Apple loves it when you buy that weapon skin in Fortnite or those super likes on Tinder. No, Apple isn’t interested in your gaming habits or love life. They do, however, enjoy the 30% fee they take on anything you spend on the App Store. This includes in-app purchases. For companies that rely on the App Store, 30% is a large ask. So someone’s gotta stand up for the little apps and that someone just happens to be Epic Games, the creator of popular video game, Fortnite.
- The trigger… On Aug. 13, Fortnite updated its game to handle direct payment to bypass Apple’s App Store.
- The response… Apple removed Fortnite from the App Store for breaching its policy. Anticipating a ban from the App Store, Epic Games immediately sued back and launched a short video that mocked Apple’s 1984 launch of the Macintosh.
- The impact… On Aug. 25, Judge Yvonne Gonzalez Rogers’ ruling gave Apple permission to remove Fortnite from the App Store while the two companies prepare for trial over the next 4-6 months.
Companies including Spotify ($SPOT), Match Group ($MTCH), Netflix ($NFLX), Airbnb and many others have spoken out in support of Epic Games. Spotify, who may be Apple’s biggest “hater”, also filed several complaints to the European Union (EU) over Apple’s unfair business practices. On June 16, the EU launched a formal investigation into Apple’s App Store and are investigating whether Apple is violating anti-competitive rules.
What does this mean for your portfolio?
A change on its policy could be a game-changer for the 2m+ apps on the App Store.
- If Apple Wins… This likely won’t change much. Epic Games is not a public company and everyday investors cannot invest in it. Meanwhile, Apple investors can take a sigh of relief knowing that the company’s profits are safe.
- If Apple loses… A possible outcome would be to force Apple to lower its App Store fees. Such a move would benefit any company that charges customers on the App Store along with those listed above in support of Epic Games.