- Apple CEO Tim Cook appeared before Congress last month to raise concerns about the company’s App Store policy.
- Cook pointed out that most developers pay nothing to Apple for including their apps in the App Store, and the company also supported a study showing that its commission rates are standard for the industry.
- But Epic Games, the developer behind the hugely popular game “Fortnite”, recently spoke out against Apple and filed a lawsuit against the company for removing the game from the App Store.
- News publishers are also asking Apple how they can negotiate better terms similar to those that apply to Amazon.
- Taken together, the moves suggest that Apple’s efforts to address anti-trust related concerns across the App Store are not working.
- Visit the Business Insider website for more stories.
Less than a month ago, Apple CEO Tim Cook appeared before Congress in a hearing on anti-trust system to address concerns that the company was competing with App Store policies.
In his opening statement, Cook pointed out that the vast majority of developers pay nothing to Apple, and made comparisons with the old days when software makers would have to pay for farm space at brick-and-mortar stores. Prior to the hearing, Apple itself commissioned a survey that showed that Apple’s 30% cut in App Store purchases was no different than the rates charged by other digital marketplaces.
But developers have long criticized this policy, claiming that the cuts Apple is making make it difficult to price its offerings competitively alongside Apple’s own products, such as Apple Music or Apple Arcade. That tension culminated in something of a powder-keg moment in recent weeks when “Fortnite” maker Epic Games filed Apple after the tech giant removed the game for continuing its payment policy.
While Epic is not the first company to address these concerns or reach a legal campaign, it is certainly one of the most high-profile, and its calculated play has galvanized other app makers, including news publishers, to come out against the so-called App Store tax.
The whole debacle suggests that Apple’s attempts to reduce accusations that the company does not provide a level playing field for developers are not working. Rather, they can further stimulate developers’ concerns – and put holes in Apple’s own anti-trust defense in the process.
Even before iPhone maker “Fortnite” launched its App Store earlier this month, Epic began taking pictures at the company. In an email June 30, a month before the hearing on anti-trust, Epic urges the tech giant to change its payment policy. After Apple refused to negotiate, the game developer sent another email on August 13 to oppose the policy.
“I’m writing to tell you that Epic will no longer comply with Apple’s restrictions on Apple’s payment processing,” said CEO Tim Sweeney in that email, which was revealed in court documents Friday. “We choose to follow this path in the firm belief that history and law are on our side.”
That same day, Apple and Google removed “Fortnite” from their app stores after Epic launched a way to buy in-game currency instantly – Apple and Google farm systems to avoid the 30% cut.
Epic then filed a lawsuit against Apple, published a video mocking Apple’s iconic “1984” ad that threw the company into a bad light, and even plans to hold an anti-Apple event called #FreeFortnite.
It all made a conscious attempt by Epic to illustrate his point that Apple’s policies are anti-competitive, and Apple took the bait, as my colleague Troy Wolverton wrote.
In its statement on the matter, Apple said it was removing “Fortnite” from the App Store because Epic Games violated infringement guidelines that apply to every developer.
“Epic freely agreed to the terms and conditions of the App Store and we are pleased that they have built such a successful business on the App Store,” the company said. “The fact that their business interests are now leading them to push for a special regulation does not change the fact that these guidelines create an equal playing field for all developers and make the store safe for all users.”
Apple’s clash with Epic came after the tech giant explained why Microsoft’s cloud gaming service will not be allowed in the App Store when it launches in September, citing App Store rules requiring that Apple will approve every game in the service.
The impact of these two gigantic showdowns has inspired others to confront Apple. News publishers are now pushing Apple for a better deal that would allow them to keep a larger cut of digital subscriptions sold through the App Store.
A trade group that counts news outlets such as Business Insider, The New York Times, Bloomberg, and The Washington Post among its members wrote a letter to Apple asking about the terms Amazon is satisfied with in order to land a better deal, reported The Wall Street Journal on Thursday. That comes after The New York Times pulled out of Apple News in June because the relationship gave the Times “little control over its business.”
Cook mentioned such circumstances during the July antitrust hearing, but did not disclose what they were.
Apple has a strong incentive to make sure all developers follow the rules and use their in-app payment system. The company’s service provider, which includes revenue from App Store transactions, is now the second largest money maker behind the iPhone when it comes to quarterly revenue.
Apple relies on companies like its service department to sap their revenue in periods when iPhone sales are slow. Apple even held a major event last year – a ritual usually reserved for tent pole launchers – to introduce new digital offerings such as Apple TV Plus, the Apple Card, and Apple Arcade.
It also prides itself on a strict app approval process and the high bar it sets for developers looking to publish their apps on their platform – and that’s a good thing. But if Apple’s policies move away or exclude products from big players such as Epic, Microsoft, or The New York Times, it’s starting to raise the question: are Apple’s decisions to the detriment of consumers, and ultimately their own services?
