On August 13, 2020, Apple decided to remove Fortnite, one of the most popular games created by game producer Epic Games, because Epic Games had found a way to evade the 30% in-app purchase cut that Apple typically takes from all apps on the App Store. This led to Epic Games suing Apple, and then Apple suing Epic Games. On top of removing Fortnite, Apple also issued a statement saying that they would remove all games with Epic Games' physics engines, known as Unreal Engine. Unreal Engine is used by thousands of small IOS game developers, and could mean that they not only lose the original 30% cut of all original in-app purchases, but lose almost all, if not all, of their business. This is because they would no longer be supported on IOS devices until they no longer used Unreal Engine. Moreover, this isn't just a push for one app produced by a large company; these changes could spell either great or horrible news for many smaller developers. If Unreal Engine is revoked permanently, many people could be put out of work. However, if the 30% cut of Apple's take is reduced to a more agreeable amount, which several companies have proposed as being 20%, it could help both smaller and larger business that operate under the App Store. According to NPR's correspondent Kenny Malone, this is unlikely to happen: "Apple decides that no one else gets to have an app store on the iPhone." Because Apple owns the only App Store, the App Store has no commission competition, and can charge any price they want on apps if they want to stick with the IOS. Furthermore, the IOS is such a dominant phone operating system that it is hard for app developers to have any choice. This has started companies such Epic Games and Facebook to publicly push for higher commissions.
At the moment, Apple won't budge, but the court can rule to require a higher minimum commission for app developers. This brings in the topic of how our government is involved in this process. Should the government be allowed to stop Apple from charging such hefty fees? Is it acceptable that Epic Games tried to evade App Store payment. Most importantly, the issue that is being addressed for not only Apple, but other large technology corporations, such as Google, is whether or not it is acceptable to ban a specific way of developing applications to limit a competitor, with the primary example being Apple's pending ban of Unreal Engine. Overall, this debate really puts into question how much control over the online market the U.S. government should have.
Going back to the questions of what a government should or shouldn't have control over, there remain several questions:
1.Should the government be allowed to stop Apple from charging hefty in-app purchase commissions?
2.Is it acceptable that Epic Games tried to evade App Store in-app purchase payment?
3.Should companies be allowed to limit their competitors within their own markets?
Source 1: New York Times
Source 2: NPR
Source 3: Washington Post
2 comments:
This is very similar to how workers strike for better wages, in this case, developers against a megamonopoly: the App Store. I don't see how this should be treated differently. Many jobs are on the line, I think it has reached the point where the government can intervene. There's a bunch of legal nitpicks from both sides that I won't understand, but this seems to be a battle between two giant companies, both believeing each is right. On technical terms, I think that neither has the right to do what they have or are doing. This brings about an old questions, how and should monopolies be controlled? The government has three ways to control monopolies:
1. Regulation through taxation
2. Conditions to which the corporation must follow: ie: gov run or max prices
3. Anti-monopoly laws
Most of these apply to utilities such as PG&E, but a close example to the case of Apple is Microsoft. In 1998, Microsoft was being charged with monopoly for forcing consumers to purchase a certain browser along with all PCs sold, killing off other smaller competitors. Microsoft lost the case and as a result was split into two parts: one to create the operating system, the other for software. This is an example of the government using conditioning to control monopolies. This however, was in fact over twenty years ago, but the same issues appear today. Apple owning a near monopoly of iOS apps. I think that the government will intervene, likely proposing whether their developer charging is legal or not. I don't know if EPIC Games approached Apple before bypassing their cut, but they shouldn't have acted so rash to lead into such a mess.
Sources:
General Gov Reg Stuff
https://cs.stanford.edu/people/eroberts/cs181/projects/corporate-monopolies/government.html#:~:text=Though%20examples%20of%20attempts%20at,fell%20on%20the%20individual%20states.
I think this is course material for macroeconomics
https://www.economicsdiscussion.net/monopoly/top-3-methods-of-controlling-monopoly-with-diagram/7294
Microsoft v US
https://www.justice.gov/atr/us-v-microsoft-courts-findings-fact
I was actually following this issue a while ago. There are definitely a lot of nuances as smart phones and such are relatively new. If you step back and look at it, it does seem a bit strange that Apple has so much power over companies that sell their products on Apple's devices. Tim Sweeney, CEO of Epic Games (so definitely biased here), tweeted out a while ago something along the lines of this: if a university holds classes on an Apple device, Apple can charge 30% of the tuition. While that argument seems pretty extreme, it was definitely thought-provoking and led me to ask myself, "why should Apple have so much power over game developers when all they did was create the device?" If you buy a PC from Microsoft, for example, you can download 3rd party stores such as Steam or Epic Games's own store to purchase games. Maybe that's totally different than downloading apps on phones, but it still seems odd to me. As Tim remarked, the App Store does seem to be a monopoly, which is illegal as they have no competition and can drive up prices at the expense of the consumer.
In regards to your second question, I'm not sure if it is "acceptable" but rather I believe that Epic Games did that on purpose. Apple's terms of service requires game developers to open DLCs and such through their "in-app purchases" feature (which is where the 30% tax comes from), and Epic Games complied with that until now (which makes me think that they knew exactly what they were doing. Also Fortnite released a 1984 style animation with the hashtag #FreeFortnite the day after it was banned from iOS, and I don't think that animation or even the concept of that animation could've been made overnight. This is just speculation though, obviously).
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