Epic Games’ antitrust dispute with Apple and Google turned into a hot war on Thursday, as Epic Games announced a policy of help and direct mechanism for Fortnite that, according to Apple and Google, violated its terms of service.
Apple evicted Fortnite from the iOS App Store and Epic Games filed an antitrust lawsuit. Later that day, Google also got rid of Fortnite from Google Play and Epic Games also sued Google.
I asked game developers and other friends on social media about the conflict, and I highlighted their arguments with my own thoughts. While Epic Games fights what it believes to be a noble cause on behalf of game players and developers, its tactic carries many dangers of alienating its platform partners, which can be evil. This danger damages Fortnite’s profits at a time when rival games are gaining ground, are distracted by legal issues, and can also disable players, who may not appreciate that they can no longer play Fortnite on mobile devices so easily.
You can say that Epic Games is in a position to be evicted from app outlets through Apple and Google. The Fortnite manufacturer founded in Cary, North Carolina, had prepared its demands and even had a hilarious satirical video about 1984, the famous Apple ad that featured the Macintosh and accused IBM of being an anti-consumer monster. The video was released on Fortnite, but enthusiasts were unable to see it on iOS because the app had been removed.
Tim Sweeney, CEO of Epic Games, has argued for years that open source and loose festivals have been suppressed in the gaming industry in favor of monopolistic platforms that do not have the interests of developers or consumers at heart. He attacked Microsoft in the afterlife while moving the PC to a single Apple-style app store. He’s since settled that relationship.
Sweeney criticized Google for having a “fake open system,” claiming it sought to scare players by fearing the security dangers associated with downloading Fortnite directly from the Epic site that through the Google Play Store. And more recently, he criticized tech giants at antitrust hearings held in Congress. Sweeney attacked while iron was hot and government attention focused on the dangers of tech monopolies. This shows how smart it is when it comes to timing, hitting anything debatable right after reaching a deal with investors to get more money.
Sweeney dared to say those things because Epic Games is not indebted to tech giants. Fortnite’s wealth gave the company a valuation of $17.3 billion. In 2019, Epic Games reported $4.2 billion in earnings and $730 million in earnings before interest, taxes, depreciation and amortization (EBITDA, a key measure of profitability). Revenues by 2020 are expected to be $5 billion, with EBITDA of $1 billion. And Sweeney recently raised more money, adding $250 million from Sony. Apple is worth $2 trillion and Google is worth $1 trillion, however, it might not be easy for them to bankrupt by taking Epic Games into bankruptcy by drowning it in legal fees.
In an email to GamesBeat, Gary Reback, Carr-Ferrell’s antitrust attorney who once confronted Microsoft in an antitrust case in the 1990s, first questioned whether Apple would slow down Epic Games with documents and spend more on legal fees, whichever epic painful case. But he claimed that Epic Games had a lot of cash and could have done more through its influence to get a love deal with Apple rather than avoid litigation.
“Would Apple have been receptive? What kind of agreement would be legally feasible? Reback asked.” It’s hard to believe a love deal now. Does Epic really think Apple will replace its entire earning model? What does Epic plan as a way to end the dispute or fight to the end in the hope of winning? Maybe they think Congressional tension will help them.
Reback didn’t say Sweeney had orchestrated some kind of crusade. He raised cash to have an additional war chest to fight this battle. He made sure to keep enough ownership to be sure he could control the company if shareholders were nervous. And he has expressed his intentions by giving lectures on how the industry deserves to do the right thing.
Sweeney’s vision of creating an industry that makes it much less difficult for developers to make a living, even if they’re independent little ones. He thinks that Apple and Google, who have created a massive mobile gaming industry with their mobile app retail outlets, no longer earn the 30% pay they receive. (Apple was once the hero, charging only 30% when operators accepted 70 percent payment.
Sweeney opened Epic Games Store to challenge the 30% fee, signing agreements with developers in which Epic helps keep only 12% of the fee. So far, Epic has focused on high-end PC consoles and games, which basically hurts Valve’s Steam business, which is also experiencing a 30% reduction. But at some point, Epic Games Store may need to take iOS and Android outlets directly.
There probably wouldn’t be much monetary gain on this crusade. In fact, Epic Games made less cash in 2019, because it built Epic Games Store, than in 2018. But clearly, Epic Games does not prioritize profits over its position in the industry. I think that’s the ultimate commendable component of what Epic has done in its quest to ensure a more open and fair gaming industry.
But there are risks.
Epic Games claimed in its lawsuit that Apple had blocked a billion iPhone consumers. But Apple has only a 44% market share in the U.S. With iOS, while Google has a 56% percentage with Android, according to Consumer Intelligence Research Partners. Globally, Apple has a 14.6% market share, compared to 85.4% of Android. Yes, at first glance, it turns out that Epic Games has pursued the company.
