Apple sued by Fortnite maker after kicking the game out of App Store for payment policy violations

Apple removed Fortnite from its iPhone App Store on Thursday, saying that the game violated Apple’s guidelines for its software distribution platform.

Epic Games, the maker of Fortnite, responded by filing a lawsuit within hours accusing Apple of anti-competitive behavior. 

“Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users,” an Apple spokesman told CNBC in a statement. “As a result their Fortnite app has been removed from the store.”

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market,” Epic Games said in its legal filing.

The clash between Apple and Epic is the latest in a series of high-profile disputes over Apple’s App Store policies. App makers like Epic Games have criticized Apple’s 30% cut of digital sales, and its approval process that can remove apps from the store, which is the only way to install software on an iPhone. 

Spotify, which filed an antitrust complaint against Apple’s App Store policies in the EU last year, praised Epic’s move to fight against Apple.

“We applaud Epic Games’ decision to take a stand against Apple and shed further light on Apple’s abuse of its dominant position,” Spotify’s spokesman Adam Grossberg said in a statement to CNBC. “Apple’s unfair practices have disadvantaged competitors and deprived consumers for far too long.The stakes for consumers and app developers large and small couldn’t be higher and ensuring that the iOS platform operates competitively and fairly is an urgent task with far-reaching implications.”

Fortnite was still available on Google’s Play Store for Android phones on Thursday. Apple said in its statement that it will make efforts to work with Epic Games to enable Fortnite to return to the platform.

Earlier on Thursday, Epic Games challenged not only Apple but also Google by introducing a new way to buy character outfits and weapons at a discount by paying Epic Games directly instead of using Apple’s in-app purchase service, which is required for digital goods. Apple takes 30% cut of those sales.

Users who paid Epic Games directly would receive a 20% discount on in-game currency, versus users who paid through Apple’s App Store or Google Play, who would pay a higher amount. On Thursday, in the Fortnite app, clicking on a button to purchase in-game items brings up a browser window and directs the user to input his credit card information into the Epic Games system.

Epic now offers direct payments.

Apple said in its statement that Epic Games enabled a feature in its app that was not reviewed by the company’s App Review approval process.

“They did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services,” Apple said. 

Shortly after Fortnite’s removal from the App Store, Epic Games said that it has filed “legal papers” in response to Apple’s decision. The legal filing appeared to have been prepared before Apple removed Fortnite on Thursday.

“Rather than tolerate this healthy competition and compete on the merits of its offering, Apple responded by removing Fortnite from sale on the App Store, which means that new users cannot download the app, and users who have already downloaded prior versions of the app from the App Store cannot update it to the latest version,” Epic Games said in the filing.

Epic Games said it’s not looking for monetary compensation, but to legally force Apple to change its policies.

Epic Games is also publicizing its battle with Apple inside the Fortnite game, which is played for billions of hours each month. Screens inside the game are displaying a 30-second video called “Nineteen Eighty-Fortnite.” It’s a parody of a famous Apple ad from the 1980s that framed the computer maker as a fighter against conformity. 

“Epic Games has defied the App Store Monopoly,” the clip reads. “In retaliation, Apple is blocking Fortnite from a billion devices. Join the fight to stop 2020 from becoming ‘1984’.”

Fortnite is one of the most popular games in the world. It’s available on a range of different devices, including Android phones, Windows and consoles in addition to iPhones. In the last thirty days, Fortnite has been installed 2.4 million times on Apple’s App Store around the world, and to date it has accounted for $1.2 billion in spending on the App Store, according to an estimate from Sensor Tower, an app analytics firm. It’s been installed over 133 million times on Apple devices, according to the estimate. 

Epic Games CEO Tim Sweeney has long criticized Apple for its control of the App Store. In July, he told CNBC that the store was an “absolute monopoly.” In April, in response to news that Apple allowed Amazon to use its own credit card processing in the Prime Video app, he called for “digital stores opening up to payment processing competition.” 

“Apple has locked down and crippled the ecosystem by inventing an absolute monopoly on the distribution of software, on the monetization of software,” Sweeney told CNBC in July. “They are preventing an entire category of businesses and applications from being engulfed in their ecosystem by virtue of excluding competitors from each aspect of their business that they’re protecting.”

Epic Games wants to create its own gaming marketplace that works across platforms, including iPhones, Android and Windows. One of the Epic Games store’s primary selling points to game makers is that it takes a lower fee from purchases. Apple said in its statement that Epic Games is pushing for a “special arrangement.” 

Apple’s App Store rules have recently been the focus of congressional scrutiny. In a hearing in July, the House antitrust subcommittee pressed Apple CEO Tim Cook about Apple’s App Store policies. Cook defended Apple’s policies at the hearing and said that if customers don’t like the App Store’s rules, “you can buy a Samsung.” 

CNBC’s Julia Boorstin contributed to this report.

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