University of St. Thomas Law Journal

Fortnite and Beyond: Epic Games’ Quest to Break Free from App Store Monopolies

Eric Osborn*

Epic Games (“Epic”) is the creator of the popular, free-to-play game Fortnite, which in November 2023 had over 100 million players.1 Instead of charging players for downloading Fortnite, Epic charges players for purchasing in-game items.2 These in-game purchases must be made with a virtual currency called V-bucks, which can be purchased within Fortnite itself via the in-game Item Shop.3 In addition to Fortnite, Epic Games also operates its own digital games store, called the Epic Games Store, where customers can purchase or download games (like Fortnite) to play.4 When players download and play Fortnite via the Epic Games Store, in-game purchases (including the purchase of V-bucks) are made using Epic Games’ payment platform.5

If, however, a user downloads the game through a mobile app store such as the Google Play Store or Apple’s App Store, any in-game Fortnite purchases must use the store’s respective payment processing system and are subject to in-app payment fees charged by both Google and Apple.6 This fee, for both Google and Apple, is 30 percent.7 So for every one dollar a customer spends on V-bucks, Epic only makes seventy cents. On August 13, 2020, Epic intentionally bypassed the app store fees by allowing customers to purchase V-bucks directly through Epic’s own payment processing system at a discount.8 In response, Apple and Google quickly removed Fortnite from their app stores.9

Epic then filed suit against both Apple and Google.10 In both lawsuits, Epic claimed various Sherman Antitrust Act violations in addition to a violation of California’s Unfair Competition Law.11 While the allegations in the two cases were very similar, the proceedings and outcomes were not. The suit against Apple was tried in front of a judge, concluding with an opinion issued on September 10, 2021,12 while the case against Google was tried in front of a jury, with a verdict rendered on December 11, 2023.13

The judge determined that Apple did not violate the Sherman Antitrust Act. Although Apple requires U.S. users to download apps on any iOS Apple device from its App Store,14 the judge found the “relevant market” for determining whether Apple had a monopoly to be the “digital mobile gaming transactions” market, not the iOS app distribution market.15 The judge found that Apple only had 55 percent market share (games purchased on Google-owned Android devices likely accounted for the rest) of the “digital mobile gaming transactions market,” and thus did not have a monopoly over it.16

Apple’s policies did, however, violate California’s Unfair Competition Law and justify a nationwide remedy.17 Specifically, the judge found that Apple’s policy preventing app developers from communicating lower prices “on other platforms either within iOS or to users obtained from the iOS platform” was unfair under California law.18 Under that policy, Epic (or any app developer) could not send an email to a user who had registered their account within the app informing them that it was cheaper to buy V-bucks at the Epic Games Store instead of through the app. The judge issued a nationwide injunction enjoining Apple from this behavior. Specifically, Apple was enjoined from “prohibiting developers to include in their: apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to [in-app purchases].”19 The injunction also enjoined Apple from prohibiting developers from “[c]ommunicating with customers through points of contact obtained voluntarily from customers through account registration within the app.”20

The Ninth Circuit upheld the district court’s ruling related to the injunction but granted a stay pending an appeal to the U.S. Supreme Court. Apple contends that they should not be subject to a nationwide injunction because the case was brought by a single party (Epic) and the judge did not specifically find that a nationwide injunction (as opposed to a geographically limited one) was necessary to redress Epic’s individual injury.21 The petition for writ of certiorari was denied on January 16, 2024.22

As of January 2024, the Google-owned Android mobile operating system has an approximately 71 percent market share.23 Unlike Apple, Android generally allows for phone manufacturers to install their own app stores and for customers to download any apps from the web or other app stores.24 But Epic alleged that Google imposes contractual and technical barriers on Android app developers that “force app developers and consumers into Google’s own monopolized ‘app store’—the Google Play Store.”25 Epic claims Google does this by conditioning the licensing of other important Google-owned apps (such as Gmail, Google Search, Google Maps, and YouTube) on the phone manufacturer’s agreement to pre-install the Google Play Store and to prominently display it.26 This behavior, in conjunction with Google’s interference with “[phone manufacturers’] ability to make third-party app stores or apps available on the devices they make,” “effectively foreclose[s] competing app stores—and even single apps—from what could be a primary distribution channel.”27

