A Bite at Apple: Why the Technology Giant is Being Scrutinized by Developers

*Kayla York

I. Introduction    

As of late, Apple has been publicly criticized by application (app) developers and regulators due to its App Store practices.[1]  The technology company, which has a two trillion-dollar market value, receives a fifteen to thirty percent commission on certain purchases made within an app sold on the App Store.[2]  Apple’s developer guidelines provide that apps may allow users to access services and/or content that were previously purchased, but “cannot ‘directly or indirectly target iOS users to use a purchasing method other than in-app purchase.’”[3]  Further, the guidelines specify “that apps can’t offer access to new, paid features within the app they must offer in-app purchases.”[4]

II. The History of Epic Games

Epic Games, a video game company founded in 1991, has perhaps become the most profound critic of Apple’s practices in recent months.[5]  Epic Games suggests that Apple has become a hypocritical monopoly while taking over the technology industry.[6]  Apple introduced its first Macintosh computer in 1984 through an advertisement suggesting that IBM was a monopoly taking over the technology market.[7]  The advertisement evoked sentiments similar to those created by the themes in George Orwell’s novel, 1984.[8]  Epic Games claims Apple is now more like IBM was in 1984 because of its use of a “series of anti-competitive restraints and monopolistic practices in markets” for app distribution, and due to its “processing of consumers’ payments for digital content used within iOS mobile apps.”[9]  Tim Sweeney, CEO of Epic Games, has said that “[t]he iOS App Store’s monopoly protects only Apple profit, not device security” and that Apple has “crippled the ecosystem by inventing an absolute monopoly on the distribution of software, [and] on the monetization of software.”[10]

Epic Games created Fortnite, which became a “global phenomenon,” amassing over 350 million players.[11]  Epic Games also created and runs the Epic Games Store, which allows players to purchase and download various games developed by Epic Games and other third-party game developers.[12]  However, when Epic Games requested Apple to put the Epic Games Store on the Apple App Store, Apple rejected the request.[13]  Epic Games claims that it would create an app store of its own on iOS if Apple did not employ anti-competitive tactics.[14]

III. Other Competitors’ Fights with Apple

However, Apple is not only excluding Epic Games, but Microsoft, Google, and Facebook as well.[15] Microsoft’s new mobile gaming service, xCloud, recently launched on many different platforms, but is notably absent from Apple’s App Store.[16]  Apple claims it denied Microsoft’s request to be included in the App Store on the basis that the gaming service would be in violation of App Store guidelines, since Apple cannot individually review xCloud.[17]  Apple App Store guidelines also exclude Google’s gaming service, Google Stadia, from the App Store.[18]

Further, Facebook has been unable to receive Apple’s approval of a new Facebook gaming app that allows users to play online games and watch livestreams of the same.[19]  Facebook ultimately had to remove gameplay functionality from the app to receive approval for the App Store.[20]  Mark Zuckerberg criticized Apple’s power, calling the company a “gatekeeper” that has the “power to decide if [Facebook] can even release [Facebook’s] apps in [Apple’s] app stores to compete with [Apple].”[21]   In August 2020, Facebook wanted to notify users purchasing tickets of online events—through a new Facebook feature—that Apple takes thirty percent of in-app purchases.[22]  But Apple did not allow Facebook to inform users, claiming the information was irrelevant.[23]  Facebook had to remove the notification before Apple would allow the new feature.[24]

IV. Epic Games Sues Apple

On August 13, 2020, Epic Games introduced a direct payment option in the Fortnite iOS app, which allowed players to purchase in-game currency at a twenty percent discount by maneuvering around Apple’s in-app purchase mechanism.[25]  This option was in direct violation of Apple’s guidelines, which prohibit use of in-app purchase mechanisms developed by other business entities.[26]  Apple immediately removed Fortnite from the App Store stating, “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.”[27]

Later that same day, Epic Games filed a ten-count complaint against Apple in California, requesting that the court issue an injunction “prohibiting Apple’s anti-competitive conduct,” mandate Apple put an end to its allegedly unlawful conduct, and provide remedies to help restore competition within the iOS App Distribution and iOS In-App Payment Processing markets.[28]  Further, Epic Games requested that the Court deem the contractual and policy restraints between Apple and developers unlawful and unenforceable.[29]

