Updated August 9th, 2024
If you’ve been keeping up with the news recently, you’ve probably run into the Apple vs Epic Games case. Though the original lawsuit was filed by Epic back in 2020, the issues that it raised and results that ensued are more relevant than ever for game developers. That's largely due to the unprecedented set of regulatory developments that followed the case - from the EU’s Digital Markets Act (DMA) to a landmark federal antitrust case against Apple in the US. Bottom line: Apple's been forced to make major changes in what they allow game developers to do.
It all started with Project Liberty
The Apple vs Epic Games case traces back to 2020 with something called Project Liberty. On August 13, Epic Games intentionally violated App Store and Google Play’s policies. What they did was push an update to the mobile versions of Fortnite on Android and iOS that offered users an alternative, direct payment processing option - this bypassed both platforms’ native payment solutions. Nicknamed Project Liberty, Epic’s updates were their first move in a premeditated strategy designed to provoke fights with Apple and Google by offering users a 20% discount if they purchased IAPs through Epic’s own payment processor. Apple and Google quickly responded by removing Fortnite from their app stores.
Epic, however, was prepared for this response. After Apple and Google pulled Fortnite from their stores, the game studio released an ad titled "Nineteen Eighty-Fortnite." The video was a play on the legendary “1984” Apple commercial directed by Ridley Scott, which aired during the 1984 Super Bowl. The original advertisement took aim at IBM as an autocratic, Big Brother-type. Epic’s version turned this premise right around on Apple, depicting the platform - and by association, Tim Cook - as the Orwellian figure and inviting its players to "join the fight to stop 2020 from becoming '1984'.”
Let the Apple vs Epic Games legal battle commence
This is when the legal battle began, with hearings, motions, and filings from both sides. The core of Epic's argument was that several of Apple’s policies were illegal, monopolistic, and anti-competitive. Specifically, the 10 counts filed in the lawsuit challenged the Apple policies that:
- force developers to use Apple’s payment processing solution
- pay Apple a 30% commission on all in-app purchases
- prohibit developers from informing users about alternative payment options (“anti-steering”)
- prevent the distribution of any apps outside of the App Store.
Apple, in turn, counter-sued Epic, accusing them of breaching their developer agreement and seeking damages for lost App Store revenue.
In September 2021, a federal judge issued a ruling in the case that favored Apple on 9 of 10 counts. But, Epic was successful on one count: the court ruled that Apple had violated California competition law with its “anti-steering policy”, which prevented developers from linking to or informing users about alternative purchase options from inside their apps.
Neither Apple nor Epic were entirely happy with this ruling - both filed appeals. In April 2023, the US Ninth Circuit Court of Appeals largely validated the original outcome. They ruled that Apple’s anti-steering policies were indeed a violation of California law while dismissing Epic’s antitrust claims.
The legal battle didn’t end there. Both Apple and Epic went on to appeal their cases to the Supreme Court. Finally in January 2024 the Apple vs Epic Games case was laid to rest when the Supreme court declined to hear it, leaving the original decision in place.
What’s happened since Apple vs Epic Games?
As a result of the case, Apple was forced to update their US App Store review terms in January, 2024 to allow developers to communicate with players about alternative purchase options. As part of their updated terms, Apple introduced a link-out policy in the US. This new rule lets developers include links to alternative payment options - like links to web shops - in their apps. But there's a catch: developers still need Apple's permission to include this link. And if a purchase happens through that link within 7 days of the click, Apple takes a 27% cut - not much less than the original 30%.
But that 27% fee didn't sit well with Epic. In a March 2024 filing, they claimed that Apple’s updates were insufficient and that “Apple is in blatant violation of the Court’s injunction.” Joining them in this claim were several other tech giants, including Meta, X, Microsoft, and Match Group, who filed Amicus Briefs supporting Epic’s claim of non-compliance.
The situation is continuing to develop rapidly. On April 24, 2024, Judge Yvonne Gonzalez made a preliminary finding in favor of Epic. She ruled that Epic had “made a sufficient preliminary showing that, viewed holistically, Apple’s practice changes undermine the spirit of the injunction by limiting competition, impeding the free flow of information, and constraining user choice.” This ruling justified an evidentiary hearing that would take place on May 8, 2024 to evaluate whether Apple’s new policies were enough to comply with the original court order.
Apple under fire
But the Apple vs Epic Games case is hardly the only battle taking place between the two companies - and it’s only a small part of a much bigger assault on Apple’s practices. Although Apple emerged mostly victorious in the original decision in 2021, more recent developments indicate that Apple’s troubles won’t be over anytime soon.
