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Epic Appeals Decision in Fortnite Battle Royale With Apple

By Tim Kelly, J.D. on September 16, 2021 9:06 AM

Editor's Note: This post was updated on September 22, 2021, with information regarding Fortnite's removal from the Apple Store.

Online "battle royale" survival video game, Fortnite, has captured global attention since its release in 2017 by software developer Epic Games, Inc. Boasting over 350 million registered accounts, Fortnite has a dedicated base of players across multiple gaming platforms.

With roughly 116 million of those accounts on mobile devices, companies like Apple and Google have reaped huge benefits, taking 15%-30% commissions on Fortnite transactions made through their respective app stores.

Epic has taken serious issue with these commissions, and in August 2020, filed lawsuits against both Apple and Google in a federal district court in California. In their case against Apple, Epic challenged the tech giant's in-app purchasing restrictions, alleging monopolistic practices in violation of the Sherman Antitrust Act.

On September 10, 2021, U.S. District Judge Yvonne Gonzalez Rogers rendered a comprehensive 185-page decision in which both parties came away with wins.

Nevertheless, Epic has already filed a notice of appeal challenging the decision. Apple, whose reply to the filing isn't due in court until January 20, 2022, wasted no time extending the game's banishment from their App Store for the duration of appeal – a process that could last several years.

Epic Can Bypass Apple's Pay Restrictions (In Theory)

Judge Gonzalez Rogers ruled that Apple can no longer prevent companies like Epic from directing users to payment methods outside Apple's digital ecosystem. However, she made an important distinction - Epic still cannot conduct these purchases in their own app. Instead, developers will need to send users to an outside website to complete the transactions.

This was a partial victory for Epic, whose founder Tim Sweeney has long argued that bypassing Apple's payment restriction is ultimately what's best for consumers. Still, with Apple's banishment of Fortnite now potentially extended for years to come, Epic's ability to bypass the store's requirements remains at a standstill for now.

Sweeney remains adamant that his company's own Epic Store app should be able to transact on iPhone free of Apple's commissions, indicating that this fight is far from over.

Judge Rules Apple Not an Illegal Monopoly

But the decision was not solely in Epic's favor. Apple scored significant wins, the most notable being the court's denial of Epic's preliminary injunction based on its allegation of monopolistic practices. The court said that since "[t]he current legal landscape cautions against preliminarily finding antitrust violations based on less than a full record" and because this case "presents questions at the frontier edges of antitrust law in the United States," the likelihood of success for Epic on the antitrust question was too weak to justify granting the injunction.

Judge Gonzalez Rogers wrote that Epic could not prove Apple was an illegal monopoly, finding instead that while "Apple enjoys considerable market share of over 55% and extraordinarily high profit margins, these factors alone do not show antitrust conduct. Success is not illegal."

Although she stopped short of calling Apple a monopoly, the judge did acknowledge that Apple's methods could be construed as unfair competition under California law.

App Store Ban Continues While Epic's Appeal Looms

In Fortnite, "knocking" refers to when an opponent is knocked down but not eliminated from the match. With Judge Gonzalez Rogers's decision, both sides seem to have suffered "knocks" that, while substantial, do not eliminate them from the fight. Epic and other app developers can now bypass Apple's pay restrictions, but the judge sided with Apple on all other critical points at issue.

With billions of dollars in potential revenue at stake, there's still much left to be settled. Both sides intend to continue the legal battle, with Apple looking to possibly file an appeal of their own soon – all the while Fortnite remains banned from their store.

Still, this decision fundamentally changes the way transactions can be conducted within Apple's App Store. The broader implications are only just now being felt throughout the industry, as the decision is likely to affect Google's transactional model as well. Epic's litigation with Google is ongoing, with Google claiming that their digital storefront is fundamentally different from Apple's and not in violation of California's unfair competition statute.

Already a trendsetter in the gaming industry, Fortnite and its creators now look to affect a lasting legal impact on how the tech industry handles digital transactions.

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