As Fortnite is removed from Apple and Google app stores, the clash between the tech giants and Epic Games may result in a serious cash loss for Apple and Google. Experts predict losses for all parties may be in the millions of dollars.
Epic Games’ battle with Google and Apple escalated last week, when Epic decided to go around app stores’ fees and started processing in-game purchases via its Epic Direct store. With its own direct payment option, Epic would avoid paying 30 percent fee to Apple and Google. The tech platforms in response accused Epic of violating the stores’ rules and claimed the Direct store was not certified. Epic Games then filed lawsuits against Apple and Google, citing monopolistic practices and a violation of both the Sherman Act and California’s Cartwright Act.
“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS in-app Payment Processing Market,” Epic said in its lawsuit.
According to Sensor Tower data, since 2017 Fortnite has been downloaded from Apple store 133.2 million times and has generated $1.2 billion in revenue from in-game purchases. In total, the Apple store has generated $360 million after the 30 percent fee. A month before the ban from Apple store, Fortnite was installed 2.4 million times and brought Epic Games $43,4 million in revenue.
Google Play store has launched Fortnite in April 2020. Since then, gamers downloaded Fortnite 11 million times and spent $10 million through purchases. After the 30 percent commission, Google has made $3 million from Fortnite.
VentureBeat estimates Epic Games 2020 revenue at $5 billion. In April alone, thanks to the coronavirus pandemic, revenue from all platforms is estimated $400 million.
Remarkably, the complaints that Epic makes against Apple and Google may also apply to consoles — Nintendo, Microsoft and Sony also take 30 percent fee from in-game purchases. On August 14, Epic announced a permanent 20-percent discount on in-game purchases, while the consoles gave no sign for changing the fee structure.
Epic’s CEO Tim Sweeney told GamesIndustry.biz in 2018 that “there’s a rationale for [the 30-percent fee] on console where there’s enormous investment in hardware, often sold below cost, and marketing campaigns in broad partnership with publishers. But on open platforms, 30 percent is disproportionate to the cost of the services these stores perform, such as payment processing, download bandwidth, and customer service.”
On Twitter, some users begin to question why Epic targeted Apple and Google but not consoles. Sweeney responded, saying that “IOS and Andriod are insanely profitable for Apple and Google from just hardware sales and ads.”
Consoles are unique in that the hardware is sold at or below the cost of manufacturing, and is subsidized by software sales, whereas iOS and Android are insanely profitable for Apple and Google from just hardware sales and ads.
— Tim Sweeney (@TimSweeneyEpic) June 17, 2020
Experts, however, note his explanation is misleading as consoles and smartphone companies operate on a different revenue model. There is also a possibility for potential bias due to Epic’s cooperative relationship with consoles. Sony has recently acquired a $250 million stake in Epic, working on new gaming technologies together. There are no such collaborations with mobile platforms.
Epic’s console revenue is also more notable from consoles than from mobile platforms, which is estimated to be only $44,3 million throughout 2020.