Fortnite maker Epic Games kicks off legal battle with Apple that could have major implications on App Store business model

The future of the established business model of how Apple’s App Store charges the developers whose apps are sold through will be established for the foreseeable future as a result of legal battle between the tech giants and Epic Games that kicked off yesterday in California. Epic Games, the company behind the hugely popular multi-platform and mass-multi-player game Fortnite is challenging Apple’s vice-like grip of its App Store through a socially distanced courtroom hearing.

The result of the court case will have major implications for both Apple and the developers of the hundreds of thousands of apps available through the App Store marketplace. Apple offers the owners of apps that can be downloaded from the App Store the non-negotiable terms of a 30% cut of all revenues generated. That cut is not just on the original download, which often costs money, but on all in-app revenues subsequently generated.

Epic alleges Apple’s terms for the businesses producing content for Apple devices amount to an illegal monopoly. Apple, predictably, denies the accusation. Katherine Forrest, one of the lawyers representing Epic, yesterday told the federal court in Oakland, California:

“The evidence will show unambiguously that Apple is a monopoly.”

Apple is building its defence around a depiction of Epic Games as a company pursuing an engineered PR strategy by taking it to court. The company’s lawyers say the video games publisher seeks to benefit from an iOS ecosystem that cost over $100 billion to build, without paying the reasonable rates it has set for access to that ecosystem – which it is the sole owner of. Something like a customer booking a table at a restaurant whose menu is publicly available, also being given a menu with full pricing clearly published on arrival, ordering a meal, eating it, and then complaining about the bill.

Apple lawyer Karen Dunn responded in the tech giant’s defence:

“Rather than investing in innovation, Epic invested in lawyers, PR and policy consultants in an effort to get all of the benefits Apple provides without paying.”

The court case will, whichever way the verdict ultimately goes, certainly be high profile with the eyes of the digital economy firmly fixed on proceedings. Should it fall in Epic’s favour it is likely to set a precedent that all of the giant technology companies will fear.

Both Apple’s chief executive Tim Cook and his Epic counterpart Time Sweeney are due to appear in court during the case’s hearing, which is expected to last around three weeks. Mr Sweeney commented:

“Apple was making more profit from selling developer apps in the App Store than developers.”

The App Store was first launched by Apple 13 years ago now and its success has created a business opportunity across the globe for app developers tapping into the well-over a billion iPhone and iPad owners around the world. It has been one of the main driver’s of Apple’s recent growth to a stock market valuation of over $2.2 trillion, making it the world’s most valuable company.