Stock

‘Fortnite’ maker accuses Apple of unlawful monopolistic practices in tech battle royale that seems headed for a courtroom

The maker of “Fortnite” has launched a Battle Royale against Apple Inc., accusing the tech giant of seeking to “unlawfully maintain its monopoly.”

Epic Games said Thursday it filed legal papers against Apple
AAPL,
+1.77%
after the iPhone maker booted the company’s hit game “Fortnite” out of its App Store, and a lawyer representing Epic confirmed that the complaint was filed in the Northern District of California. Apple removed the game after Epic began offering players a discount on in-game purchases if they opted to make a direct payment and not buy their digital offerings through the App Store.

The game maker came prepared for a fight, debuting a video that spoofs Apple’s classic 1984 advertisement, which urged customers to oppose conformity and prevent International Business Machines Inc.
IBM,
-1.31%
from dominating the computer market. Back then, Apple warned that without a change, the year 1984 could mirror George Orwell’s dystopian “1984” novel; Epic Games cautions in its ad that 2020 could come to embody “1984” as well.

Apple charges developers 30% of purchases made through the App Store, and 15% after the first year of subscriptions. This has been the focus of antitrust investigations into the company, which is worth nearly $2 trillion thanks to the money it collects from the iPhone and the apps and services that are delivered through it. Epic has long tried to avoid paying such fees, previously launching its own store to get around Alphabet Inc.’s
GOOGL,
+0.62%
GOOG,
+0.78%
similar Play Store that is bundled with Google’s rival Android operating system.

See also: ‘Fortnite’ spurned Android, then Google found a major security flaw in its app

Fortnite had racked up more than 125 million app installations and more than $1 billion in player spending on Apple iOS devices alone through mid-May, according to mobile-app research company Sensor Tower.

After Epic publicly announced Thursday morning that it would offer users on Apple’s iOS operating system a discount on purchases made through their own store instead of through Apple, the Cupertino, Calif.-based tech giant removed the app from the App Store. In response, Epic filed a lawsuit against Apple that says it seeks “to end Apple’s unfair and anticompetitive actions that Apple undertakes to unlawfully maintain its monopoly” involving app distribution and in-app purchases.

An Apple spokesperson said in a statement that Epic Games introduced the feature without the company’s approval and did so “with the express intent of violating the App Store guidelines regarding in-app payments.”

The statement also said that Apple will “make every effort to work with Epic to resolve these violations so they can return ‘Fortnite’ to the App Store.”

An Epic spokeswoman confirmed the suit in an email to MarketWatch.

As part of its blitz against Apple, the company has launched a page on its website with the tagline “#FreeFortnite” that tells customers to use this hashtag in support of Epic by engaging with the App Store’s official Twitter account. The hashtag was trending on Twitter within an hour of the site’s launch.

Epic says on its website that players who’ve already downloaded “Fortnite” to their Apple mobile devices “should have no issues continuing to play Chapter 2 – Season 3’s 13.40 update.” Once the new season begins, Epic expects that players will be able to play the older content but not access new material.

For more: Apple and Facebook could be most vulnerable among the antitrust suspects

Apple’s fee policies around the App Store have come under increased scrutiny from both developers and regulators recently. Big developers including Spotify Technology SA
SPOT,
+0.14%
have looked for ways to avoid paying Apple a cut of subscription fees, and the developers of Hey, a new email app, publicly battled with Apple in June after the email service rolled out its app without an option to buy subscriptions from within the app. Apple and Hey’s developers eventually reached a compromise.

Regulators and lawmakers in the U.S. and Europe have also questioned the company’s App Store policies and whether they stifle competition.

Epic argues in its complaint that Apple “harms app developers’ relationship with their customers” through its mandatory involvement in all transactions since customers “often blame Epic” for problems related to payments. “In addition, Apple is able to obtain information concerning Epic’s transactions with its own customers, even when Epic and its own customers would prefer not to share their information with Apple,” the complaint said.

Evercore ISI analyst Amit Daryanani said in a note to clients late Thursday that Apple collects an estimated $30 million monthly from Fortnite. The company generated $13.2 billion last quarter in revenue for its services segment, which includes the App Store. He expects the legal battle to be “a multi-year process that is appealed at every level of the US court system.”

Apple shares rose 1.8% Thursday and have gained more than 50% in the past three months as the Dow Jones Industrial Average
DJIA,
-0.28%
, which counts Apple as a component, has added 20%.

Related Articles