billion-dollar company that attempts to prevent Apple from receiving revenue.

Epic Games attempted to establish a direct-pay system for gaming currency. The direct-pay option would leave Apple and Google out of the purchasing process. Hence, the tech giants would not be able to generate revenue from currency purchases. Things did not sit well with Apple and Google. Epic Games' Fortnite ended up removed from the app stores.

Apple did not ban all Epic Games, though. However, as long as Epic Games intends to push a direct pay system with Fortnite, that particular game is not welcome on the app store platform. Fortnite ranks as an incredibly popular game with more than 100 million players. Reportedly, the Apple App Store stands as the top download provider for the game. The App Store remains a top source for players interested in downloading games, including casino ones. The App Store offers the LeoVegas app for players interested in trying out baccarat in India, among other options. So, the games aren't all fantasy or whimsical ones.

Cutting Fortnite out of the App Store cuts out access to untold numbers of iOS players. Epic Games intends to fight both Apple and Google. The company launched a lawsuit over Fortnite's banning, and Apple responded in kind.

Terms of Service and Revenue Protections

Apple recently filed a countersuit against Epic Games for breach on contract. The filing is somewhat curious, as Apple would need to prove monetary losses from the contract breach.

Apple did note that through the App Store, Epic Games generated $600 million in revenue. Apple receives a cut of the revenue, and Epic Games wanted to circumvent the cut. Does Epic Games legally have the right to do so, and are Apple's terms of service fair? Again, it may take a court decision to settle the matter.

Apple and the App Store are for-profit endeavors. Google and Google Play also intend to make as much money as possible from their ventures. Both companies are publicly traded and must boost revenue for shareholders. So, it comes as no surprise they would fight Epic Games in court over revenue and profit disagreements.

Apple's cut comes out to 30% of each sale. Out of Epic Games' $600 million in revenue, that would mean Apple received roughly $180 million in payments. Shaving even a small amount of Apple's cut from sales and purchases would deliver millions to Epic Games. Of course, a lengthy, protracted lawsuit against Apple would also cost a small fortune. Time will reveal whether Epic Games' legal strategy and the initial decision made sense.

Apple likely wants to discourage others from bucking the App Store policy. The countersuit could prove costly for Epic Games, but the company does have billions of dollars in capital. Smaller companies probably wouldn't want to fight Apple, as risks may outweigh any perceived rewards.