News Information and Media Site: Byers Market: Tim Sweeney goes to war with Apple, Google

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August 14, 2020

By DYLAN BYERS in Los Angeles &

AHIZA GARCÍA-HODGES in San Francisco

Good morning. 🌴 Happy weekend.

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Tim Sweeney goes to war with Apple and Google

Epic Games, the maker of the popular video game "Fortnite," is locked in a standoff with Apple and Google over how money flows between the companies. The dramatic, high-stakes battle is bringing new focus to the tech giants' influence over the digital marketplace.

• The big picture: The standoff pits Tim Sweeney's $17 billion gaming company against two trillion-dollar tech giants at a time when both Apple and Google are facing intense antitrust scrutiny.

• While many companies have complained for years about the fees that Apple and Google charge app developers, Epic Games is the first to take action and force their respective hands.

The latest: On Thursday, Epic intentionally flouted Apple and Google's policies, which require certain apps to give them up to a 30 percent cut of all in-app purchases. Epic launched its own in-app payment system for Fortnite instead, circumventing the fees.

• Apple responded by removing Fortnite, which has 350 million registered players, from its app store. Epic, anticipating the move by Apple, responded by suing the company for anticompetitive behavior.

• Epic also hit Apple by riffing on its famous 1984 ad, in which Apple portrayed itself as an innovator overcoming the status quo. In its own version, Epic claimed to have "defied the App Store Monopoly," and asked players to "join the fight to stop 2020 from becoming '1984.'"

• Google also removed Fortnite from Google Play on Thursday night, several hours after Apple, but as of last night Epic had not taken any legal action against the company.

• As of last night, Spotify and Match Group had both lauded Epic for taking a stand against Apple and what they described as its "arbitrary" and "unfair" practices.

Background: Epic and other companies like Spotify and Netflix have long criticized Apple and Google for requiring certain apps to give them a cut of all in-app purchases. Sweeney recently accused the two companies of being a duopoly.

• Their primary complaint is that Apple and Google's power over the app marketplace allow them to set an arbitrary tax on developers and advantage their own apps over those of their competitors.

• "The problem here isn't whether 30% or 15% is 'fair,' but that there is no store or payments-based competition on Apple devices," media strategist Matthew Ball told us. "This means the rates Apple sets ... are not determined by the market, but instead just by Apple."

What's next: Sriram Krishnan, an investor and veteran of Twitter, Snap and Facebook, warns that Apple could face a fate similar to Microsoft's in the mid-2000s if it angers developers.

• "Apple may not be able to measure yet the long term impact of having so many developers upset with them," he writes.

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🏛️ Big in the Beltway

U.S. businesses protest Trump's WeChat ban

Apple, Disney, Walmart and other companies whose fortunes are linked to China "are pushing back against the Trump administration's plans to restrict business transactions involving the WeChat app," WSJ's John D. McKinnon and Lingling Wei report.

• Representatives from more than a dozen major U.S. companies took part in a call with the White House on Tuesday and raised concerns about the vagueness of Trump's executive order, which bars any transaction related to WeChat by Americans.

The big picture: The firms say a ban on WeChat, which is used by more than 1.2 billion people around the world for mobile payments, messaging and e-commerce, could undermine their competitiveness in China, the world's second-biggest economy.