Epic Games then released a video that mocked Apple’s Macintosh advertisement from 1984.[30]  In Epic Games’ video, Apple is portrayed as the “dominant power” that has complete control.[31]  Epic Games claims to have “defied the App Store Monopoly” and “[i]n retaliation, Apple is blocking Fortnite from a billion devices.”[32]  Soon after, Google removed Fortnite from its Google Play Store.[33]  In response, Epic Games filed a similar lawsuit against Google.[34]  To prepare for trial, Epic Games has reached out to other technology executives about “forming a coalition of companies critical of Apple’s business conduct.”[35]

On August 24, 2020, the Honorable Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California granted a temporary restraining order against Apple.[36]  The order prohibits Apple from terminating Epic Games’ other developer accounts that are unrelated to Fortnite.[37]  Apple, however, is not required to bring Fortnite back to the App Store.[38]  Nonetheless, on August 28, 2020, Apple terminated Epic Games’ Fortnite developer account, blocking Epic Games’ access to Apple’s software and developer tools that would allow it to develop future versions of software.[39]

V. The Future of Antitrust for Potential Technology Monopolies

On October 9, 2020, Judge Gonzalez Rogers denied Epic Games’ request for a preliminary injunction requiring Apple to put Fortnite back on the App Store.[40]  However, Apple will be required to allow Epic Games to operate the Unreal Engine developer account.[41]  No updates are expected on this case until the parties will be back in court in early 2021.[42]  While this case will likely take many years to conclude, it may finally answer the question: how much control of the app industry will Apple be able to maintain?

*Kayla York is a second-year day student at the University of Baltimore School of Law, where she is a staff editor for Law Review. Kayla serves as the Publications Chair for the Women’s Bar Association, Public Relations Coordinator for UBSPI (University of Baltimore Students for Public Interest), and Secretary for the Criminal Law Association. This past summer, Kayla was an intern for both The Law Offices of Evan K. Thalenberg, P.A. and the Office of the State’s Attorney for Baltimore City, where she continued her internship through the fall semester. In the spring, Kayla will be an intern for the Office of the Attorney General for the State of Maryland in the Organized Crime Unit. 

[1]           See Joe Rossignol, Epic Games vs. Apple: Timeline of Events Surrounding Fortnite’s Removal from App Store, MacRumors (Sept. 10, 2020, 5:22 PM), https://www.macrumors.com/guide/epic-games-vs-apple/.

[2]           See Jack Nicas, Apple Reaches $2 Trillion, Punctuating Big Tech’s Grip, N.Y. Times (Aug. 19, 2020), https://www.nytimes.com/2020/08/19/technology/apple-2-trillion.html; see also Isobel Asher Hamilton, Apple is Facing Rage and Insurrection from Developers Over the Commission It Charges Apps on the App Store, Bus. Insider (June 17, 2020, 6:08 AM), https://www.businessinsider.com/apple-developer-rage-30-percent-app-store-tax-2020-6.

[3]           Hamilton, supra note 2.

[4]           Id.

[5]           About Epic Games, Epic Games, https://www.epicgames.com/site/en-US/about (last visited Nov. 9, 2020); see Rossignol, supra note 1.

[6]           See Complaint for Injunctive Relief at 2, Epic Games, Inc. v. Apple Inc., 2020 WL 4698967 (N.D. Cal. 2020) (No. 3:20-cv-05640).

[7]           Id. at 1.

[8]           Id.

[9]           Id.

[10]         Reed Albergotti & Tony Romm, Tinder and Fortnite Criticize Apple for Its ‘App Store Monopoly’, Wash. Post (June 16, 2020, 9:38 PM), https://www.washingtonpost.com/technology/2020/06/16/apple-antitrust-european-commission/; Kif Leswing, Apple Sued by Fortnite Maker After Kicking the Game Out of App Store for Payment Policy Violations, CNBC, https://www.cnbc.com/2020/08/13/apple-kicks-fortnite-out-of-app-store-for-challenging-payment-rules.html (Aug. 13, 2020, 9:09 PM).

