European Union (EU) regulators seek to question Apple (AAPL) over the tech giant’s termination of the Epic Games Store from its App Store. European officials view this to be in violation of the EU’s Digital Markets Act.
Yahoo Finance Tech Editor Dan Howley breaks down the latest in the legal conflict between the Fortnite creator and Apple.
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Editor’s note: This article was written by Luke Carberry Mogan.
Video Transcript
RACHELLE AKUFFO: Apple is facing more regulatory scrutiny. EU regulators are set to question Apple on its recent feud with Epic Games and its App Store rules. Let’s bring in Yahoo Finance’s Dan Howley to give us the details. So Dan, walk us through where we are now and how we got here.
DAN HOWLEY: Yeah. So we’ll start from how we got here. This basically all comes back to Epic Games and Apple’s showdown where Epic wanted to provide consumers with a third party means of purchasing items inside of games. Apple doesn’t allow that through the App Store. When Epic went ahead and did that on their own, Apple basically pulled Fortnite and suspended Epic Games from being able to use the App Store.
Epic, knowing that this would happen, sued Apple. And then basically in California, what ended up happening was Apple was not found to be a monopolist, but it did have what the court said were some anti-steering rules. And so they had to address those.
Now, where this recent spat comes from is the EU and the Digital Markets Act. And Apple basically says that look, we can’t trust Epic. We need to put in place a kind of a block from them. We’re not going to let them use our platforms because of the prior issues we’ve had with them. And Epic saying, look, the Digital Markets Act, which allows for third party app stores on things like iOS is in place, and we should be allowed to put our App Store there.
So what we’re hearing from the two companies is basically obviously completely opposite. So first, we have a statement from Epic where they say, “Apple is taking one of the largest potential competitors to the Apple App Store,” which would be that Epic Games Store. “They are undermining our ability to be a viable competitor and they are showing other developers what happens when you try to compete with Apple or are critical of their unfair practices.”
Now, essentially what Epic is saying there is, look, CEO Tim Sweeney went ahead, criticized Apple and its Digital Markets Act maneuvers as well as its moves in the US. And they’re saying that that’s why Apple is not letting Epic run any App Store on iOS in the EU.
Now, Apple on the flip side had this to say. Epic’s egregious breach of its contractual obligations led courts to determine that Apple has the right to terminate any or all of Epic Games’, wholly owned subsidiaries, affiliates, and/or other entities under Epic Games control at any time. Apple chose to exercise that right.”
That comes from that California court ruling. And so you know how that exactly plays out with the EU, I don’t know. But it really comes down to two companies that are just at loggerheads over what they believe they should be allowed to do on iOS. And for Apple, they’re not going to give this up, obviously. This is something that they’re going to hold onto.
They’re trying to make moves that allow them to continue to remain in control of iOS and the App Store. And for Epic, look, they have a mountain of money from Fortnite, and so they’re going to go ahead and continue to fight this as well. What it ends up doing is making Apple look bad and making Epic look bad so we’ll see if either or decides to pull back or doesn’t or if the EU makes some decision. Now, they’re starting to probe Apple on its decision to pull Epic Games’ ability to put games onto the App Store in the EU.
RACHELLE AKUFFO: Certainly a legal battle when you consider the California ruling versus what the EU is looking at in terms of the disproportionate or proportionate reaction that Apple had. Are we expecting to see more of these sorts of these challenges when it comes to the App Store and Apple trying to maintain its dominance while still trying to stay within the rules here?
DAN HOWLEY: Yeah. I mean, look, when it comes to the $2 billion that they were fined from the EU over Apple Music and Spotify, Apple says that they’re going to appeal that. And so clearly, they’re not going to just take this lying down. They’re going to continue to try to I guess work through what the EU’s rules are but to the limit, right? And so that appears to be what they’re intent on doing.
They don’t want to give up making money off of the App Store or the way they do now through commissions from developers when there’s sales of their products or apps themselves. And so you got to imagine that they’re going to continue to try to fight this as much as they can while still sticking to the law.
