Aug 25, 2020

‘News | Business | iPhone Maker: Fortnite’ maker bruises Apple in battle over payments

Patrick McGee 

Apple has suffered a setback in its payments dispute with Epic Games, a developer, after a US court issued a temporary restraining order preventing it from blocking Epic’s access to its gaming platform.
Epic had introduced its own payment mechanism for players making in-app purchases in its hit title, Fortnite, in order to get round giving Apple a 30 per cent cut — a violation of App Store guidelines. Apple responded by giving Epic two weeks’ notice to comply with store rules or risk being blocked from Unreal Engine, a toolkit to create software for Apple platforms.
In a ruling on Monday evening, US district judge Yvonne Gonzalez Rogers sided with Apple in allowing the iPhone maker to ban Fortnite from the App Store. But she did not allow Apple to take action that would have affected third parties including Microsoft, which backed Epic on Sunday.
In a hearing held over Zoom earlier on Monday, the court heard Apple’s threat to revoke all of Epic’s access to Apple tools looked like acts of “retaliation” and “over-reach”.
In the order Judge Rogers said: “Apple has chosen to act severely, and by doing so, has impacted non-parties, and a third-party developer ecosystem. In this regard, the equities do weigh against Apple.”
She added: “Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders.”
Epic had argued that when it filed a lawsuit against Apple on August 13, Apple had “retaliated ferociously” with a threat that would be “existential” for its gaming engine, causing harm to millions of developers.
The lawsuit was Epic’s reaction to having Fortnite kicked off the App Store for giving customers a payment option that skirted around Apple’s system. Fortnite is among the top grossing apps of all time, free to download but earning revenues estimated at $34m a month from in-app purchases of items such as tools and outfits.
Each company has said the stakes are high. Epic is arguing that Apple is a monopolist guilty of antitrust violations, because it “ties” App Store distribution with a payment system that demands a 30 per cent fee on all in-app purchases.
Apple argues these are not two products, but one — the payment mechanism is merely a digital checkout counter — and that it is “nothing approaching a monopolist”. Apple has said that if Epic were allowed to bypass its payment mechanism than the “entire App Store” business model would be at risk.
Judge Rogers set a court hearing for September 28. She said neither company had a “slam dunk” case.

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