Apple has reversed course under regulatory pressure, paving the way for pesky rival video game maker Epic Games to set up an alternative iPhone app store in Europe.
The move revealed Friday is the latest twist in a bitter battle between Apple and Epic Games, maker of the popular video game Fortnite, over how iPhone apps are distributed and fees for digital transactions that occur within them.
Apple attributed the change of heart to Epic’s assurances that it would not violate its requests to gain access to iPhone owners. Epic defiantly broke the rules in the US in 2020 to launch an antitrust lawsuit claiming that Apple’s App Store is a monopoly.
After a month-long trial, a federal judge in 2021 dismissed most of Epic’s claims in a ruling that has withstood appeals, but the dispute with Apple continued.
Apple rejected Epic’s attempt to set up an account that would have allowed it to set up an alternative store for iPhone app downloads — something Apple has had exclusive control over for more than 15 years.
But a new set of regulations called the Digital Marketing Act, or DMA, that went into effect earlier this week in the 27-nation European Union bloc opened the way for other companies to compete with Apple’s App Store — an opportunity Epic was eager to seize.
Epic CEO Tim Sweeney claimed that Apple’s actions to block his efforts to open an app store in Europe were part of his efforts to get revenge on the video game maker for challenging a system that brought the iPhone maker huge money. Apple collects commissions ranging from 15% to 30% on digital transactions completed within iPhone apps, an arrangement that generates billions of dollars in annual revenue for the company while fueling complaints from Epic and other companies that oppose the fees as monopolistic price gouging.
European regulators have signaled that Apple’s rejection of Epic’s bid to open an iPhone app developer account in Europe, based in Sweden, could run afoul of the DMA, raising the prospect of a potentially significant fine.
Apple did not mention the regulatory approval in a brief statement, saying it is now satisfied that Epic will follow all of its rules.
Sweeney praised regulators for taking swift action to rein in Apple in a social media post hailing the outcome as “a major victory for the European rule of law, for the European Commission and for the freedom of developers around the world to speak.”
The bad blood between Apple and Epic is far from over. Apple is seeking more than $73 million from Epic to cover its fees in the US antitrust case surrounding the App Store. A hearing on that request, which Epic described as unusual in court documents, is scheduled for later this month.