While gaming apps make up over 70% of all App Store revenue, this percentage is generated by less than 10% of store users. The gaming market is massive, and a recent court ruling in Epic’s favor has opened the door to payments outside of the App Store. This means new revenue opportunities for video game businesses all across the globe.
Are you in the gaming industry? Wondering how you benefit from this change? Then look no further, as our guide will help you discover how your SaaS business can benefit from the Epic Games vs. Apple case.
The Case: Apple vs. Epic
The dispute began in August 2020, when Epic created an in-app payment system for their video game Fortnite. To avoid Apple’s 30% cut on in-app purchases, Epic began to sell virtual currency on Fortnite without going through Apple’s payment system. This move violated Apple’s rules regarding in-app payments, and as I am sure you can imagine, they weren’t impressed.
Later that day, the Apple store removed and banned Fortnite in retaliation. Epic sued Apple for anti-competitive business practices and abusing its monopolistic position within the month. Although other corporations have spoken about this before, Epic was the first to take direct legal action against Apple.
Epic claimed that Apple had too much control over distribution in the app store and that its 30% commission fees were an unfair practice, with Apple dominating the mobile app market. On the contrary, Apple argued that since Google’s Android app store was a significant competitor and Fortnite users could play on other devices, the claims of an unfair monopoly were unfounded.
Apple insisted the issue in question was about game distribution rather than app distribution and argued that as the creators of the App Store, they were in the position to set the store’s rules and regulations. Simply put, if an app developer wants to benefit from the App store's reach, then they should be prepared to follow its rules.
The case began in May 2021 and centered primarily around whether or not Apple has a monopoly over app distribution.
The Landmark Ruling
Judge Yvonne Gonzalez Rogers’ 1880-page ruling was handed down on September 10, 2021. Of the motions brought forward by Epic, Apple won nine, and Epic was successful in only one. Although this may seem like a landslide victory for Apple, the judge ruled in favor of Epic in one very critical motion.
The two key takeaways of the case
Apple must allow iOS apps to offer payment options outside of those subject to Apple’s 30% fees. In other words, app developers can link to payment methods outside of those that Apple offers.
Epic lost its motion to declare Apple as monopolistic. Furthermore, Epic was required to pay Apple 30% of the revenue gained from their non-App Store-approved payment methods between August and October 2020. Even worse, the game Fortnite was banned indefinitely because of their breach of contract.
The judge gave the companies 90 days to implement the ruling, which came into effect on December 9, 2021.
Although Epic lost on the majority of counts, the ruling on payment options in Epic’s favor was a significant victory for developers worldwide, many of whom had been feeling like Apple’s App Store was severely oppressive for too long.
It’s important to note that Epic has since appealed the court’s judgments and called on a higher court to overturn the ruling.
13 Reasons This Judgment Matters for Gaming Businesses
To understand why this judgment is pivotal, it’s key to know how the App Store was operating. Judge Gonzalez Rogers described Apple’s App Store as a “black box” enforcing complete obedience and control over all shopper information in the ruling.
For many years, Apple’s ecosystem has also been described as a “walled garden,” providing both security and many potential customers for developers. Unfortunately, the cost of accessing this ecosystem was high commissions. The latest judgment did create a small crack in the garden wall, but it remains to be seen what this crack will become and how much of a blow it will prove to be for Apple.
These developments will likely also set a precedent for more antitrust claims by other developers. If these claims are successful, it could change how major tech companies are regulated worldwide. This, in turn, could reshape the mobile games industry, creating other avenues for developers to create new revenue streams.
As it stands now, the Apple vs. Epic ruling could benefit small, medium-sized, and extensive video game businesses in a range of different ways.
Read on our article to learn 13 ways how you can put this case for your business good use.
What’s the future of the App Economy?
There’s a strong possibility that the app economy may begin to open up as the pressure from developers increases. Developers will be able to run commerce from within their apps in the same ways they do from their web platforms. For example, they can run webshops aimed at mobile commerce and control their own payment processes.
The changes may also prompt a rush of innovation from developers as they’ll be motivated to take advantage of so many new revenue opportunities. This is the first step towards a higher proportion of revenue ending up in the hands of the developers. Antitrust reform legislation may also be on the table soon, at least in the U.S. and Europe. Rather than allowing companies to continue policing themselves in good faith.
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