By Drew Apperson
At what point does a rent contract overburden retailers in a shopping mall? What if there are only two shopping malls for the entire world? A trial set for mid-2021 may answer this question in the mobile-app context. It will immediately effect over 100 million people in the United States and potentially anyone with a smartphone around the globe. Thankfully, the suit may save consumers money and its anticipation has already triggered a selective discount to begin in January, 2021. Who can be thanked for initiating the suit? The developer of a free gaming app.
When the once-popular video game, Snake, was first available on cellphones in 1997, it was only available on select Nokia phones on which it was predownloaded from the factory. Today, Apple offers its users over 278 thousand gaming apps, available for download from its virtual, mobile-app storefront, the App Store. Google’s equivalent, Google Play, offers over 385 thousand. Together, the two account for nearly 100% of the global smartphone market.
For an app to be made available on the App Store, a game developer must, among other things, agree to Apple’s rules and meet its standards. The App Store then distributes the apps to Apple devices and continues to profit from the apps by taking a percentage of the sales made therein – 30% during the app’s first year and 15% during subsequent years.Apple requires these purchases to be made via In-App Purchase, which is a tool that “allows [a developer] to offer users the opportunity to purchase in-app content and features. Customers can make the purchases within [the developer’s] app, or directly from the App Store.” In 2019, the App Store reportedly paid out $35 billion to app developers after taking its share. Because of Apple’s massive customer base and successful App Store, these transaction fees have grown Apple into one of the top-five largest gaming companies in the world despite not having made a single game of its own.
The rent that Apple charges for a spot in its marketplace, however, has been a topic of discussion for a few popular app developers who initiated antitrust inquiries into Apple’s policy. Fittingly, Epic Games, the developer of Fortnite, has taken charge in the fight. Fortnite is a household name in the gaming world: it is a free-to-play, battle-royale game that offers multi-million-dollar prizes and, through its over 250 million users, brought in $1.8 billion in 2019. On August 13, 2020, in Epic’s strategic approach to voice dismay with Apple, the developer: breached its App Store contract by including in its Fortnite update a workaround to the App Store’s transaction fees; launched an anti-Apple campaign, which included a parody of Apple’s ‘1984’ ad; and filed suit after Apple delisted Fortnite from the App Store. The subsequent lawsuit has drawn widespread attention as Epic has gained support, not just from the gaming-app community, but from other app markets as well. It even gained support from Microsoft as it too has fought with Apple over the introduction of Microsoft games to the App Store.
Tim Sweeny, founder and CEO of Epic, argues that Epic’s victory in the lawsuit would allow for consumers to pay less and for developers to earn more. In contrast, Douglas Vetter, Apple’s Vice President and Associate General Counsel, argues that result would undermine the principle of the App Store’s standards – “to provide a safe, secure and reliable experience for users and a great opportunity for all developers to be successful.” The suit may serve as a precedent for the similar suit that Epic filed against Google when Google Play delisted Fortnite for the same workaround. It follows that if it wins both cases, Epic will effectively change the entire smartphone industry.
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 Erin Griffith, Apple and Epic Games Spar Over Returning Fortnite to the App Store, NY Times (Nov. 18, 2020), https://www.nytimes.com/2020/09/28/technology/apple-epic-app-court.html.
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 Epic Games v. Apple Inc., No. 4:20-cv-05640-YGR, 2020 U.S. Dist. LEXIS 188668, at *12-14 (N.D. Cal. Oct. 9, 2020).
 Griffith, supra note 13.
 Cryer, supra note 1.
 Epic Games, Inc. v. Apple Inc., at *10.
 Id. at *11.
 Epic Games, Inc. v. Google LLC et al, No. 3:20-cv-05671-JD (N.D. Cal. filed Aug. 13, 2020).
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