As contrasted with the Apple case, the jury in the Google case found that Google did operate a monopoly in violation of the Sherman Antitrust Act. Because the jury defined the relevant market as the “Android App distribution market” and “Android in-app billing services for digital goods and services transactions,” as opposed to a general market for mobile digital video games, it is easy to see why the jury found that Google “willfully acquired or maintained monopoly power by engaging in anticompetitive conduct” when the judge in the Apple case did not.28

It is unclear exactly what remedies Epic will receive as a result of the jury verdict, but Epic is asking for three things: (1) freedom for Epic and other developers to introduce their own stores on the Android platform without restrictions, (2) freedom to use its own billing system for in-app purchases, and (3) an anticircumvention provision to prevent Google from introducing the same problems through a novel implementation.29 Epic is not asking for monetary compensation.30 The judge has indicated that the anticircumvention is not going to happen, and the remedies will be discussed with the judge in January.31 Regardless of what remedies the district court awards, Google is planning to appeal the verdict.32

It may not matter precisely what remedies Epic receives from its lawsuit. In a settlement agreement for an antitrust suit brought by state attorneys general, Google agreed to allow Android apps like Fortnite to charge consumers directly for in-app purchases rather than forcing developers to use Google’s payment system.33 App developers like Epic can also now show “different pricing options within the app when a user makes a digital purchase.”34 Time will tell if these updated policies are enough for Epic to bring Fortnite back to the Google Play Store. In the meantime, if you want to play Fortnite on an Android device, you can download it via the Epic Games Store.35 If you own a Samsung smartphone, you can also download it via the Samsung Galaxy Store.36 If you own an iPhone, unfortunately, you are out of luck.37

* Eric Osborn, J.D. Candidate, University of St. Thomas School of Law Class of 2025 (Associate Editor).