[11]         Complaint for Injunctive Relief, supra note 6, at 10.

[12]         Id at 6.

[13]         See id. at 22.

[14]         Id at 23.

[15]         See Ben Gilbert, Apple Refuses to Allow Major Gaming Apps From Microsoft, Google, and Facebook Onto the App Store, and the Fight Just Went Public, Bus. Insider (Aug. 9, 2020, 11:10 AM), https://www.businessinsider.com/apple-refuses-to-allow-major-apps-from-microsoft-google-facebook-2020-8.

[16]         See Nick Statt, Apple Confirms Cloud Gaming Services Like xCloud and Stadia Violate App Store Guidelines, The Verge (Aug. 6, 2020, 5:55 PM), https://www.theverge.com/2020/8/6/21357771/apple-cloud-gaming-microsoft-xcloud-google-stadia-ios-app-store-guidelines-violations.

[17]         Id.

[18]         Id.

[19]         Seth Schiesel, Facebook Gaming Finally Clears Apple Hurdle, Arriving in App Store, N.Y. Times (Aug. 7, 2020), https://www.nytimes.com/2020/08/07/technology/facebook-apple-gaming-app-store.html.

[20]         Id.

[21]         Id.

[22]         See Pranav Dixit & Ryan Mac, Mark Zuckerberg Said Apple Has a “Stranglehold” on Your iPhone, BuzzFeed ), https://www.buzzfeednews.com/article/pranavdixit/zuckerberg-apple-monopoly (Aug. 28, 2020, 3:19 PM).

[23]         Id.

[24]         Id.

[25]         Rossignol, supra note 1.

[26]         Id.

[27]         Leswing, supra note 10.

[28]         See Complaint for Injunctive Relief, supra note 6, at 34.

[29]         Id.

[30]         See Fortnite, Nineteen Eighty-Fortnite – #FreeFortnite, YouTube (Aug. 13, 2020), https://www.youtube.com/watch?v=euiSHuaw6Q4.

[31]         Rossignol, supra note 1.

[32]         Fortnite, supra note 30.

[33]         Brian Fung & Shannon Liao, Fortnite’s Maker Sues Apple and Google After the Game Was Removed from Both App Stores, CNN Bus., https://www.cnn.com/2020/08/13/tech/fortnite-apple-store-removed/index.html (Aug. 14, 2020, 9:21 AM).

[34]         Id.

[35]         Nick Wingfield & Alex Heath, Epic Games Seeks to Form Coalition of Apple Critics, The Info. (Aug. 17, 2020, 5:53 PM), https://www.theinformation.com/articles/epic-games-seeks-to-form-coalition-of-apple-critics.

[36]         Russell Brandom et al., Epic Judge Will Protect Unreal Engine – but Not Fortnite, The Verge (Aug. 25, 2020, 1:01 AM), https://www.theverge.com/2020/8/25/21400240/epic-apple-ruling-unreal-engine-fortnite-temporary-restraining-order; Order Granting in Part and Denying in Part Motion for Temporary Restraining Order at 1, Epic Games, Inc. v. Apple Inc., 2020 WL 5073937 (N.D. Cal. 2020) (No. 4:20-cv-05640-YGR).

[37]         Brandom et al., supra note 36.

[38]         Id.

[39]         Stephen Nellis, Apple Terminates ‘Fortnite’ Creator’s App Store Account As Lawsuit Proceeds, Reuters (Aug. 28, 2020, 5:18 PM), https://www.reuters.com/article/us-apple-epic-games/apple-terminates-fortnite-creators-app-store-account-as-lawsuit-proceeds-idUSKBN25O2YM.

[40]         Epic Games, Inc. v. Apple Inc., No. 4:20-cv-05640-YGR, 2020 WL 5993222, at *1 (N.D. Cal. Aug. 24, 2020); see Juli Clover, Epic Games Denied Preliminary Injunction for Fortnite, but Apple Can’t Block Unreal Engine, MacRumors (Oct. 9, 2020, 4:40 PM), https://www.macrumors.com/2020/10/09/apple-denied-fortnite-preliminary-injunction/.

[41]         Clover, supra note 40.

[42]         Id.

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