Epic vs Apple – Big Win

This was a very interesting lawsuit because it hit 3 fundamental aspects of the App Store – first, the need to even use the AppStore at all, second the % of cut that Apple took from developer sales, and finally the requirement to use Apple for any in-game purchases. That business line accounts for a big chunk of Apple’s income. There was a fair amount of mud slinging on this, which was certainly entertaining.

Now we have some answers for the 3.

AppStore Is Mandatory

This was expected, and to most people, a long shot to start, if not a red herring. Epic was smart here, as it forced some disclosure on Apple’s part of the inner workings. For multiple reasons (if not primarily security) this has to be the case.

AppStore Cuts are Pro-Rated

The rate is low for the first $1m in revenue, and scales depending on the size of the application. Again, this makes sense for the smaller organizations that barely recouped any costs, and Apple is big enough to absorb it. The downside here is that it will likely generate more bloatware as the cost of entry has dropped. See itch.io as a good example.

AppStore Must Support 3rd Party Payment Options

This was the real meat of the case, though the one that had the least amount of press. Today, if you only use your phone for Spotify and pay your sub through the app, then Apple takes a cut. For multi-platform apps, this isn’t a huge deal as you’re unlikely to use a mobile app as the primary method of payment. Well, it seems a judge ruled that Apple no longer has full domain over payment processing inside the applications. That leaves a particular use case that is going to be a massive change.

No question that the AppStore makes a ton of money off F2P/IAP. The game industry made about $110 billion on F2P games in 2020 – the market is massive. Apple makes a chunk from that for games like Clash of Clans, Honor of Kings and so on. Does anyone really think that Tencent wants to pay Apple 15% moving forward? And you know that Google has got to be sweating as well!

This one is a big deal, and a massive shift in the market. Odds are it will generate alternative payment programs that are lower % cuts for the smaller apps, and then some in-house machines for the bigger ones. Heck, it may even mean that Apple themselves needs to re-price themselves appropriately.

The details still need to be worked out, as well as the timing. And certainly there will be some appeals. Lots of them. But from what’s come out so far, it really looks like Epic won this battle.

4 thoughts on “Epic vs Apple – Big Win

  1. The reports I read were confusing. They said judgment went against Epic in 9 out of 10 items but also that Epic had won what they wanted, more or less. That seems peculiar given If Epic are appealing the judgment, all of it, even the one part they actually did win. It seems a risky strategy if they have in fact done as well as you sugggest. They wouldn’t be the first appelant to end up worse off than they started by appealing.

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    • Sorry, Apple is appealing. Epic is smashing champagne bottles here. This is a billion+ dollar win for Epic. Fortnite is F2P, they effectively don’t need to pay Apple anything moving forward. Wild.

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  2. You’d have to read some articles again, it’s a big loss for Epic. They had to pay Apple cut from the period when Fortnite used its’ own payment processor. Apple has no obligation to allow them back to App store. Apple wasn’t recognized as a monopoly. Apple is going to collect 30% cut even from apps that use their own payment processing, which means IAP will still be preferable.

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