Epic Games dares to challenge the 30% Apple Tax and gets its developer account closed in return

Apple and Fortnite developer Epic Games are in the middle of a, well, epic battle. The fight is over Apple's in-app payment system and the 30% cut that the company takes on in-app payments. Apple says that it will revoke Epic Games' developer privileges by shutting its accounts starting later this month. Last week, Apple told the developer to "remove the 'Epic direct payment feature' that bypasses Apple's in-app payment system which counts seven beans for Epic and three for Apple with each purchase. On Epic's website, the developer wrote, "Apple is keeping prices high so they can collect 30% of your payments, and is blocking Fortnite in order to prevent Epic from passing on the savings from direct payments to you!"

Epic, very publicly, is revealing what is going on. A Tweet disseminated today by the game developer revealed that Apple has removed Fortnite from the App Store and will terminate its developer accounts on Friday, August 28th. Epic will not have access to iOS or Mac developer tools starting on that date. Epic filed a lawsuit today seeking a Temporary Restraining Order against Apple; the suit requests that the latter be restrained "from removing, de-listing, refusing to list or otherwise making unavailable the app Fortnite, including any update thereof, from the App Store on the basis that Fortnite offers in-app payment processing through means other than Apple’s In-App Purchase..."

Epic's Preliminary Statement included with its court filing explains everything from Epic's point of view. It says, "Apple has for years used its complete monopoly over the distribution of apps to the billion users of iOS, the Apple operating system running on all iPhones and iPads, to coerce app developers into using Apple’s payment platform, In-App Purchase (IAP) for all in-app purchases of digital content used in their apps. By tying IAP to app distribution, Apple eliminates all competition in the market for in-app payment processing, allowing it to impose an exorbitant 30% "app tax" on all in-app purchases of in-app content."

The filing goes into more detail as Epic explains what took place earlier this month. "Just over two weeks ago, Apple’s CEO Tim Cook was asked during a Congressional hearing whether Apple has "ever retaliated against or disadvantaged a developer who went public about their frustrations with the App Store". Mr. Cook testified, "We do not retaliate or bully people. It’s strongly against our company culture." But Apple has done just that. When Epic gave users of its app Fortnite a choice of how they wanted to make purchases, Apple retaliated by removing Fortnite from its App Store. Then when Epic sued Apple to break its monopoly on app stores and in-app payments, Apple retaliated ferociously. It told Epic that by August 28, Apple will cut off Epic’s access to all development tools necessary to create software for Apple’s platforms—including for the Unreal Engine Epic offers to third-party developers, which Apple has never claimed violated any Apple policy."

Apple has said that it is willing to work with Epic but the developer notes that "Apple’s actions will irreparably damage Epic’s reputation among Fortnite users and be catastrophic for the future of the separate Unreal Engine business." The optics just do not look good for Apple especially since the App Store and the tech giant's 30% cut are under the regulatory microscope in the states and Europe.

Epic believes that it is "likely to succeed on the merits of its claims," but is asking for the restraining order anyway. That is because it is concerned that it will be irreparably harmed before the court reaches a final decision. It should also be pointed out that Epic is not asking for monetary damages, nor it is asking for a ruling that would favor it above other companies. What Epic is asking for is "injunctive relief to allow fair competition in these two key markets that directly affect hundreds of millions of consumers and tens of thousands, if not more, of third-party app developers."