Epic Games, the company behind popular online game Fortnite, is ramping up its legal fight against Apple with a new antitrust complaint filed in the European Union. Dan Patterson joins "CBSN AM" to talk about the dispute between the two companies.
ANNE-MARIE GREEN: The company behind the popular video game Fortnite has filed an antitrust complaint against Apple with the European Union. It is the latest in a series of legal actions Epic has taken against Apple amid a dispute between the two companies surrounding in-app purchases. So Dan Patterson has been following the very latest on this story, and he's here to sort of break it all down and tell you why that means to you.
OK, Dan, explain to us just how this dispute got started. Epic Games certainly not the only company that has an issue with the way Apple runs its App Store, but it's probably one of the few ones that is big enough to actually take on Apple. So how did this get started?
DAN PATTERSON: That's right, Anne-Marie. This is not a battle of David versus Goliath. These are two Goliaths. And if you like corporate intrigue and games, this one is-- pun intended-- epic. Going back to last summer, Epic, who make Fortnite and the Unreal Engine, which is a development kit that a lot of other mobile games use to build their apps, tried to circumvent Apple's 30% fee that is in the App Store. When they did that, Apple responded by yanking Fortnite from the App Store, and this kind of set off a chain reaction where the two have been in this legal tussle all fall.
Now, that escalated this week when Epic lobbed similar accusations against Apple in the EU. They've also pursued legal action in a number of other territories. And they're effectively saying, hey, look, this is-- this fee-- I almost keep calling it a tax-- but this fee stifles innovation. It-- you know, Apple is trying to keep other competitors off the App Store. And they're asking for this fee to be modified-- fascinating story.
ANNE-MARIE GREEN: It is really fascinating, and I mentioned how huge Epic is. I'm wondering if they have been able to convince any other software creators, any other app creators to sort of come along with them on this ride. And I also thought to myself, but this is supposed to be a mutually beneficial relationship. These app creators, these software companies get access to this huge market, and Apple gets access to content. Why are they not getting along right now? They should be.
DAN PATTERSON: That's Apple's argument exactly, that, hey, we've built this massive distribution platform in the App Store, as well as iOS-- the iPhone and iPadOS. Now they're bringing this to Macs, and Apple says, look, we have a massive distribution platform that's not free to run, and these fees cover that cost.
Again, Epic is a massive company, but there are a lot of Davids in this fight. Individual developers, small and middle-sized businesses, especially, are really impacted by this. So the winner here will really be small businesses. The loser is kind of the same thing. And we have seen Apple respond over the last couple of months, and they've adjusted and changed their pricing not officially in response to this, but kind of in response to this.
ANNE-MARIE GREEN: So as I understand it now, as you're sort of clarifying it for me, a lot of it has to do with the fact that-- the belief that Apple just has too much control over the pricing, over how much they charge. And so at any moment, they could sort of jack up the percentage from 30% to 40% to 50% and say, if you want access to our audience, the customers, then you need to pay this. There's a larger debate in the gaming world about the idea of micro-transactions. Can you explain that to me?
DAN PATTERSON: Yeah, these are called in-app purchases, at least when it happens on your mobile device in the Google Play Store or the App Store. And this is not a small business. By some estimates, Apple made about $64 billion last year in in-app transactions that happened on the platform. But Epic, like I said, is not a small company either. And Fortnite, by some estimates, makes about $100 million per month.
So these in-app purchases, when they're in a game-- and we should say that Epic have their own distribution store where you can buy stuff and not-- or where you can buy apps directly from them. But this can also happen on Valve's Steam platform. It can happen through Amazon or through Google. All of these companies charge a similar fee for the transactions. It's just a massive business that is often not talked about.
ANNE-MARIE GREEN: That's so true. You were bringing me-- like, I'm going into my Wayback Machine, and I remember, you know, when we first sort of got the App Store and how all the apps were free, and if someone had the audacity to charge you $0.99, you'd be like, this better be worth it, a whole $0.99. We've come a long, long way from there now that we have all these little computers in the palm of our hand. Dan, thank you so much.