The Epic battle against Apple reveals awkward details

The Epic battle against Apple continues, and it reveals awkward details about the mobile app market.

The Timeline so far:

• Summer 2020: Epic Games introduces a direct payment system in its popular game, Fortnite, on iOS and Android, to bypass Apple’s and Google’s 30% cut on in-app purchases.
• August 13, 2020: In response, Apple and Google remove Fortnite from the App Store and Play Store.
• August 13, 2020: Epic Games files lawsuits against Apple and Google, accusing them of anti-competitive practices and monopolistic behaviour.
• August 17, 2020: Epic Games launches the #FreeFortnite campaign, parodying Apple's famous "1984" advertisement.
• May 3, 2021: The trial between Epic Games and Apple begins.
• September 10, 2021: The judge issues her ruling. Epic loses the case as Apple is not a monopolist, and its 30% commission rate is lawful. Fortnite will remain out of the App Store. However, the ruling also mandates that Apple must allow developers to direct users to external payment methods.
• November 2023: The trial between Epic Games and Google begins.
• December 2023: Epics Games wins against Google; the search giant runs an illegal monopoly with the Play store. However, it’s still unclear what Epic Games exactly won (Epic never sued for monetary damages); the parties are still discussing. But one thing is certain, this victory will pave the way for increased freedom on the Play Store and Android.
• February 16, 2024: The EU introduces its Digital Markets Act (DMA), which was effectively enforced on March 6th. Under this act, Epic Games plans to develop the Epic Games Store as an alternative app marketplace on iOS within the EU. This store will feature third-party apps, Fortnite, and other mobile games owned and affiliated with Epic. It's expected to resemble its existing desktop counterpart, charging a 12% commission to third-party apps. Epic Games applies for and obtains an Apple Developer Program account, needed to build native apps for iOS.
• February 23, 2024: In a long email, Apple asks Epic Games for written assurance that, this time, they will “act in good faith” and will honour Apple’s terms of service.
• February 23, 2024: Tim Sweeney, Epic’s CEO, personally responds to Apple with a brief statement. “[We are] acting in good faith and will comply with all terms of current and future agreements with Apple”.
• March 2, 2024: Apple is not happy about Sweeney’s quick reply and terminates Epic’s developer account.
• March 8, 2024: Following an inquiry from the EU, Apple reinstates Epic’s developer account.

On the one hand, Apple owns the hardware (the iPhone) and it should be free to manage it how it’s best for the business. Additionally, by maintaining tight control over iOS and the App Store, they can guarantee cyber safety and user privacy.

On the other hand, it's evident they're abusing their dominant position. They ban apps at their discretion, disallow advertising of external payment flows, and prohibit third-party stores.

At the same time, Epic Games is also a leader in its market. Ultimately, their objective is to circumvent Apple's 30% commission to boost their profit margin, not to make the world a better place.

This story isn't only about a legal battle. It uncovers awkward details on how Apple and Google operates in the app market.

Why did Google lose its legal battle against Epic Games while Apple won, even though they were sued for essentially the same reason?

Several factors contribute, but fundamentally, it's due to the market definitions used by the judges in the trials. For Apple, the market was defined as "digital mobile gaming transactions," where Apple isn't a monopolist and faces competition from companies like Microsoft, Sony, and Nintendo, who also charge similar commissions on their stores. For Google, the market was defined as "Android app distribution and Android in-app billing services," where Google is the clear monopolist. Bear in mind that Android is an open-source platform.

Some uncomfortable details emerged from the trials.

Google has been making sweetheart deals with the largest apps on its store, notably Spotify and Netflix. Reports indicate that Spotify was permitted to pay 0% fees on the Play Store when using its own payment system, or only 4% (as opposed to the standard 15%) when using Google's payment system.

Netflix was offered a similar deal, but refused and kept subscription payments only available on the web version.

It seems that Google has made great efforts to conceal the details of these deals, even deleting some Google Chat messages from their records. This suggests that more revealing details may have been uncovered otherwise!

Apple reportedly followed this practice as well, offering special treatment to Netflix.

The truth is, without clear regulations and enforcement, big tech companies will continue to employ discriminatory and unfair practices.

Some might argue that as private enterprises, they should be free to conduct business as they wished. However, given their size, the consequences of their actions extend far beyond their target markets. In fact, big tech also serve as strategic, intelligence, and military assets for the governments where they're based, playing a crucial role in global affairs and ultimately on our lives.

It may be time to reconsider the extent of power that a private enterprise can wield.