Over the last couple of months, I’ve been watching with interest as game publisher Epic has had a falling out with both Apple and Google over mobile device in-app purchases, and subsequently took Apple to court over it. Although this lawsuit isn’t directly related to ebooks, it could nonetheless have some interesting implications for ebook stores’ reader apps depending on the outcome.
Since 2011, Apple has been strictly enforcing its policy that developers and companies who sell apps through the iOS app store must pay Apple 30% of the money they receive from in-app purchases. This includes magazines, ebooks, streaming media services, games, and more. Unlike with Android, iOS developers don’t have the option to make their apps available outside of the iOS store, without resorting to hacking or workarounds; Apple keeps the doors on its walled garden locked tight. (Google takes a percentage of in-app purchases in certain categories, such as games, but not media services or ebooks.)
In response, these apps have by and large either raised their prices on Apple purchases (Spotify bumped its iOS device subscription fee up by $3 to cover that 30% vig), or simply removed direct store access from their apps and advised customers to purchase through their web store from a browser instead (Amazon). None of them seemed to deem it worth starting a legal battle over, however—until now. Perhaps Apple’s percentage of their market was just too small to make a fuss over.
But on the other hand, last year the Supreme Court allowed a lawsuit from a group of iPhone owners to go forward complaining that Apple’s vig and locked garden served to drive up the prices they had to pay. I haven’t seen any further news about progress in that suit, but these things do take time. Also in 2019, a couple of app store developers filed their own antitrust suit against Apple. In June of this year, the EU announced it was opening antitrust investigations into Apple over this issue. And now Epic has deemed it worth picking a legal fight with Apple.
It was kicked off by Epic’s decision in August to submit a hotfix (an urgent patch that goes into effect right away without having to be reviewed by the app stores first, intended for time-critical issues like fixing exploits) that implemented an in-app purchase system that bypassed the ones used by Google and Apple so Epic could bypass the 30% fees, and offer discounts on the in-game currency they were selling. As soon as Apple and Google discovered this sneaky act, both of them suspended Fortnite from their app stores.
Epic had only made Fortnite available via Google’s store in April, after a long period of bypassing the app store to offer it directly. At the time, Epic made it clear it was doing this under protest, complaining about the way Android’s app security treated externally installed apps as second-class citizens. It’s not exactly surprising that a scant few months later Epic got itself tossed out of the store. Second-class citizen or not, Epic is still offering the Android version of the app for direct download. However, it can’t do the same for Apple—and that’s where the lawsuit comes in.
Thinking about it, it makes a lot of sense that one of the first parties to mount a serious legal challenge to Apple’s in-app purchase fee would be a mobile video game publisher. Perhaps more than any other medium, video games depend on impulse buys. They can’t afford to drag someone out of immersion in the game to go somewhere else and make the payment. By the time they get the web browser open, they might have changed their mind. (This is especially true on mobile devices, where swapping apps tends to take a little more effort.) They need that impulse buy button for a one-click purchase. Having to give up a big chunk of their revenue on those impulse buys or else lose sales to inconvenience is practically an existential threat.
Epic has not been afraid to shake up existing markets, making a name for itself in the PC gaming field by cornering exclusive distribution deals on popular games like Borderlands 3. It’s not surprising that company would want to do the same for the mobile gaming market.
But can Apple be forced to open its platform to external apps, or to reduce or remove the in-app purchase fee? Does Apple really have a monopoly? After all, consumers could just buy an Android device instead if they wanted to run apps Apple wouldn’t permit in its store. Apple spent so much time and effort building a nice walled garden; should it be obligated to throw open the gates for free just because it made the garden so nice a lot of people want in?
But then, Apple is the dominant player in the tablet market (though it comes in third in smartphones), which means it could come in for extra scrutiny as to whether it’s abusing its market power. All things considered, this could be an interesting trial to watch.
And if Apple loses? Depending on what the terms are, we might see Amazon Kindle, Spotify, and other media services start offering in-app purchases on Apple devices again—whether in Apple’s store, or via an alternate downloadable version of their apps that don’t have to put up with those restrictions. But I’m not so sure I’d hold my breath on that score just yet.
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