The Reckoning Over Apple and Google’s App Stores Has Been a Long Time Coming

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Illustration for article titled The Reckoning Over Apple and Googles App Stores Has Been a Long Time Coming

Photo: Sam Rutherford

Epic Games was prepped for battle when it added a new feature to Fortnite this week that allowed users to buy the game’s virtual currency (V-Bucks) directly from Epic, simultaneously bypassing the payment systems built into the iOS App Store and Google Play store and eliminating Apple and Google’s usual cut.

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To pretty much no one’s surprise, this got Fortnite booted from both app stores faster than being yeeted from the Battle Bus. Epic promptly responded by filing lawsuits against both Apple and Google, and the company also released a video mocking Apple for its practices and poking fun at the company’s iconic 1984 commercial. It was clear from the jump that Epic came ready to brawl, and while Fortnite may have been the catalyst, the reckoning for Apple and Google’s App Stores has been a long time coming.

Smartphones have overtaken laptops as our primary computing device, and with the death of Windows Mobile—the only potentially viable smartphone OS alternative—in 2017, it’s fair to say that Android and iOS—and by extension Google and Apple—have an outsized influence on people’s phone habits.

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You can side-load apps on Android by installing them manually using an APK, or even create your own fork of Android that features a third-party store (moves that both Amazon and Huawei have attempted with varying degrees of success), but Google’s Play Store remains the easiest and most trusted way of getting new Android apps. Google charges a service fee of around 30% for developers who want to be in the Play store.

For people who use iOS, things are even more restrictive—Apple doesn’t allow any third-party device makers to license iOS for use on other phones, and because iOS doesn’t allowing side-loading or manual installation of apps (aside from some niche developer-related cases), your only method of getting new apps to run on an iPhone is the App Store. It’s a totally locked-down platform, with Apple charging a 30% commission on any app sales, either up front or within the app itself.

For anyone who has ever purchased physical media (remember CDs and cassettes?) or people who grew up using PCs where installing executables from outside sources was the norm, the concept behind app stores can feel incredibly draconian. It’s like buying a microwave that can only heat up food that came from a single grocer, which is a big reason why people can’t stand coffee machines from companies like Keurig.

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When it comes to Android, a lot of companies try to get around Google’s restrictions by making APKs of their apps publicly available, and months before Fortnite ever showed up on Google Play, it was available to download directly from Epic and worked just fine—as long as you took the time to change some permissions. In its lawsuit against Google, Epic even claims that it negotiated a deal with OnePlus to have a special Fortnite launcher pre-installed on OnePlus devices, only to have Google force OnePlus to “renege on the deal.”

And on iOS, Epic claims “absent Apple’s anti-competitive conduct, Epic Games would also create an app store for iOS.”

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I’d be remiss not to mention that app stores do offer a lot of benefits to the user. You can buy an app once and download it again on any other Android or iOS device, you can automatically sync data, save profiles, and more. The problem is that there’s little competition compelling Apple and Google to adjust their 30% service fees, and with app stores rules that stipulate that any software that contains in-app purchases must comply with Apple and Google’s guidelines, those rules are ironclad. If you sell an app, or offer items inside an app that came from one of the two big app stores, Apple and Google will take their cut, or else the app gets the boot.

The closest analogy to app stores outside of the mobile world are PC games stores like Steam, GOG, Battle.net, and others. For a long time, Steam was the premier game store, running uncontested for years. But over the last decade, multiple publishers and game devs (including Epic) have stepped up to create their own digital storefronts, which eventually led Steam to lower its service fees. While some people may complain about things being annoying now that Steam is no longer the home for every single game, it’s a clear case of competition resulting in more revenue for game devs and lower prices for consumers.

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But perhaps the bigger issue is when Apple and Google’s own app store guidelines get applied in different degrees. According to emails shown to Congress during the recent tech antitrust hearing, Apple agreed to cut its typical 30% service fees in half for a year in order to entice Amazon to put Prime Video in the App Store.

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It’s a similar situation when it comes to game streaming on iOS, where apps like Steam Link are allowed on the App Store but Microsoft was forced to cut short its cloud gaming xCloud beta (now called Xbox Game Pass Ultimate). Microsoft said that “Apple stands alone as the only general purpose platform to deny consumers from cloud gaming and game subscription services like Xbox Game Pass. And it consistently treats gaming apps differently, applying more lenient rules to non-gaming apps even when they include interactive content.”

As evidenced by last month’s big tech antitrust hearing, the U.S. is starting to look more closely at Apple and Google’s app stores. But in other countries, Apple is already under investigation by the EU over anti-competitive practices regarding music-streaming apps and the price of ebooks, while Google was hit with a record $5 million fine in 2018 for antitrust due to Google’s licensing terms for Android.

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One potentially interesting note is that while Epic is suing both Apple and Google, it’s not seeking monetary damages, and instead only hoping for both companies to end their “monopolistic practices.” So while Epic’s stunt with Fortnite might be the powder keg that started the war, concerns over the app store duopoly have been brewing for quite some time. It’ll probably take even longer for regulators to figure what to do.

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