The high-stakes battle is being watched closely as a showdown over the vast commercial power of the iPhone producer.
Apple, the world’s most valuable company, and Epic Games, a video game developer, are locking horns in a legal fight over how to sell content through iOS. At issue is Apple’s right to impose a 30% fee on game sale proceeds. The high-stakes battle is being watched closely as a showdown over the vast commercial power of the iPhone producer.
Marketplaces such as Apple’s App Store and Google ‘s Play Store usually charge developers and content sellers 30% of revenue over the first 12 months and 15% thereafter—a cut that many consider excessive. To get around this “tax,” Epic introduced its own payment mechanism for one of its most popular games, Fortnite. Apple responded by removing Fortnite from the App Store.
This is where the legal battle started. Epic wants its game reinstated on App Store and accuses Apple of assuming the monopolistic role that IBM held 20 years ago. Apple is demanding that any sellers using the App Store, which analysts estimate generates about $15 billion in annual sales, observe its payment rules.
While a court hearing was set for the end of September, Yvonne Gonzalez Rogers, the federal judge hearing the case in California, said last month that neither company has a “slam-dunk case.” Meanwhile, she granted a temporary restraining order barring Apple from revoking Epic’s developer accounts while allowing Apple to continue banning Fortnite.
The Justice Department has reportedly opened an antitrust investigation into Apple over its App Store practices, after the European Commission opened a similar probe earlier this year.