A brief summary: this past Thursday, Epic Games launched an attack on Apple and Google. Epic makes Fortnite, a game that operates on a made-up digital currency called V-Bucks, which are sold for real money. The exchange rate of V-Bucks has been: 1 American cent = 1 V-Buck. This week, Epic dropped the price of V-Bucks – assuming users paid the developer directly, rather than paying them through Apple or Google, which handle in-app payments on their respective mobile app stores.
Shortly after Epic announced this move and enabled it through a backdoor update to its mobile apps, Apple pulled the software from its storefront. Epic, knowing that this was coming then did two things: it debuted a spoof of Apple’s famous “1984” commercial directly calling out Apple’s “monopolistic” practices and urged fans to use the hashtag #FreeFortnite, and it filed a lawsuit seeking injunctive relief against those practices. Later in the day, Google also pulled Fortnite from the Play store, and Epic sued it as well
So that’s where we’re at. The main issue in all of this is the 30-percent cut that Apple and Google take from every transaction that they help facilitate within their ecosystems. Players would pay 10 dollars for 1,000 V-Bucks, and Epic would receive 7 dollars and Apple would get 3. On Thursday, Epic introduced a second option, letting players pay 8 dollars to Epic directly in exchange for 1,000 V-Bucks. Epic framed this as passing the savings on to the consumer, which is true, though they also make more money by cutting Apple and Google out entirely.
Epic is fighting a war on two fronts: in the court of public opinion and in the actual courts. Why? It would be tempting to say that Epic wants to make more money, which is almost certainly true. I too would love to make more money. But another reason is that Epic’s CEO and co-founder, Tim Sweeney, hates the concept of walled gardens such the App Stores, which take a giant cut simply to act as a middleman. App stores only take a cut of digital purchases, not physical ones, which is why takeout orders and ecommerce purchase of physical goods are exempt. The distinction seems largely arbitary.
Sweeney is fairly outspoken about this issue and has been for years. In 2016, Microsoft introduced the Windows Store (analogous to the Mac App Store) and along with it, the Universal Windows Platform. UWP apps differed from standard Windows apps in important ways, and were the only types of apps that would be available in the store.
Sweeney was not pleased. In an op-ed for The Guardian, he wrote:
Microsoft has launched new PC Windows features exclusively in UWP, and is effectively telling developers you can use these Windows features only if you submit to the control of our locked-down UWP ecosystem. They’re curtailing users’ freedom to install full-featured PC software, and subverting the rights of developers and publishers to maintain a direct relationship with their customers.
His argument was not that Microsoft couldn’t operate its own storefront, but rather that making certain capabilities available only to apps that go through the storefront was anti-competitive. He wrote this at a time when Epic was merely very successful instead of unimaginably successful. “My view is that bundling is a valuable practice that benefits users, and my criticism is limited to Microsoft structuring its operating system to advantage its own store while unfairly disadvantaging competing app stores, as well as developers and publishers who distribute games directly to their customers,” he wrote. Eventually, Microsoft relented and decided to allow standard win32 applications to flow through its storefront as well.
I bring this up mainly to point out that Sweeney is a long-time proponent of open platforms and developer flexibility, and that stuff like the iOS App Store, with its strict app development guidelines and conduct restrictions, runs counter to that stance. In its lawsuit, in addition to railing against the 30 percent cut Apple takes, Epic also points out draconian restrictions like Apple preventing developers from even telling users that there are cheaper equivalent purchasing options outside of an iOS app. Spotify has similaryl railed against this, and has voiced public support for Epic. (Epic, which runs its own developer marketplace for its Unreal Engine software, reduced its cut to 12 percent two years ago, and made the cut retroactive to 2014.)
Epic has a recent history of skirting the line. Three years ago, it “““accidentally””” activated cross-platform multiplayer, a move that demonstrated, unsubtly, “We can do this technically but are prohibited merely by policy.” Cross-platform multiplayer is now standard among free-to-play games. The same approach typifies its most recent initiative to shame Apple. The backdoor update is a provocation. Epic could have enabled its backdoor payment system without prodding Apple directly. It opted to pick a fight and air a spoof ad, and they knew that Fortnite would get pulled from the App Store.
Sweeney doesn’t talk to the press, but my theory is that, basically, he senses blood in the water. He has the controlling stake in Epic – not even Tencent, which owns 40 percent of the company, can overrule him – and buoyed by the gobs and gobs of money Fortnite continues to rake in, he probably feels that now is the time to pick a fight.
So, what happens next? Great question.
I guess it’s easier to say what won’t happen: this will not be decided in court anytime soon. Epic is a billion-dollar company and Apple is a trillion-dollar company. Both can afford to drag this fight out for years, or decades, if they so choose. The Microsoft antitrust case stretched through most of the '90s and into the 2000s, and only resolved itself when Bush was elected and the newly appointed Republican DOJ basically dropped the case.
I doubt anyone will cede to public pressure, which is an interesting stalemate. Epic was able to pressure Sony’s PlayStation division – the generational incumbent – into accepting cross-platform multiplayer, but Apple is a much larger and much more stubborn target. Its general App Store policies are far less pliable than the gaming divisions of Sony or Microsoft. Based on chatter for the #FreeFortnite hashtag over the past couple of days, Epic has not successfully articulated the minutae of antitrust law to the game’s largely teenage, highly web-savvy fanbase.
Absent a definitive court ruling or grassroots online uprising, I assume that Epic is hoping for a “policeman at the elbow,” as net-neutrality coiner Tim Wu puts it. Microsoft wasn’t broken up at the end of its antitrust case, but the increased scrutiny made the company more cautious about how it conducted business – and that’s largely why Microsoft doesn’t control a dominant smartphone ecosystem.
So the Epic gambit is less likely to yield direct, positive results and more likely to force other companies (Apple) to pump the brakes in subtler ways. And the naive part of me believes that it’s largely driven by Tim Sweeney’s libertarian bent, rather than a capitalist profit incentive. I could very well be wrong! But the best-case scenario is a long, slow transition for Apple to a more open marketplace, the result of which just happens to be larger, direct payments to the people who actually make your favorite apps, rather than the middlemen who facilitate transactions.
Mostly, I think this direct-payments system is a larger-scale version of the “accidental” cross-platform activation from years ago. It demonstrates that the only roadblock to these business models and useful techniques is profit incentive, not technical inability. By activating an illegal direct payments system, Epic is taunting Apple. They are letting you know, directly, that nothing is stopping Epic from charging players a fair price – except Apple’s greed.
I can’t stop thinking about this and it literally made me torrent this movie:
thank you Byron for sending me this essay about ‘00s webcomic culture, which is my culture