Epic Games lawsuit against Apple has become a much-publicized affair. But the gaming company isn’t looking for a payout here. In fact, Epic is looking long-term and the goal of this lawsuit is to force Apple to rewrite its app store rules. And if indeed it’s successful, this could be a huge payoff in the long term.
Just a few months ago, Epic’s game Fortnite was removed from the Apple App Store. The main reason for this was the fact that the gaming company issued an update on its game that allowed its customers to make payments outside the app store. This would make it possible for the company and its fans to bypass the 30% cut that Apple takes on all in-app transactions.
Apple said that the update was in violation of its terms of use and decided to remove Fortnite from the app store. But things did not end there. The gaming company felt that it was treated unfairly and filed a suit against the smartphone giant. That lawsuit is set to start this week and there seems to be so much at stake here.
Epic Games is not fighting this one on its own. The company has put together an alliance called the Coalition for App Fairness. The alliance has attracted a series of great companies including Spotify, Basecamp, Match Group, and others. According to many experts, this lawsuit is not just about a settlement of money. Epic is simply hoping to stop what it calls unfair practices by big tech companies that have so much power.
And the high-stakes nature of this suit is starting to bore some fruit. Epic and its coalition of companies are not opposed to giving Apple a cut of all its in-app transactions. But the gaming company maintains that 30% it’s just too much. And it seems Microsoft, a big tech player, agrees. Just recently, the Windows giant announced that it will be cutting its take on PC games to 12%.
Despite this, Epic is spending a lot of money to wage the way against Apple. It’s estimated that its stance on the 30% cut will cost the company nearly $600 million by the end of 2021. But this isn’t something that worries Epic.
After all, the company is already making massive revenues with total returns in April alone hitting $400 million. But even then, it’s hard to discount the role that the app store plays in the success of Epic and other apps. For example, in 2020, Epic games returned revenues of nearly $5 billion with up to $1 billion in profits.
However, $700 million of the $5 billion in revenue was directly sourced from iOS customers that are largely on Apple's platform. That’s nearly 25% of its yearly revenue and without it, Epic could see a huge decline in its bottom line. But many experts still believe that Epic is in such a strong position financially simply because its game Fortnite remains one of the most popular video games in the world.
