Why Was 'Fortnite' Removed From Apple and Google App Stores?
August 14 2020 - 2:16PM
Dow Jones News
By Sarah E. Needleman
"Fortnite" players have been drawn into an off-screen battle
between the company behind the popular videogame, Epic Games Inc.,
and tech giants Apple Inc. and Alphabet Inc.'s Google. Here is a
look at what's involved in the dispute.
What is the fight about?
Apple and Google on Thursday pulled "Fortnite" from the App
Store and Google Play, respectively, after Epic Games introduced a
new in-game payment system that would skirt the 30% fee certain
developers are required to pay the companies for in-app
purchases.
In response, Epic Games sued Apple and Google in federal court,
accusing them of monopolistic behavior over how they distribute
apps to devices and process payments for digital content. Apple and
Google have defended their business practices, saying the
commission fees are necessary because of the services the stores
provide, including security and safeguarding user privacy.
Epic has argued for marketplaces to lower fees on app
developers. It has also called for Apple to open up to competition
in the iOS app distribution market.
Does this mean I can't play "Fortnite" on my phone?
Not necessarily, but you'll only be able to continue playing
"Fortnite" if it was already installed on your iOS or Android
device before the title was removed from the App Store and Google
Play. The removal means players can't download the game or receive
app updates from those two app marketplaces. "Fortnite" is still
available for download on Android devices through other app
marketplaces. The spat doesn't affect "Fortnite" gameplay on gaming
consoles, PCs or Macs.
How did companies arrive at charging 30% as a commission?
Apple started charging a 30% commission on apps in certain
categories in 2008 when it launched the App Store, prompting other
online marketplaces to follow suit. Google launched the Play Store
in 2012, bringing multiple digital services under one umbrella.
Apple settled on the 30% number more than a decade ago because
its chief executive at the time, co-founder Steve Jobs, was looking
to undercut the 35% fee that cable TV companies were charging for
distributing pay-per-view movies, said Wedbush Securities analyst
Michael Pachter.
Apple has cited economic research it commissioned showing that
the fees it collects from developers are in line with those charged
by other app stores and videogame marketplaces.
Critics of the 30% fee commonly refer to it as a "tax."
What's at stake with the fees?
App marketplaces are big businesses and generate significant
revenue for Apple, Google and other operators. For the first seven
months of this year, nearly $39 billion was spent within Apple's
App Store world-wide on in-app purchases, subscriptions and premium
apps, while almost $21 billion was spent within Google Play,
according to research firm Sensor Tower. Both figures were up more
than 25% from the comparable 2019 period.
Analysts estimate the App Store is responsible for about $15
billion of Apple's annual revenue.
What do regulators think?
U.S. Rep. Hank Johnson (D., Ga.), during a tech antitrust
congressional hearing last month, questioned Apple CEO Tim Cook
about whether the company treats app developers equally, citing its
moves to take a lower cut of some App Store sales from Amazon.com
Inc. and to allow China's Baidu Inc. to fast-track app
approval.
Apple has defended its policy, arguing, among other things, that
its fees are a fraction of what developers paid to distribute
software through retailers before the App Store's 2008 inception.
The European Union opened an antitrust probe in June over the App
Store.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
August 14, 2020 14:01 ET (18:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alphabet (NASDAQ:GOOGL)
Historical Stock Chart
From Apr 2023 to Apr 2024