Home Topics News Legal battle between Epic Games and Apple reaches Australian courts

Legal battle between Epic Games and Apple reaches Australian courts

Epic Games, the maker of one of the world’s most popular video games Fortnite, has brought its legal fight against Apple to Australian shores.

Epic Games and Apple first became embroiled in a lawsuit in a US District Court on 13 August 2020.

The claim filed in Australia’s Federal Court today concerns the same issue of Apple’s control over its App Store.

“This is much bigger than Epic versus Apple – it goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests,” said Tim Sweeney, Epic Games founder and CEO.

“Apple were pioneers of the personal computer, and their original products were open platforms. Anyone could write code, anyone could release software and users could install software from sources of their choosing. Today’s digital platforms must be similarly open to fair competition.”

Epic Games is alleging that Apple’s control is a “misuse of market power” that “substantially lessens competition in app distribution and payment processes.” They allege that Apple breaches the Australian Consumer Law and sections of the Competition and Consumer Act 2010.

The legal battle ensued because of Epic Games’ addition of a payment processing option for in-app purchases that allowed Fortnite users to pay Epic Games directly on iOS devices.

iOS devices are Apple iPhone and iPad products with pre-installed operating systems.

Fortnite’s in-app payment mechanism allowed them to avoid Apple’s 30 per cent transaction fee, which meant they could offer iOS device users a 20 per cent price reduction for in-app purchases.

Epic Games also requested its own app store, which was denied by Apple.

Apple then removed Fortnite from the App Store, and so iOS device users could not download or update Fortnite.

“Apple’s contravening conduct forces Epic (and other app developers) to only use Apple’s App Store to distribute its software applications (apps) to the broad base of iOS device users, and to only use Apple’s payment platform for purchases of their in-app content by iOS device users,” stated Epic Games in its filings.

“The conduct prevents Epic (and other app developers) from providing or using competing app stores to distribute apps to iOS device users and/or from providing or using competing payment processing systems. It also allows Apple to impose a 30 per cent commission on the sale of every paid app and on every purchase of in-app content: a monopoly price. The conduct in turn results in harms including a reduction in choice for app distribution and higher prices for in-app content for iOS device users in Australia.”

In a statement to the Australian Financial Review, Apple has described Epic Games’ behaviour as “deceptive and clandestine.”

“For 12 years, the App Store has helped developers turn their brightest ideas into apps that change the world. Our priorities have always been to provide customers with a safe and trusted place to download software and to apply the rules equally to all developers.

“Epic has been one of the most successful developers on the App Store, growing into a multibillion-dollar business that reaches millions of iOS customers around the world, including Australia.

“In ways a judge has described as deceptive and clandestine, Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines that apply equally to every developer and protect customers.

“Their reckless behaviour made pawns of customers, and we look forward to making this clear to Australian courts.”

Apple, along with fellow tech giant Google, is already under investigation for anti-competitive behaviour under the ACCC Digital Platform Services Inquiry.

Epic Games emphasised that they are not seeking monetary damages in Australia or the US. They are bringing proceedings to force Apple to allow alternative payment methods and other app stores on iOS devices.

“Epic is simply seeking fair access and competition that will benefit all consumers.”

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Ann Wen
Ann is a journalist at Dynamic Business with a background in commercial law and research. She is interested in SME tax law, public policy and Australian innovation.
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