“They can bring about a change”: Epic Games drags Apple to court, and Aussie startups are watching closely

Epic Games, the creator of the wildly popular online game Fortnite, has dragged Apple into the arena of the Australian Federal Court, alleging misuse of market power. And Aussie startups are cheering from the sidelines.

On Monday, Epic filed documents in the Federal Court, claiming Apple’s control over in-app purchases amounts to misuse of market power and prevents competition.

This control also allows Apple to impose a 30% commission on every paid app and purchase of in-app content, the complaint says.

The lawsuit follows a long-running stoush between Epic and Apple, and a similar filing in courts in the US.

Back in August, Fortnite was booted from the App Store after bypassing the in-app payment methods, in order to offer users better prices.

Epic also alleges that Apple threatened to terminate its access to the Apple development tools necessary to keep its other apps up and running, and to remove other apps and games from the iOS and Mac App Stores.

“Apple has engaged, and continues to engage, in unconscionable conduct in trade or commerce,” Epic’s complaint says.

“Among other things, Apple’s conduct has forced Epic and other app developers to pay Apple monopoly prices (the 30% commission) in connection with all in-app purchases of their in-app content on iOS devices,” it goes on.

“This has led to harms including increased prices for in-app content by iOS device users in Australia and lost profits for Epic.”

Startups are watching

It’s worth noting here, that this week, Apple has announced its App Store Small Business Program, which will see its commission reduced to 15% for businesses earning less than US$1 million per year. That comes into effect from January 1, 2021.

But, for Aussie app developers, it’s not only the large commission that’s a problem.

Maree Beare is founder and chief of Wanngi, a health management app allowing users to track their own symptoms, health information and appointments.

She notes the level of control the App Store has over products such as hers.

“It’s a monopoly,” she tells SmartCompany.

“Where do we turn if we get refused from the app store?”

Beare also points to Apple’s 90-day payment terms. That’s significantly longer than any other payment provider, but app developers have no choice in the matter.

“All payments must go through the App Store,” she says.

“So, we’re very much controlled in both the market, and also the fees, and the payments.”

For businesses of all sizes, that’s inconvenient. But “90 days is a long time in the startup world”, Beare notes.

Waiting three months for your revenue could cause significant problems.

It also means Apple has the power to block the money-making capacity of any app. If a developer doesn’t follow the rules to the letter, they can be cut off — as Fortnite was back in August.

For small developers, that means extra costs they can ill afford.

“That’s time you can make money out of the app and it’s also time and money to do a redevelopment,” Beare says.

Taking up the fight

According to Beare, this issue with the App Store has plagued Aussie businesses like hers for some time. But, you’d be hard pushed to find a startup founder with the capital, or the time, to take this to the Federal Court.

Epic Games has taken up the battle — perhaps unknowingly — on behalf of them all.

“I would hope it won’t just be something they win, but that they can bring about a change for the terms and conditions of these monopolies.”

When asked what would be the optimal outcome for Aussie startups here, Beare highlights two items on her wishlist.

First, she wants to see Apple’s payment terms fall in line with other providers, such as Paypal or Stripe.

But, she also wants to see an end to the monopoly the App Store has, allowing more payment options for her customers.

And she’s feeling pretty confident that those changes could come about.

“I want to put my positivity out there for them,” she says.

“If anyone is going to do it [it’ll be them]. I wish Fortnite well.”