Apple is being sued by the company behind the blockbuster video game Fortnite, claiming the iPhone maker abuses a monopoly over its App Store to charge developers exorbitant fees.
Epic Games filed a lawsuit in California accusing Apple of “attempting to control markets, block competition, and stifle innovation” after Fortnite was removed from the App Store.
The move represents a new challenge to Apple’s strict management of the store, which is the only way that software can be installed on the iPhone and which generates billions of dollars for the company each year.
The App Store is coming under intense scrutiny, with developers speaking out against the company and regulators in the US and EU investigating the company.
Epic’s lawsuit demands that Apple cease what it called the company’s “anti-competitive conduct” and asking that its behaviour be declared illegal.
Apple requires developers that publish apps on its store to follow strict rules. Apps that want to sell digital goods, such as game upgrades, within the app must use Apple’s payments service, with the iPhone maker taking a cut of up to 30pc.
These sales have become an increasingly important part of Apple’s revenue as sales of its iPhone have slowed, but developers have complained that they are unfair.
Earlier on Thursday, Fortnite, which has more than 350m registered players, began allowing gamers to bypass Apple and Google’s payment method, offering discounts of up to 20pc for its in-game currency if people paid with a credit card or PayPal.
Epic Games has defied the App Store Monopoly. In retaliation, Apple is blocking Fortnite from a billion devices.— Fortnite (@FortniteGame) August 13, 2020
Visit https://t.co/K3S07w5uEk and join the fight to stop 2020 from becoming "1984" https://t.co/tpsiCW4gqK
“Currently, when using Apple and Google payment options, Apple and Google collect a 30pc fee, and the up to 20pc price drop does not apply. If Apple or Google lower their fees on payments in the future, Epic will pass along the savings to you,” the company said.
The move prompted Apple to remove Fortnite from the store, claiming Epic had purposefully broken its rules. Later, Google removed the app from its Play Store for Android phones, although unlike the iPhone, Android devices have other ways to install software.
“Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users. As a result their Fortnite app has been removed from the store,” a spokesperson said.
“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.
It added: "We will make every effort to work with Epic to resolve these violations so they can return Fortnite to the App Store.”
Immediately after Fortnite was removed, Epic filed a lawsuit in California against Apple. "Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear. At a market cap of nearly $2 trillion, Apple’s size and reach far exceeds that of any technology monopolist in history," the lawsuit said.
It claims that Apple’s rules such as its payment demands are an abuse of its control over iPhone app distribution. Apple’s chief executive Tim Cook has long insisted that the company's minority share of the global smartphone market means it is not a monopoly, and the company recently released research arguing that its fees are not out of line with the rest of the industry.
Apple is under investigation in the EU following a complaint from Spotify, which alleges that the App Store fees make it difficult to compete with the Apple Music streaming service, and a committee of the US Congress is investigating as part of a broad probe into large tech companies.