Apple App Store paralyzed with 30% cut

Epic Games CEO Tim Sweeney said Apple’s App Store is an “absolute monopoly” and that Google’s control of Android “essentially stifles competing stores” on CNBC’s Squawk Alley on Friday, adding his voice to a chorus of detractors before CEOs testify in Congress in the coming weeks.

Privately owned Epic Games is the publisher and developer of Fortnite, which is one of the top earning apps in mobile app stores. But because in-app purchases from Fortnite are digital products as character sets, both Apple and Google get a 30% cut in game revenue in accordance with store policies.

“Apple has blocked and paralyzed the ecosystem by inventing an absolute monopoly on software distribution, on software monetization,” Sweeney told CNBC’s Julia Boorstin.

In 2019, the company launched Epic Game Store, a platform to distribute software on Windows and Mac computers, in which the main point of sale for game makers is that it charges a fee of less than 12% of sales.

But the Epic Game Store has yet to launch on iPhones, because Apple has strict guidelines that prevent competing software stores on the App Store.

“They are preventing an entire category of businesses and applications from being engulfed in their ecosystem by excluding competitors from every aspect of their business that they are protecting,” said Sweeney.

In addition to Fortnite, Epic creates the Unreal Engine, a software that greatly facilitates the creation of 3D-based video games. The company is worth $ 18 billion after Sony invested $ 250 million earlier this month. Tencent is also a major shareholder.

Google too

Sweeney said in June that the company still plans to bring the Epic Games store to Android. In the CNBC interview on Friday, she noted that Google also has rules that complicate that launch.

“Google essentially intentionally drowns out competing stores by having barriers and obstructions in the user interface,” said Sweeney.

Previously, Epic Games released Fortnite as a “side-loading” install that did not require download via the Google Play app store, allowing the company to bypass Google’s 30% cut. But the installation process was not simple, it damaged the adoption, and Google finally accused Fortnite of having a security flaw in its installer. Fortnite launched on Google Play earlier this year.

Ultimately, though, one of Sweeney’s biggest complaints centers on the 30% fee Apple and Google get from in-app purchases. On iPhones, users must pay for digital products through the Apple app store payment system. Applications that bypass the mechanism could be removed from the App Store. Google requires developers to also use Google Play billing. Other apps that make big bucks through apps, such as Match Group, publisher of Tinder, have also publicly criticized the 30% fee.

Earlier this week, Apple launched a paid investigation that suggested its iPhone App Store was not substantially different in terms of practices or rates from competitors, including Google.

“If each developer could accept their own payments and avoid the 30% tax from Apple and Google, we could pass the savings on to all of our consumers and gamers and get a better deal on the items. And it would have economic competition,” said Sweeney.