Thoughts on Fortnite vs Apple
Anyone who has been exposed to the tech press lately is aware that Epic Games just picked a fight with Apple, and Google to a lesser extent. The App Store has been my biggest bone of contention with Apple as someone who is otherwise a big fan of their products, so I have a lot of thoughts about this conflict.
First, let me explain my thoughts on some other App Store controversies. One of the biggest annoyances of living firmly in the Apple ecosystem is the fact that apps like Netflix, Kindle and Spotify don’t allow you to make purchases in their own apps. This is because Apple requires developers to pay it a 30% cut of any digital purchases.
In some regards I feel like Apple taking a cut of revenue is justified. If an app is offered in the App Store and Apple scans the app for malware, tests it, offers the bandwidth for the download and promotes that app in the store, taking a portion of the transaction feels reasonable, especially given the nature of retail. Apple also offers a convenient payment systems that developers can leverage for purchases where the same 30% cut is required. If Apple didn’t take the in-app cut (or it was lower), developers would simply make their apps free and require an in-app purchase for the functionality, so Apple makes that percentage constant for both scenarios.
The problem is that cut applies to all digital goods, which beyond app functionality doesn’t work for many developers. Amazon pays book publishers more than 30% for a Kindle book and Spotify pays record labels more than 30% of their revenue. As a result you can use Kindle or Spotify on an iPhone, but you are presented a login screen with no explanation for how to sign up because Apple doesn’t allow the developer to give this information to users, which is particularly galling. On top of these facts, it’s not a good look that Apple offers competing services in both of those realms.
At least in these instances a user who understands how to sign up for these services on the web can get access to them. If you’re wanting to use one of the new cloud gaming services like Google Stadia or Microsoft xCloud you simply can’t as a Apple user, as these have been rejected from the App Store. Games are a major portion of Apple’s App Store revenue, and cloud services are a big threat to that stream of money, but isn’t a mass exodus of game fans to Android a much bigger threat? I have high hopes that this problem will get solved sooner rather than later because it feels like a lose-lose scenario otherwise.
Now the most public face of the App Store pushback is Epic with its massively popular Fortnite. There is no question that Epic picked this fight with the intention of making a spectacle of it. They pushed an update to Fortnite that allowed users to buy in-app upgrades via their own purchasing system in a manner that circumvented Apple’s app review process knowing full well that Apple would pull their app, then released their video and #FreeFortnite campaign immediately, along with lawsuits filed against Apple and Google (who also pulled Fortnite from the Play Store for the same reason).
While I clearly am not happy with all of Apple’s App Store policies for the reasons I detailed above, Epic Games is a terrible poster child for this struggle. Fortnite is free to play, but earns billions from selling upgrades, skins and dance moves, all of which incur zero marginal cost to Epic. They act like the aggrieved party here, but they agreed to Apple’s terms and played by them for over a decade, so iPhone users can’t play Fortnite because of Epic’s actions, not Apple’s.
Epic is not simply asking to be able to use their own payment system, but to offer a competing app store on iOS. Epic tried to offer Fortnite as a direct download on Android devices to avoid Google’s same 30% cut, but eventually gave up because users don’t want to sideload apps, app stores are more convenient and safer. So sideloading (which Apple doesn’t allow at all on iOS) isn’t the answer. I’m not sure that alternate app stores is either, who wants to remember which store they had to go to for a particular app? And would you trust an app that you downloaded from the Facebook App Store? I wouldn’t.
Ultimately I’d like to see Apple make some policy and revenue changes that are fairer to developers, but keep iOS’ technical limitations in place for the sake of user safety and convenience. Ben Thompson suggests lowering Apple’s cut of digital goods where the vendor incurs a marginal cost to 10%, which makes sense to me. Perhaps this lower rate would allow in-app purchases to return for Netflix, Kindle and Spotify which would be great for users who may buy more content from those apps as a result. Also that lower cut may get Microsoft and Google to offer xCloud and Stadia with in-app purchases to subscribe to these gaming services.
But the digital goods in Fortnite incur zero marginal cost for Epic, so in this scenario Fortnite would not be “freed” from Apple’s 30% cut. Keep in mind this is the same cut they give to Microsoft and Sony for in-app purchases on the Xbox and PlayStation that Epic has thus far not complained about. When Epic charges you $10 so that your character can do the floss, why should I give a shit if Apple takes three of them?
