Epic Games Challenges Mobile App Store Policies

On August 13, 2020, Epic Games updated Fortnite — one of the world’s most widely played games, with approximately 350 million registered accounts — to offer a direct payment option that bypassed Apple’s in-app purchase system. Epic’s “Epic Direct Payment” offered Fortnite’s in-game currency (V-Bucks) at a 20 percent discount compared to the price charged through Apple’s IAP system ($7.99 versus $9.99 for 1,000 V-Bucks), where Apple’s 30 percent commission had been built into the price. Apple’s App Store Review Guidelines required all digital content purchases in iOS apps to use Apple’s in-app purchase system, with Apple receiving 30 percent (15 percent for subscriptions after the first year, for developers earning under $1M through Apple’s Small Business Program). Apple removed Fortnite from the App Store within hours of detecting the policy violation; Google removed it from Google Play the same day (though Fortnite had already been available via direct download/sideload on Android). Epic had prepared for the removal: simultaneously with the update, Epic filed a lawsuit against Apple in the US District Court for the Northern District of California, and a separate lawsuit against Google, both alleging antitrust violations. Epic also published a parody video titled “Nineteen Eighty-Fortnite” — a direct parody of Apple’s famous “1984” Super Bowl advertisement — with Fortnite characters fighting an “Apple Corporation” controlling citizens, reversing the iconic imagery to cast Apple as the monopoly rather than the liberator.

Epic’s legal theory centered on Apple’s control of iOS application distribution. On iOS, there was no legitimate mechanism for a user to install applications from sources other than the App Store (absent device jailbreaking); Apple required all apps to be code-signed with certificates issued only to registered Apple Developer Program members, and signed apps were only distributable through the App Store. This meant Apple’s 30 percent commission applied to all digital content sold in iOS apps, with no competitive alternative payment processor or alternative app storefront available. Epic argued this constituted an illegal monopoly over iOS app distribution and iOS in-app payment processing under Sherman Antitrust Act sections 1 and 2. Apple’s defense: developers voluntarily agreed to the App Store terms when they chose to distribute through iOS; the 30 percent covered the value Apple provided (payment processing, app review, fraud protection, device access to Apple’s 1 billion+ active iPhone users); and the integrated distribution model provided security benefits users relied on. Judge Yvonne Gonzalez Rogers issued her ruling on September 10, 2021: Epic did not win on its core antitrust claims (the court found that Apple’s App Store was not a monopoly in a properly defined market), but the court found that Apple’s anti-steering provisions — which prohibited iOS apps from informing users that they could purchase content at lower prices elsewhere (outside the app, on the developer’s website) — violated California’s Unfair Competition Law. Apple was ordered to allow developers to include external payment links in their apps.

The Epic v. Apple ruling opened a regulatory front globally that reshaped the app store model more broadly than the US litigation alone. The European Union’s Digital Markets Act (DMA), published in the Official Journal September 2022 and enforceable from March 7, 2024 as to Apple, required Apple to allow alternative app distribution (third-party app stores) and alternative payment methods on iOS in EU countries — the most significant structural change to iOS app distribution since the App Store launched in 2008. Apple complied with the DMA by establishing a “Core Technology Fee” (€0.50 per install after 1M per year) for alternative distribution, a decision immediately criticized as designed to make alternative stores economically unviable. South Korea’s amended Telecommunications Business Act (signed September 2021) required both Apple and Google to allow alternative payment methods in their Korean app stores. The Netherlands Authority for Consumers and Markets ordered Apple to allow alternative payment systems in Dutch dating apps. Google reached a settlement with Epic in November 2023 in which Google agreed to allow third-party app stores and alternative payment links on Android globally. Fortnite returned to the US iOS App Store in March 2024 after a three-and-a-half-year absence, with Epic also launching the Epic Games Store on iOS in the EU. For developers, the period between 2020 and 2024 represented the most significant change in the legal and regulatory landscape surrounding mobile app distribution since the App Store model was established, driven substantially by Epic’s deliberate legal and public-relations confrontation strategy.