The company behind the popular online video game Fortnite is suing Apple in Australia for allegedly misusing its market power by taking a slice of all revenue earned by apps on iPhones, iPads and Macs.
Fortnite is a big money maker for Epic, with millions of daily users logging billions of hours on the game each month. It is forecast to bring in US$5bn in revenue in 2020.
However, Epic Games has long complained about Google and Apple’s policies of taking between 15% and 30% of all transactions made through apps on iOS, and Android devices.
Fortnite was kicked off both the Apple App Store and Google Play Store in August after Epic bypassed the companies’ in-app payment methods for their own cheaper direct billing that prevented Apple and Google taking a share.
Epic has since filed court action in the US, while facing a potential year-long ban from the Apple App Store, and on Monday, Epic Games launched a case against Apple in Australia.
In documents filed in the federal court, Epic Games alleges that through Apple’s control over in-app purchases, and its actions in banning the Fortnite app, Apple has misused its market power, and is substantially lessening competition in app development.
“Apple’s conduct has forced Epic and other app developers to pay Apple monopoly prices [the 30% commission] in connection with all in-app purchases of their in-app content on iOS devices,” the filing states.
“This has led to harms including increased prices for in-app content by iOS device users in Australia and lost profits for Epic.”
Epic Games stated if Apple allowed developers to distribute their apps for iOS outside the App Store, or make payment methods outside Apple’s payment method, it would improve competition.
Epic’s chief executive, Tim Sweeney, said in a statement that Apple was stifling competition by limiting in-app purchases.
“This is much bigger than Epic versus Apple – it goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests,” he said.
In an FAQ published alongside the announcement, Epic said it had not yet begun proceedings against Google. The company also noted other companies such as Amazon, DoorDash and McDonald’s were all allowed to have their own direct-payment methods in apps, but Apple had restricted it for games and for Epic.
“Adding our own payment system allows us to offer players choice while passing along savings, just like other apps are allowed to do. This choice provides a more level playing field on mobile stores while saving players money, which Apple should agree is a positive thing for everyone.”
In a statement, a spokeswoman for Apple pointed to a US judge’s comments in a ruling against Epic seeking a preliminary injunction in October where she described Epic’s payment bypass as “deceptive and clandestine”. The spokeswoman said Epic’s actions were expressly about violating App Store guidelines designed to protect customers.
“Their reckless behaviour made pawns of customers, and we look forward to making this clear to Australian courts,” she said.
The case will be the first test of misuse of market power when it comes to the Apple App Store in Australia, and a big test of section 46 of the Competition and Consumer Act, which was added in 2017 after a recommendation of the Ian Harper-led review of Australia’s competition laws in 2015, Australian Competition and Consumer Commission chair Rod Sims told Guardian Australia.
“It’s possibly the most significant test of [section] 46, we’ve had to date,” he said. “So from our point of view, it’s a really important case.
“We’re very pleased this will be tested in our jurisdiction.”
Sims said the case will centre on what defines the market – is it anywhere you can buy a game, or is it confined to the market within the App Store itself.
“Apple are clearly going to argue the market is the market for games, and it’s very broad. Epic is going to argue the market is for how you pay things on the Apple App Store.
“So that’s exactly what has to be argued out.”
The case will inform the ACCC’s review of the market power of the Apple and Google app stores announced in September as part of its long-running investigation into the digital platforms.