DMA enforcement begins
For example, over in Europe, the groundbreaking Digital Markets Act came into effect on March 7th, 2024 - and it’s already forcing real changes in the Apple ecosystem. Under the DMA, Apple was forced to allow users to download apps outside of its App Store for the first time (otherwise known as “sideloading”). Epic was ready to capitalize on the decision, having planned for some time to launch a competitive app store that was now made possible under the new EU policies.
The DMA’s impact can be seen in another instance of Apple vs. Epic. After revoking Epic’s account on the App Store in 2020 in response to Project Liberty, Apple reinstated their account in February, 2024. But on March 6 - the day before DMA enforcement began - Apple suddenly banned Epic’s account again, citing their criticism of Apple and their past violation of App Store policies. Within days, however, the EU announced it would investigate the move - and Apple quickly backtracked on their decision and reinstated Epic’s account.
Just a few weeks later, the EU announced its initial DMA investigations. Their first targets? Apple and Google’s revised anti-steering policies - aka Apple’s “link-out policies” which still take a 27% fee from developers. In June 2024, the EU Commission passed a preliminary ruling based on the investigation: Apple was indeed in violation of these anti-steering provisions. The official decision is set to be handed down in March 2025 - if the initial ruling stands, Apple could face a fine of up to 10% of global revenue, or $38 billion.These forceful and swift actions by the EU could be an early indication of the firm approach that regulators are taking to enforcing the DMA.
Then on August 8th, Apple announced a new set of updates to expand the freedoms of developers distributing their games in the EU to link out and promote alternative payment options. The guidelines include two new fees that apply to all link-out purchases for a period of 12 months: an initial acquisition fee and store services fee. Together, these add up to at least 15% on purchases made through the external links, depending on whether developers opt in or out of Apple's alternative terms. If you opt in, you're subjected to a 5% initial acquisition fee, 10% store services fee, and the standard core technology fee. If you opt out, you're still responsible for the 5% initial acquisition fee, but the store services fee increases to 20% (though there is no core technology fee in this situation).
US antitrust regulations on the table
Beyond Apple, the last 6 months have seen two developments that are unprecedented in the modern history of antitrust regulation of tech companies.
First, in December 2023, Epic won a total victory in its parallel case against Google. This was a shock not only to Google, but also to Epic’s former co-plaintiffs (including US State Attorneys General and Match Group), who had bowed out weeks before the trial began after reaching a settlement with Google.
More importantly, though, in March 2024, the DOJ filed a landmark antitrust lawsuit against Apple. This case marks the most aggressive antitrust action taken against a Big Tech company since at least the 1990s, when the government won major concessions from Microsoft during the years of the “browser wars”.
The future looks like sideloading and direct payments
Between the official Apple vs Epic Games court rulings in the US and the actions happening out of court and across the globe, like with the DMA sanctions, alternative payment options are increasingly in the spotlight. And more than that, this awareness is turning into real opportunities - protecting developers’ rights to communicate directly with users, and even opening up side loading in the EU. Also although it may take a while, the US antitrust case against Apple is a major new development that parallels the progress happening in Europe.
Don’t be surprised if this trend turns into the standard, and you’ll soon be able to offer your app on other stores and use third-party payment gateways, like web shops.
TLDR: Apple vs Epic Games timeline and history
- August 13, 2020: Epic purposefully violates App Store policies and Apple pulls Fortnite from the App Store
- August 24, 2020: Epic files an antitrust lawsuit against Apple in the US
- September 10, 2021: A federal judge favors Apple on 9 out of 10 counts, except for Apple’s “anti-steering” policy
- April 24, 2023: After appeals from both sides, the US Ninth Circuit Court of Appeals validates the original verdict
- January 16, 2024: The Supreme court declines to hear additional appeals and Apple is forced to update its policies - it creates its “link-out” rule in the US
- January 25, 2024: Apple releases its new EU guidelines complying with the Digital Markets Act
- February 16, 2024: Apple reinstates Fortnite on the App Store
- March 6, 2024: Apple takes down Fortnite again
- March 7, 2024: The Digital Markets Act goes into effect in Europe
- March 21, 2024: The US Department of Justice files a landmark antitrust lawsuit against Apple
- March 25, 2024: The DMA announces they’re investigating Apple’s “link-out” policy in Europe
- April 24, 2024: The US court sets a date for an evidentiary hearing to review whether Apple's link-out policy complies with the Apple vs Epic Games court order
- May 8, 2024: Apple and Epic return to court for the evidentiary hearing
- August 8, 2024: Apple updates its guidelines to allow developers to promote and link out to alternative payment options in Europe - with a 15% fee
Take a page out of Epic’s book
You don’t need to wait for all the legal proceedings to settle for you to establish a direct-to-consumer channel with your players. Talk to us at Stash to learn more about setting up alternative payments that are App Store compliant, engaging, and profitable.