Abstract
Mid-August 2020, a series of events unfolded in a short period of time. They may prove a watershed moment for the role of antitrust in regulating digital markets.
It started when players of Epic Games’ popular Fortnite game on their iPhone were suddenly faced with a choice screen when buying in-app currency (‘V-Bucks’). The screen asked users how they wanted to pay for 1.000 V-Bucks, through Apple’s App Store (for $9.99) or through Epic direct payment (for $7.99). Epic thus introduced its alternative payment system next to Apple’s. That alternative was cheaper: while Apple charges a 30% fee on in-app purchases, Epic charged only 10%, passing on 20% of cost savings to players.
Apple then quickly removed Fortnite from its App Store for bypassing the 30% fee—a violation of its Developer Guidelines. This was not the first time Fortnite was yanked from an app store. Epic itself had already experimented with pulling its app from Google’s Play Store and having users ‘sideload’ it instead (i.e. download it directly from the web), thus bypassing the 30% fee. However, the Dutch Competition Authority, which examined this experiment in a report on app stores, came to sobering conclusions: Fortnite downloads dropped an estimated 41% of, with Epic seemingly losing users to competing game PUBG.
Within Apple’s iOS, however, sideloading is made technically impossible. The consequences of being removed the App Store are thus even more severe: the app becomes completely unreachable for new players and cannot be updated by older players. It is no surprise, then, that Epic had a carefully crafted response ready: it immediately filed a complaint with the U.S. District Court for the Northern District of California. Epic also uploaded a video titled ‘Nineteen Eighty-Fortnite’—a parody of Apple’s iconic ‘1984’ commercial (which was directed at the monopolist of its time, IBM).
These are only the first shots in a larger battle that will rage on for some time. Given that app stores are the quintessential online platform, rulings in this area will have outsized influence in shaping antitrust law in the digital era. This article introduces the source of the dispute (the Apple ‘tax’), examines its broader context (the gaming industry), describes the first battle in this larger war, and assesses its importance for EU competition law.
It started when players of Epic Games’ popular Fortnite game on their iPhone were suddenly faced with a choice screen when buying in-app currency (‘V-Bucks’). The screen asked users how they wanted to pay for 1.000 V-Bucks, through Apple’s App Store (for $9.99) or through Epic direct payment (for $7.99). Epic thus introduced its alternative payment system next to Apple’s. That alternative was cheaper: while Apple charges a 30% fee on in-app purchases, Epic charged only 10%, passing on 20% of cost savings to players.
Apple then quickly removed Fortnite from its App Store for bypassing the 30% fee—a violation of its Developer Guidelines. This was not the first time Fortnite was yanked from an app store. Epic itself had already experimented with pulling its app from Google’s Play Store and having users ‘sideload’ it instead (i.e. download it directly from the web), thus bypassing the 30% fee. However, the Dutch Competition Authority, which examined this experiment in a report on app stores, came to sobering conclusions: Fortnite downloads dropped an estimated 41% of, with Epic seemingly losing users to competing game PUBG.
Within Apple’s iOS, however, sideloading is made technically impossible. The consequences of being removed the App Store are thus even more severe: the app becomes completely unreachable for new players and cannot be updated by older players. It is no surprise, then, that Epic had a carefully crafted response ready: it immediately filed a complaint with the U.S. District Court for the Northern District of California. Epic also uploaded a video titled ‘Nineteen Eighty-Fortnite’—a parody of Apple’s iconic ‘1984’ commercial (which was directed at the monopolist of its time, IBM).
These are only the first shots in a larger battle that will rage on for some time. Given that app stores are the quintessential online platform, rulings in this area will have outsized influence in shaping antitrust law in the digital era. This article introduces the source of the dispute (the Apple ‘tax’), examines its broader context (the gaming industry), describes the first battle in this larger war, and assesses its importance for EU competition law.
| Original language | English |
|---|---|
| Pages (from-to) | 79-85 |
| Number of pages | 7 |
| Journal | European Competition and Regulatory Law Review |
| Volume | 5 |
| Issue number | 1 |
| Publication status | Published - 2021 |
| Externally published | Yes |