The Big Tech antitrust throwdown of 2020 continued Thursday when Fortnite maker Epic Games sued Apple (and Google) over how they manage their mobile app stores, objecting, for instance, to the 30% cut the company takes from in-app payments.
Why it matters: Apple’s control over iOS app distribution has been a thorny issue, so any changes would have ramifications for the business models of startups and indie app developers.
- 30% is not an insignificant portion of revenue to pay in rent. For some companies, it can be bearable, but it can be crippling for others. Though some companies get to pay less.
- And even more extreme: Apple can also shut out apps from the store.
- While Epic is suing Google with similar allegations, its Google Play Store is not the only Android app store, so Apple has a unique power over apps for its operating system.
For new companies, the so-called “platform risk” of being at the mercy of Apple App Store's rules and power is an existential one.
- Entrepreneurs and investors absolutely consider whether a company’s product and business can withstand barriers from any given platform.
- Not to mention the heightened risk if their product is directly competitive with one offered by Apple (or any other platform). Just ask Spotify…
The bottom line: It’s very possible Apple and Epic Games will come to some sort of compromise soon.
- But if this makes it to a trial and an ultimate verdict, it could have an impact on the future of apps and Big Tech.
