제 13 호 David Versus Goliath : Epic Games Against Apple
Kicker : SOCIETY
David Versus Goliath : Epic Games Against Apple
Hotshot Gaming New Boy Challenging Tech Giant
Do-Hyuk Kim, Reporter
Platform business model has become one of the hottest topics in the business industry and the drawbacks of it have become a hot potato around the world – including South Korea. The Korean platform giant ‘Kakao’ was recently accused of unrestricted expansion on every retail item they could find, eventually threatening owners of small businesses and their lives. The basic idea of platform business is like a fairy story that platform provider makes a marketplace that everyone can join easily while retail companies can meet much broader amounts of customers with minimal amount of hassle. However, while retail companies and customers invest a certain amount of effort or cash, platform business were constantly criticized for taking away that money by doing almost nothing. Epic Games, a rising star in the gaming industry with its highly popular mobile game ‘Fortnite’, recently sued Apple – the company we all know for manufacturing ‘iPhone’ and ‘iPad’ – for banning their game apps on Apple’s App Store. What’s going on between Apple, one of the world’s biggest companies, and Epic Games, which is considerably smaller? This article is here to find out.
The main cause of this lawsuit between these companies began from August 14th, 2020. Apple decided to remove all games uploaded to the App Store – which was founded by Apple and currently remaining as cash cow of them, earning Apple over eighty-five billion dollars – made by Epic Games. The reason for this decision is because Epic Games tried to form their own In-App Purchase ecosystem, not Apple’s. Apple is forcing all app developers trying to register their apps to their App Store to embrace Apple’s own In-App Purchase system which allows Apple to track app developer’s additional profits derived from these In-App purchases and take away some part in the name of ‘commission.’ Epic Games’ bold moves meant that Epic Games will fully earn what they collect from their customers.
Apple immediately opposed this decision, since if they leave Epic Games to keep their own In-App Purchase ecosystem in their games, other app developers will soon follow that route. This might affect Apple’s earnings by big numbers, because Apple’s profit margin brought to them reaches 30% of what app developers earn from In-App Purchase customers pay to them. Another major platform provider Google also marked commissions as 30%, but dropped it in 2021 to half of what Apple collects in App Store to hold back Apple and being conscious of this issue. Google also removed Epic Games’ games for the same reason, but left some room for bringing Epic Games to the table for negotiation. On the other hand, Apple kept its strong policy that not a single app is allowed in their App Store while supporting third-party In-App Purchase services. This uncompromising big gap between Apple and Epic Games eventually led to a fight in the court.
The first round was held on May 3rd, 2021. Epic Games presented the same logic, criticizing Apple’s excessively high commission fee for apps registered for sale in App Store – which Epic Games referred to as a ‘monopoly.’ Apple responded by pointing out Epic Games breaking up agreement between the two companies on their own, which is basically a contract and must be followed strictly no matter how unfair it is after marking their signatures on the paper. Epic Games called up Microsoft as a witness and refuted Apple saying Microsoft asks ‘considerably less’ percentage of commissions on apps sold in the Microsoft Store than the App Store. Apple completely became entangled by this attack from Epic Games supported by Microsoft, showing ugly behavior of efforts trying to stop Microsoft from joining this court debate by requesting justice to ban Microsoft. This entire progress made people think Epic Games caught the chance of victory.
However, the tone of the previous argument did not last long. The first trial announced a win for Apple, which was an unexpected call for Epic Games and their supporters. Epic Games can no longer revert their game apps in the App Store, and the justices decided that it was Epic Games that broke up the contract with Apple alone. There is a small development compared to the past, which is external link that leads to purchasing in-app goods is allowed from now on. But this is not an In-App Purchase that originally brought this trouble between the two companies, and the judges also reconfirmed Apple’s position of banning this third-party In-App Purchase ecosystem on apps uploaded in the App Store.
Epic Games, obviously, decided to appeal to a higher court by not accepting those decisions, so this controversy in the court will take much longer than what we expected from the beginning. Apple also announced that it would act the same as Epic Games, not satisfied by the results from the first trial. The battle between platform the provider and the participants of that platform just heated up even more. Already waiting for the final results, isn’t it curious what the Supreme Court will finally announce? Whatever the results are, it will make a big impact on many conflicts between giant “platform business”-companies and rather smaller enterprises.
Sources : https://zdnet.co.kr/view/?no=20210911094017
https://archive.esportsobserver.com/apple-epic-games-unreal-engine/ (Picture)
