Did Fortnite just kill the App Store as we know it?


The controversy arose Thursday when both Call (AAPL) en Google (GOOG) Fortnite stepped out of their app stores. The companies claimed that Epic wrote their guidelines by announcing a way for players to buy in-game currency outside of them proprietary payment systems.
The gaming company was ready for battle. Epic rap submitted their packs and published a video parody of Apple’s iconic “1984” ad, which cast Apple in the role of villain. It rebuffed Google’s “Don’t Be Evil” slogan at the tech company, accusing the company of “lowering its motto after almost an afterthought.”

Apple and Google have not commented on the Epic Games lawsuit. But they both pointed out that their guidelines are aimed at all developers, to “keep the store safe” from security risks.

“Epic blew it up with its big PR campaign yesterday with videos ready to go and all,” John Bergmayer, legal director of consumer law firm Public Knowledge, told CNN Business on Friday. “They hired Apple and Google to take their apps out of the store.”

The complaints each ran on 60 pages, and Epic has representation of big names; one of her lawyers ran the Justice Department’s anti-trust division during the Obama administration.

“Epic preservation of Christine Varney is significant,” said Sandeep Vaheesan, legal director of the Open Markets Institute. “It shows that Epic is serious about this suit.”

The company is asking the court to end Apple and Google’s all anti-competitive behavior. It does not require any damage.

Here are the problems while playing and what’s on the point.

How app stores work

Android, which is open source but owned by Google, controls 85.4% of the global operating system market, while Apple has 14.6%, according to IDC.

Their app stores are offering a 30% discount for in-app purchases. Developers say the fee is too high and voice growth. Apple does not allow outside apps to download to its devices, and with no company allowing developers in their app stores to overhaul their payment systems.

While Google allowed to download apps outside to Android devices, Epic has complained about that go outside of Google approved process has been banished with security pop-ups and other software restrictions. Epic originally introduced Fortnite outside the Google Play Store, but after 18 months it launched the game there in April.

In 2019, consumers bought about $ 61 billion in digital goods and services from Apple’s App Store, while Google Play users spent nearly $ 30 billion on apps, according to analytics firm Sensor Tower.
The new email service Hey.com found himself on chance with Apple after asking its users to subscribe and pay Hey on their own website instead of its iOS app. Founder David Heinemeier Hansson testified about the case at a January hearing before the House Justice Committee’s antitrust panel, which is investigating Apple, Amazon, for potentially anti-competitive behavior.
Hansson told CNN that he also spoke with Justice Department anti-trust officials about Hey.com’s experience with Apple.
Earlier this year, the European Commission opened two anti-trust investigations in Apple’s App Store, with a complaint from Spotify.

Is Apple like Google a monopoly?

In antitrust cases, perhaps the most crucial element in determining what the market is, the better it is to show harm to the competition. It’s in Epic’s favor define the market as narrowly as possible, while Apple and Google will push for a broader interpretation.

Claiming that Apple monopolizes the distribution and purchase of iOS apps, “Epic Games” will have to convince the judge that these are brands to begin with, “John Bergmayer, legal director of consumer law group Public Knowledge, told CNN Business.

For its part, Epic Games claims that since Apple controls one billion devices, there is no other way to reach these consumers.

But if Apple convinces the judge to see the market as just their smartphones, then that makes their defense much easier. Apple accounts for only 13.3% of the global share of the phone market.

Apple could also claim that it pays the 30% fee for in-app purchases for running the App Store and checking apps to make sure they are not security risks, said Jeffrey Blumenfeld, a partner at Lowenstein Sandler.

“I have a very hard time believing that the outcome of this lawsuit is that the court says Apple is not allowed to control distribution of apps through its own App Store,” Blumenfeld said. For the court to decide otherwise, it would have to “pretty strongly convince” that consumers could be better in the long run, he said.

Potential outcomes

If Epic wins, Apple and Google could be tasked with allowing developers to sell in-app purchases without giving the tech giants a cut, Vaheesan said. The court could also rule that Apple and Google are prohibited from bundling payment services with their app stores, allowing developers to be paid directly.

Alternatively, Apple and Google could simply settle with Epic and quietly change their policies.

If Epic loses, Bergmayer, the legal director for Public Knowledge, said, “at least that marks what the boundaries of the anti-trust law are at the moment so people who want to change can look to other avenues.” For example, they could ask Congress to pass new anti-trust laws.

The case could take years, several lawyers told CNN Business. The 1974 anti-trust case against AT&T, for example, took eight years to litigate and ended with the division of the company into multiple companies. (AT&T is the parent of Warner Media, which owns CNN.)

“I think [Epic winning the lawsuits] would be very good for the markets in general, “said Mitch Stoltz, attorney for senior staff at the non-profit digital rights group Electronic Frontier. You would see more experiments, you would see more business models. You would see more innovation. ”

Correction: An earlier version of this story misrepresented the policies of Apple and Google about how customers can download apps on their devices.

CNN’s Brian Fung contributed to this report.

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