Well, it turned out that Epic Games also sued Google later in the afternoon, after Google also announced that it would remove Fortnite from the Google Play Store. Apple would possibly attempt to evade the antitrust claim by arguing that it does not have a dominant market percentage in the applicable markets. Epic Games has argued that Apple has two-thirds of the profits from mobile games, and this may also be a winning argument that will keep it in business. But to win the argument that consumers have no choice, Epic Games would possibly have to prove that a duopoly is the problem, because it blocks consumers at higher costs and generates bad business for developers.
This means that Apple and Google deserve to behave more like oligopolises than fierce competitors, and this can be difficult to prove. Epic Games can simply accuse Apple and Google of collusion, given how they acted to remove Fortnite from app outlets on the same day, and none have reduced their rates by 30% since the dawn of the smartphone era. But this rate would be maintained only if there was genuine evidence of that, and it is difficult for those antitrust-savvy corporations to leave such evidence. This is a fishing expedition that I do not expect Epic Games to win when everything is said and done. It’s not very unlikely that you’ll win, because any of the corporations has behaved the same way in terms of price, yet I hope that Google and Apple will vigorously protect their competition.
The demand for Epic Games comes at a delicate time, as a long-held Congress addressed the tech giants, with recent testimony from CEOs on Facebook, Apple, Google and Amazon. When asked to lawmakers, it seemed that Democrats and Republicans agreed that businesses were too big and that dismantling them may be just a service to consumers.
Epic Games may also have great compadres in the test in the form of Microsoft and Facebook. Yes, those corporations have also had their antitrust problems. Bill Gates laughs at Apple and wonders how it feels now that the shoe is on the other foot. A few decades later, Microsoft tried to get its xCloud cloud game app assigned on iOS, but Apple turned it down.
Facebook has also tried to open a store (or actually just one way for friends to play with each other) in the instant games feature of your Facebook Gaming app. But Apple rejected the app component that allowed players to play instant games, so Facebook had to launch the app without that feature available, even though it was allowed to do so on Google Play. In several of those cases, Apple backtracked on the defense that it created the App Store for users. But it might not be so simple for Apple to win this argument, especially since Epic was allowed to do things in the Google Play Store without destroying the App Store and making it dangerous.
Apple is also about to complicate the lives of mobile gaming marketing specialists to find out how well it attracts its advertising to new users to games. You will do this using the IDFA or advertiser ID. This means that in the call to privacy, Apple will make it difficult for third-party corporations to track users’ habits when it comes to downloading apps or making purchases.
Dan Barnes, the leading mobile gaming operating director and corporate platform N3twork, was so involved with this that he gave an overview of THE replacement of IDFA on the summer occasion of the Game Developers Conference last week. Privacy may sound good, but perhaps only 20% or less will decide to share your knowledge with third parties, meaning that functional advertising will now have a poor knowledge link. This can also harm many game developers and publishers, and can also generate a lot of sympathy for anti-Apple voices.
Maybe Apple is right to promote its own causes, such as maintaining the same regulations for all developers and protecting privacy. But this is the threat of making leaders like Sweeney and game developers feel unhappy. And that can get the government’s attention.
There is a query that is made by small developers, and it is a trusted query. Will Epic behave as well as it needs the tech giants to behave? A segment of players criticized the way Epic Games gave many things to lose to gain market percentage with Epic Games Store. These players would benefit, but they no longer like the fact that they can no longer play some of the games that Epic gets exclusively on the Steam platform. They say Epic is behaving anti-competitively because it is wasting cash in its store while fighting Steam in an effort to convince Steam of its prices to developers.
Epic Games has not revealed how much developers will pay for exclusive offers that earn advantages from Epic Games Store. I’m playing Total War Saga: Troy from Sega’s Creative Assembly, which is an exclusive Epic Games store and is loose for its first 24 hours. Epic Games obviously subsidizes this game in the hope of retaining customers. That way, this can be a very smart deal.
And it should be remembered that The other Epic Games business, Unreal Engine, is part of some other duopoly in the industry. Epic’s main competitor in game engines, the team developers use to create games, is Unity Technologies. Unity CEO John Riccitiello complained that it’s a little “unpleasant” that Epic Games has given so many grants to Unreal Engine developers. Sweeney has championed this practice and says his company does not require beneficiaries to use Unreal Engine.
If those methods are so successful that Epic becomes even more powerful, it may simply be subjected to the same type of antitrust court cases that it presents in opposition to Apple and Google. These tactics have been used through larger corporations to take competition out of the business. Just as Epic accused Apple of failing to deliver on its 1984 promise, Epic may fall into the same trap. And that would be a shame.
But, worse than nothing, the Crusade of Epic Games on behalf of the players can fall on deaf ears. As one of my friends pointed out, “What’s the difference for me to know which [a big company or another] gets the most out of my money?”