Epic Games, the maker of Fortnite, responded by filing a lawsuit against Apple.
Four market watchers weigh in on the impact.
Alex Kantrowitz, founder of Big Technology, explains why Apple should back down.
“Apple should back down, because rent collecting is bad for its business long term. So you have to decide as a business, do you want to make your money milking your asset or do you want to make your money innovating into the future?”
Dan Niles, founding partner of AlphaOne Capital Partners, says Epic Games made the choice to feature in Apple’s store.
“I mean, I have a lot of issues with Apple, but the charges they put on the App Store is not one of them. I mean, at the end of the day, Epic Games chose to be on the platform; those were the terms. If they didn’t want to do it, they didn’t have to, and they get a lot of benefit from being able to access Apple’s 1.5 billion devices globally, [the] installed base that they have … [Apple CEO] Tim Cook, though, the thing he’s done the best by honestly managing is his relationship with Washington and his relationship with China. He’s been masterful, the best CEO out there. And so I really don’t think this is going to gain much traction.”
John Sculley, former Apple CEO, sees explosive growth ahead for Apple.
“I look at it in terms of what are the things that Apple can control, and one of them is the terrific technology that they now have with their vertical integration into the iPhone. The iPhone is not going away in the decade of the 2020s. In fact, if you look at the microprocessor technology that Apple has invested in, some people have estimated that by 2030, the iPhone — and I think it will still be around as a main part of Apple’s business in 2030 — that it may be a billion times more powerful than the original iPhone that Steve Jobs introduced. So think about what that means for services, the types of things you’ll be able to do, think about when 5G is fully deployed around the world. So Apple’s got a great runway ahead of them. It’s the most competent company maybe in the world in terms of its ability to run operations, execute.”
Jim Suva, senior tech analyst at Citi, says it’s not a positive but he does not see too much downside.
“It’s not the first litigation, we expect that there’ll be more to go. Typically, litigation is not a good thing. But, when we look at it, Apple has simply innovated — left, right and center. They can continue to innovate during the recession, they continue to come out with new products, they continue to go into new markets like health care. We like the stock, we have a buy rating on it. This is a little bit of a distraction. It’s not a positive but, simply put, it’s not the first time we’ve seen this either.”