In a “Battle Royale” the opponents fight against each other in an arena until only one is left. This game mode is extremely popular with video gamers all over the world. But what works so well virtually is now causing disputes in the real world. In the arena: Apple, Google, Spotify, Facebook – and game developer Epic Games. A kind of battle royale of the big tech companies fighting for power in the smartphone universe. It’s about controlling the conditions under which apps will get onto cell phones in the future. At the end of this argument there could be many losers.
Epic Games, which brings out Fortnite, one of the currently most successful battle royale video games, stages the dispute as a fight for freedom. The company is rebelling against Apple, it’s about power and a lot of money. Because Apple keeps 30 percent of sales with apps and in-app purchases. Epic Games tried to bypass this – whereupon Apple threw the Fortnite game from the app store. But the game developer was well prepared and responded with a lawsuit.
The issue is whether Apple is exploiting its market power. The company controls which apps are offered for its devices and dictates the conditions. If you want to bring out an app for iPhones and iPads, you have to play along or you don’t stand a chance. Imagine it at a weekly market: Apple owns the only marketplace, it builds all the vans and stands, tries every sausage before it is sold, and at the end of the day retains 30 percent of all sales. This is especially tough for small developers, who mostly don’t even make a profit. Users have to pay more because the fees are usually passed on to them. So Epic Games has good arguments for Apple taking advantage of its dominant position.
At Google, with which the game developers are also arguing, things look a little different: The group also keeps around a third of the revenue in the Playstore, but allows Android users to download apps elsewhere. In reality, however, only a fraction of the users do this.
So the roles seem to be clearly distributed. But Epic Games is of course not fighting for the freedom of small developers and the wallets of users, but primarily for itself. The group wants to make its own app store the most important marketplace for games. There, Epic Games does not demand a 30 percent share of sales, but at least a twelve percent share, binds developers with exclusive contracts and imposes conditions on them if they want to use the store. Actually, Epic Games wants one thing above all: to become a caliph instead of the caliph.
The outcome of this dispute, in which Spotify, Facebook and large US publishers also got involved, will determine how apps will get onto our smartphones in the coming years – and who will make the big money with them. Apple and Google rightly argue with security: their marketplaces are relatively well protected against hackers and viruses, and Apple in particular checks all apps strictly. Epic Games, on the other hand, wants everyone to be able to download their apps anywhere, in case of doubt also from dubious sources. But that’s not realistic. To be on the safe side, the average user will continue to look to the big names they trust. Epic Games is betting that it will be among those trustworthy brands itself and then get a decent chunk of the business.
Everyone has a lot to lose in this dispute. Apple because it earns a lot of money with the revenue sharing and the company threatens to mess with a whole generation of young, wealthy cell phone gamers. Epic Games because it’s financially inferior. The company has about half a billion players behind it and is valued at $ 17 billion. However, Apple alone has $ 200 billion in cash reserves. The longer the dispute lasts, the sooner Epic Games will have to back down for financial reasons. For the small developers, the situation will hardly improve anyway because their apps will depend on marketplaces one way or another where individual corporations dictate the conditions.
The best solution would be something that is not actually intended in “Battle Royale”: a compromise. Apple would have to reduce its revenue sharing and allow other payment methods outside of the app store, and Epic Games would be content with these concessions instead of striving for even more power. That would be the variant that would benefit the players the most.