Does Apple Need To Be More Careful?

Apple isn’t the world’s most valuable company for no reason, but does the iPhone-maker need to tread lightly amid an App Store ‘rebellion’?

Aug. 14, 2020

Apple (NASDAQ: AAPL) has always had an ‘interesting’ relationship with app developers, to say the least. Sure, it’s the second-largest app market in the world — behind Google’s (NASDAQ: GOOG) Play Store — but the 30% cut on digital sales that Apple takes from developers appears to have left the company on the verge of a full-scale developer revolt. And it’s all because of Fortnite.  

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An ‘Epic’ legal battle

On Thursday, one of the most popular games in modern history, Fortnite, was removed from the App Store after the iPhone-maker claimed that the game’s creator, Epic Games, had violated App Store policies. The game has been downloaded on the App Store 2.4 million times in the past 30 days alone, highlighting its popularity. Apple gave a statement on the matter:

“Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users. As a result, their Fortnite app has been removed from the store.”

How did Epic Games respond? Well, they’ve had enough and they’re suing the world’s most valuable company, stating: 

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market.”

Epic actually used Apple’s own tactics against them, creating a Fortnite version of Apple’s own famous ‘1984’ advert, and I must admit it’s pretty fantastic:

The game was also removed from the Google Play store, and Epic is also suing them, but nobody seems all that interested in talking about that part of the story…

Smells like revolution

Although this is neither the first, nor likely the last of such an instance, Apple is definitely treading on thin ice right now having just come out of a fresh investigation into its anticompetitive behavior. When CEO Tim Cook dialed into Capitol Hill last month — alongside the heads of Google, Amazon (NASDAQ: AMZN), and Facebook (NASDAQ: FB) — he did defend the company rather well, pointing out that Apple has no monopoly over any market, nor should it be punished for simply being “a good business”. Cook also defended Apple’s App Store policies at the hearing and said that if customers don’t like its rules, “you can buy a Samsung.” 

However, app developers may now have a champion that they can all get behind to prove that Apple is pricing out ‘smaller’ businesses — Epic is worth $18 billion, but I guess everyone’s a small business when compared to Apple. Some other big names such as Tinder-parent Match (NASDAQ: MTCH) and Spotify (NYSE: SPOT) have shown their support for Epic on social media, having had their own gripes with Apple’s 30% policy in the past. Not sure Spotify has a toe to stand on here though, never mind a leg if you consider its abhorrent pay of artists that stream on their platform, but that’s another story. 

And let’s not forget about the power of the consumers’ voice. Roughly $519 billion in commerce is generated on the App Store by its estimated 1.4 billion device users, and Apple has just infuriated an entire subsection of them: gamers. 

One quick browse of Twitter (NYSE: TWTR) will show just how irritated the gaming community is, with calls for boycotts of the App Store and Apple products swirling. This might seem far-fetched, but so was the Facebook ad boycott, and look how far that’s gotten? 

Will there be repercussions?

It’s still far too early to say and coming back to my Facebook ad boycott example, we already saw that this did not massively affect its revenue — which smashed expectations in Q2. Though one could argue that this is also too early to analyze, while the long-term damage to Facebook’s already sketchy reputation may not be felt for some time.

Apple could face a similar staining of its relatively clean reputation, whilst also prompting a further antitrust investigation, or even sanctions, against its App Store practices. And also, never underestimate the power of Gen Zers! Fortnite is their game, and much like when TikTok users messed with President Trump’s rally numbers, they could also find creative ways to mess with Apple too for taking away their favorite game. 

Perhaps this influence is why Microsoft (NASDAQ: MSFT) is really after TikTok…

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