Everything to Know About Fortnite Creator Epic Games’ Battle Against Apple

Key Points:

• Apple and Epic Games are locked in a legal battle over latter's right to use third party payment system for in-app purchases by Fortnite users

• A recent court order declared partial victory for both parties. Epic Games can use Apple's third-party payment system. Apple gets 30%

In one of the most controversial tech battles between Apple and "Fortnite" creator Epic Games, a U.S. federal court gave a verdict which ended in a partial win for both the parties.

The most striking part of the ruling was that Apple, Inc. can no longer prohibit developers from directing users to third-party payment options.

Let's dive into the details of the case and understand the impact of the ruling. Before that a few bytes of starters.

What is Epic Games?

Epic Games is the creator of Fortnite—one of the most popular video games currently. Fortnite is a battle game in which last standing player or team wins the game. The game is free to play, which is one of the biggest reasons for its popularity.

What happened between Epic and Apple?

For iPhone users, the game Fortnite can only be installed through Apple's App Store. Developers using the App Store for their applications have to adhere to Apple's rules which include using its own payment system, which charges a commission.

Apple charges Epic Games a commission of 30% for using its App Store.

The battle started between the two in August 2020 when Epic Games updated the "Fortnite" iPhone app offering gamers to pay Epic directly instead of using Apple's payment system—escaping the 30% commission that Apple charges.

Apple, in turn, removed Fortnite from its App Store and also cut off Epic's access from its Mac and iOS developer accounts.

When did the lawsuit begin?

The companies took the battle to court and the trial started on May 3 which was overseen by U.S. District Judge Yvonne Gonzalez Rogers. The trial was held in a federal court in Oakland.

What was the verdict?

On September 10, Gonzalez Rogers of the U.S. District Court ruled that developers can now provide links in their apps to let customers pay outside of Apple's own in-app purchase system.

This means that the iPhone maker can no longer prohibit developers from directing users to third-party payment options.

Apple can also not ban developers from communicating with customers via contact information obtained by them when customers signed up within the app, the ruling said.

The order is set to take effect in 90 days.

Epic Games' most requested demand of letting app makers use their own in-app payment systems in App Store was not accepted, though. Apple charges 15% to 30% commission to developers for its own in-app payment system.

Fair competition claim

Epic CEO Tim Sweeney tweeted that the ruling "isn't a win for developers or for consumers."

"Epic is fighting for fair competition among in-app payment methods and app stores for a billion consumers," Epic's CEO, Sweeney, said on Twitter. "We will fight on."

Epic later that week said in a legal filing that it plans to appeal the ruling.

Though, the ruling favoured Epic Games in letting developers use third-party payment options, but it also ruled against Epic in nine out of 10 issues.

Epic had argued that Apple is a monopoly because of its tight control over its iOS platform. The court, on the other hand, said that Epic failed in proving its argument.

Suggestion of anticompetitive conduct

"Given the trial record, the Court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws," Rogers wrote.

Rogers said Apple was not a monopolist and "success is not illegal."

The court, though, said that it found Apple to engage in anticompetitive conduct under California law.

Epic Games dealt with another blow of paying Apple the 30% commission of the $12 million it earned when it launched alternate payment system in Fortnite. According to the ruling, it was then in breach of the legal contract signed with Apple.

Apple, after the ruling, declared that the battle was a victory as the judge sided with the iPhone maker by saying that the company was "not in violation of antitrust law."

What does the ruling mean for Apple and other companies?

After the 90-days period, Apple will have to give consumers the choice between using the App Store's payment method or alternative payment methods.

The change iPhone users will observe after the ruling is that some apps may start showcasing external links for making payments.

If the users choose to pay through a third-party payment option, developers will escape the hefty 30% commission charged by Apple.

But, this might not affect Apple's revenue as many small developers have not built their own payment systems and may opt for Apple's payment system.

More comfortable

Small developers might prefer using Apple's payment system as they may be more comfortable using Apple for entering credit cards information rather than other websites.

Epic Games, on the other hand, has its own online shop and therefore can bypass Apple's payment option.

Big app developers can take advantage from the ruling as they can escape Apple's commission.

Epic Games had also sued Google over its control on the Play Store.