Tech

Apple faces a growing number of companies in open revolt over its control of the App Store

Key Points
  • On Thursday, Fortnite maker Epic Games performed a high-profile stunt against Apple by blatantly ignoring the App Store's payment policies.
  • As a result, Apple removed Fortnite from the App Store, and Epic filed a prepared lawsuit shortly after.
  • Epic is the latest high-profile mobile software maker to put pressure on Apple to change its App Store policies that require it take a 30% cut of sales on the platform.
  • Other recent critics of Apple's policy include Sonos, Match Group and Spotify.
Source: YouTube

The app makers are revolting, and Apple is their target.

On Thursday, Epic Games, the video game giant behind Fortnite, challenged Apple by adding a new payment option to the game that circumvents Apple's 30% cut of sales it takes from developers through the App Store.

But there was a twist: Epic apparently knew it would get kicked out of the App Store for blatantly violating Apple's rules. Hours after it made the change to its app, Apple pulled Fortnite. And shortly after that, Epic filed a prepared lawsuit against Apple, claiming it holds an unfair advantage by setting the rules for the only distribution channel for apps on the iPhone. It also launched an in-game event inside Fortnite, mocking Apple's power with a parody of Apple's iconic "1984" Mac commercial.

It was an epic (excuse the pun) troll against Apple, the biggest company in the world, as it flirts with a $2 trillion market cap. And it was the latest major tech company to revolt against Apple's App Store policies, hoping to latch onto the current anti-Big Tech sentiment and use this moment to put a stain on Apple's grip on the mobile app ecosystem.

Over the last year or so, we've seen a growing list of companies speak openly and aggressively about their disagreement with the cuts Apple takes from the App Store. Some of them even used Epic's stunt as another chance to poke Apple.

Spotify, which filed an antitrust complaint against Apple in the EU last year, put out a statement of support for Epic, just hours after Fortnite was booted from the App Store. Match Group, which runs popular dating apps such as Tinder and Hinge, also backed Epic's move.

Add those to the growing list of name-brand companies who have recently spoken out against Apple's 30% cut of sales in the App Store, among other policies.

Microsoft and Google, which have new video game streaming services, aren't allowed to put those apps on the App Store due to Apple's rules. Apple told Business Insider last week that's because it can't individually review each game that's offered on those streaming services, after Microsoft disappointed fans by saying Apple wouldn't allow its new service on the iPhone.

Then there's Tile, the company that makes location tags for lost items. And Sonos, the connected speaker maker that competes with Apple in both hardware and music software. Both have been critical of Apple, and have even testified in front of Congress about the company's control over mobile apps.

These aren't small companies. Epic Games alone has a $17 billion private valuation and is backed by Chinese internet powerhouse Tencent, for example. They all have the lawyers, the money and the anger to keep this fight dragging on as long as they want. On top of that, they can afford to lose a little business through the App Store, unlike smaller app makers who feel constrained by Apple's rules and don't want to risk retaliation by speaking out.

Equally as important as the money are the user bases. Epic's Fortnite game has at least 350 million registered users playing billions of hours a month. Match Group has more than 10 million paying subscribers across its dating apps, on top of the tens of millions more who use the services for free. Microsoft and Google's video game services have the potential to turn video games into huge, Netflix-like subscription businesses.

And so on.

Companies speaking out against Apple
CNBC

Epic's brilliant move was to leverage that huge fan base against Apple's policies, painting it as the kind of evil corporate monolith it once stood up against. Hey, kids, do you want to play Fortnite on your iPhone? Well, you can't. Blame Apple. I have a feeling this won't be the last company to take a stand like this. Take the short-term hit and hope Apple grants some sort of concession.

There's one other piece to the puzzle. Google, which operates Google Play, the primary app store for Android devices, also removed Fortnite on Thursday. Google also takes a 30% cut of purchases through Google Play. But Google said users can still download Fortnite through other, third-party app stores, which are allowed on Android devices. Apple doesn't allow third parties to operate app stores on the iPhone.

But app makers aren't targeting Google as aggressively and are instead focusing their attention on Apple.

Even though Android dominates the smartphone operating system market, Apple brings in more sales through its App Store. In Epic's case, the company has generated over $43 million in sales through Apple's App Store in the last 30 days, according to data from research firm Sensor Tower provided to CNBC. It generated only a little more than $3 million in sales through Google Play in that same period.

If you want to make money as an app developer, you have to start with Apple. And that means playing by Apple's rules, even if you disagree with them.

But now those disagreements are spilling out into the public view from Apple's rivals that rely on the App Store. If this momentum keeps up, Apple will have to concede something to ease the tensions.

Epic Games CEO Tim Sweeney on the state of the gaming industry
VIDEO4:5904:59
Epic Games CEO Tim Sweeney on the state of the gaming industry