Apple won or lost against Fortnite? See 5 points about the case – 13/09/2021

Last Friday (10), the court ruling came out of a battle between Apple and Epic Games, maker of online games and creator of Fortnite, over how the apple company rates applications offered in the App Store. The result ended up displeasing both parties, so much so that Epic has already appealed and Apple should do the same.

But who was more satisfied? What, after all, were they fighting? And what is the downside of the sentence for each of the parties? Understand the five points highlighted below.

1 – The origin of the dispute

All financial transactions made in apps available on the App Store, Apple’s app store, are taxed at 30% by the iPhone and iPad manufacturer, as they use its payment system, which was mandatory until then. As Fortnite is a game that sells a lot of content to its players, such as clothing and character items, Epic Games considered that the price of these products was inflated by the fee charged by Apple.

Therefore, the company developed an update of the game that allowed direct payments to it, with lower values. In response, Apple removed Fortnite from the App Store and Epic went to court, saying it was anti-competitive: by refusing to pay a fee, Epic then had no way to reach iPhone and iPad owners.

2 – The court decision

The case reached federal court in the United States, with ten charges brought by Epic Games against Apple. Judge Yvonne Gonzalez Rogers ruled in favor of Apple in nine of them, including saying that, contrary to what Epic claims, the apple company does not exercise a monopoly.

The setback for Apple, however, was that the judge ruled that the company must allow app developers to send their users, via links or buttons on the apps, to other payment systems. Thus, the 30% rate could be “dribbled”.

3 – Why was Epic not satisfied?

From the beginning, Epic’s motivation was to demonstrate that since an app developer’s only way to reach iPhone and iPad owners was the App Store, this was an illegal monopoly. Epic therefore required that third-party app stores (that is, from companies other than Apple) could have space on the apple company’s smartphones and tablets.

That was not the conclusion of Judge Rogers, who found that while Apple’s market share is high, it is not sufficient to prove a violation of competition law. She understood that the fight wasn’t over the way games are distributed, as Epic argued, but over the way game payouts are made. In this market, as there are other competitors, the judge indicated that it cannot be said that Apple owns a monopoly.

In addition, Epic was also ordered to indemnify Apple in US$ 3.6 million (R$ 18.7 million), equivalent to 30% of what the company obtained at the time when the Fortnite update that allowed direct payment to the Epic became available. After all, until then, the contract between the two parties that provided for the collection of this percentage was in effect.

To use a medieval metaphor, Epic failed to break through the walls of Apple’s castle, but it left some cracks in them. Therefore, it has already filed an appeal against the decision.

4 – Why was Apple not satisfied?

For the company of Tim Cook (CEO), Judge Rogers’ decision was reasonably favorable. After all, the court recognized the app store’s business model as legal and dismissed the monopoly charge.

But within 90 days, Apple needs to offer the option that the user of an application such as Spotify can pay directly into Spotify’s system, without using Apple’s. This can result in a considerable loss of revenue.

The company is still studying what to do, and it is expected that it will also appeal the court decision.

5 – What does this mean for the consumer?

In theory, some products offered by apps on iPhones and iPads may be cheaper. After all, without having to pay Apple a chunk of the transaction, developers can lower the prices of services.

But it could be that the apps simply hold the prices and pocket the equivalent of Apple’s 30% fee themselves. It’s wait and see.