  1. Fortnite (@FortniteGame), Twitter (Dec. 1, 2023, 12:00 PM), https://twitter.com/FortniteGame/status/1730648069102882952. ↩︎
  2. See FAQ, Epic Games Store, https://store.epicgames.com/en-US/p/fortnite–faq (last visited Jan. 2, 2024). ↩︎
  3. See id. ↩︎
  4. See Epic Games Store, https://store.epicgames.com/en-US/ (last visited Jan. 2, 2024). ↩︎
  5. See Epic Games Store, supra note 2. ↩︎
  6. Grete Ling, Google Play Store and Apple App Store Fees, App Radar (Feb. 4, 2021), https://appradar.com/blog/google-play-apple-app-store-fees. ↩︎
  7. Apple also has an App Store small business program that reduces the cut Apple takes to 15 percent, but this does not apply to Epic Games. See id. ↩︎
  8. Sean Hollister, Epic v. Google, Explained, Verge (Nov. 5, 2023, 5:00 AM), https://www.theverge.com/23944251/epic-google-antitrust-trial-explainer-monopoly. ↩︎
  9. See id.; FAQ, Fortnite, https://www.fortnite.com/faq (last visited Jan. 2, 2024). ↩︎
  10. See generally Complaint for Injunctive Relief, Epic Games, Inc. v. Apple Inc., 559 F. Supp. 3d 898 (N.D. Cal. 2021) (No. 4:20-cv-05640-YGR); Complaint for Injunctive Relief, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671 (N.D. Cal. Aug. 13, 2020) [hereinafter Google Complaint]. ↩︎
  11. See id. ↩︎
  12. Epic Games, Inc. v. Apple Inc., 559 F. Supp. 3d 898 (N.D. Cal. 2021). The Ninth Circuit upheld the trial court’s ruling regarding antitrust and California anticompetition laws, while reversing the trial court’s findings regarding attorney fees. See Epic Games, Inc. v. Apple Inc., 67 F.4th 946, 966 (9th Cir. 2023). ↩︎
  13. Epic Games Defeats Google in Antitrust Trial Victory, Cravath (Dec. 19, 2023), https://www.cravath.com/news/epic-games-defeats-google-in-antitrust-trial-victory.html. ↩︎
  14. See Sami Fathi, Apple’s Arguments Against Sideloading on iOS: All Your Questions Answered, MacRumors (Nov. 11, 2021, 10:38 AM), https://www.macrumors.com/2021/11/11/ios-sideloading-questions-answered/. While downloading apps via other app stores on iOS devices is allowed in the European Union and other countries as a result of the European Union’s Digital Markets Act, it is not allowed in the United States. See id. ↩︎
  15. See Apple, 559 F. Supp. 3d at 921. ↩︎
  16. Id. at 922. ↩︎
  17. Id. California’s Unfair Competition Law defines “unfair competition” as “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. ↩︎
  18. Apple, 559 F. Supp. 3d at 1053. ↩︎
  19. Id. at 1058. ↩︎
  20. Id. ↩︎
  21. Petition for Writ of Certiorari at 2–3, Apple Inc. v. Epic Games, Inc., No. 23-344 (Sept. 28, 2023). ↩︎
  22. Docket for Apple Inc. v. Epic Games, Inc., Supreme Court, https://www.supremecourt.gov/docket/docketfiles/html/public/23-344.html (last visited Jan. 2, 2024). ↩︎
  23. Nick Galov, Android Market Share and Other Statistics for 2024, Tech Jury (Jan. 3, 2024), https://techjury.net/blog/android-market-share/. ↩︎
  24. See Epic Games App on the Samsung Galaxy Store, Samsung, https://galaxystore.samsung.com/detail/com.epicgames.portal (last visited Jan. 2, 2024); Jerry Hildenbrand, What Does Sideloading Mean, and How Do You Sideload Apps?, Android Central (May 24, 2022), https://www.androidcentral.com/what-sideloading. ↩︎
  25. Google Complaint, supra note 10, at 2. ↩︎
  26. Google Complaint, supra note 10, at 5. ↩︎
  27. Google Complaint, supra note 10, at 5–6. ↩︎
  28. See Verdict Form at 3, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671 (N.D. Cal. Dec. 11, 2023). ↩︎
  29. Sean Hollister, Epic v. Google Day 12 Is Done – but Not Before Some Revelations, Verge (Nov. 28, 2023, 5:53 PM), https://www.theverge.com/2023/11/28/23980294/epic-v-google-day-12-is-done-but-not-before-some-revelations/. ↩︎
  30. Google Complaint, supra note 10, at 2. ↩︎
  31. Hollister, supra note 29. ↩︎
  32. Sean Hollister, Google Will Appeal the Epic v. Google Verdict, Verge (Dec. 11, 2023, 7:17 PM), https://www.theverge.com/2023/12/11/23996902/google-will-appeal-the-epic-v-google-verdict. ↩︎
  33. Wilson White, Reaffirming Choice and Openness on Android and Google Play, Google: Keyword (Dec. 18, 2023), https://blog.google/outreach-initiatives/public-policy/reaffirming-choice-and-openness-on-android-and-google-play/. ↩︎
  34. See id. ↩︎
  35. Fortnite, supra note 9. ↩︎
  36. Samsung Galaxy Store, Fortnite, https://www.fortnite.com/mobile/samsung (last visited Jan. 2, 2024). ↩︎
  37. See Fortnite, supra note 9. ↩︎

Posted

in

by

USTLawJournal

Tags:

Comments

Leave a comment

Blog at WordPress.com.