In our recent MediaWrites article we discussed Epic Games dispute with Apple and Google. It set out that Epic, the makers of Fortnite, were suing Apple and Google for alleged anti-competitive practices. More information on the dispute can be found here. However, one practice, which was a significant part of Epic’s grievance, was that Apple and Google both charge a 30% service fee on payments made in apps downloaded through their respective app stores. That has now, at least in part, changed with respect to Apple’s app store.
In a somewhat surprising turn of events in November, Apple announced that it will reduce the service fee for every in-app purchase by half for developers that make less than $1m a year in annual net sales on the app store. This means that smaller developers only have to pay a 15% service fee from 1 January 2021. Epic, and other larger companies like Spotify, would be unaffected by Apple’s cut.
Apple’s announcement came in the same week that Epic launched proceedings in Australia, which largely reflect the ongoing proceedings in California. Apple’s motive for the cut has been questioned by Epic CEO Tim Sweeney who responded stating that “Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases…this would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments.” A spokesperson for Spotify was also critical, describing Apple’s behaviour as “arbitrary and capricious”. Notwithstanding Epic and Spotify’s criticism, the significant cut in service fee will undoubtedly be well received by those developers that are eligible to receive it.
It will be interesting to see if the service fee cut has any impact on Epic’s dispute with Apple which is ongoing in California and now Australia. In addition, we will also be monitoring whether it wards off any future anti-competitive claims being brought on similar grounds in other jurisdictions.
Stay tuned to MediaWrites to follow how the case develops!