Apple escalates feud with Epic Games by blocking Fortnite app in EU – 03/06/2024 at 11:01 pm

((Automatic translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))

By Akash Sriram and Stephen Nellis (rewrite on the entire Epic-Apple litigation story)

Apple AAPL.O escalated its feud with Epic Games on Wednesday, blocking video game maker Fortnite from launching its own online marketplace on iPhones and iPads in Europe.

The two companies have been engaged in a legal battle since 2020, when the video game company alleged that Apple’s practice of charging up to 30% commission on in-app payments on its iPhone operating system (iOS) violated US competition rules.

Epic’s latest challenge comes as Apple grapples with concerns about strong demand for its iPhones in China, and its shares have fallen 12% since the start, compared with peers in the larger tech sector in the United States.

Efforts by regulators and competitors like Epic to pave the way for competing markets on Apple’s devices pose a major threat to the Silicon Valley heavyweight’s profits and control of its own ecosystem.

European lawmakers are pushing Apple to allow these third-party marketplaces through a law called the Digital Markets Act (DMA) that goes into effect this week.

Additionally, competition authorities in Brussels () on Monday fined Apple 1.84 billion euros for hindering competition from its rivals in the music streaming sector by imposing restrictions on its App Store, the first sanction ever imposed. Apple for violating EU regulations.

Epic had been working to leverage DMA, but Apple blocked those efforts on Wednesday, citing Epic’s past contract breaches.

Apple has terminated a new developer account that Epic created in Sweden. Epic created the account with the aim of bringing Fortnite and other games to iPhones in Europe by running its own game store on Apple devices. Under the new European law, Apple must allow third-party stores to be installed on its devices.

Developer accounts are important because software makers can’t distribute apps on iPhones and iPads if they don’t have one. Apk had previously terminated some of Epic’s developer accounts in 2020, after Epic deliberately broke Apple’s rules on in-app payments, using its rules violation and subsequent ban from the App Store at the center of a public relations campaign and legal campaign against Apple.

Apple said on Wednesday that the court’s rulings made clear that it has “full discretion” to terminate any Epic Games developer account in light of its “gross” violation of the company’s developer agreements business.

“In light of Epic’s past and present conduct, Apple has chosen to exercise this right by terminating Epic Games’ accounts,” Apple said.

Epic claimed that by terminating its account, Apple was removing one of the biggest potential competitors from Apple’s App Store.

“This is a serious violation of the DMA and shows that Apple has no intention of allowing true competition on iOS devices,” Epic Games said.

The European Commission, the EU’s executive body, did not immediately respond to a request for comment.

In January, Apple proposed some changes ahead of a March 7 deadline to comply with certain terms of the DMA, a law intended to make it easier for European users to switch between services.

The company said it will allow other app stores on iPhones and opt out of the in-app payment system, but will set a “base technology fee” of 50 cents per user account per year for developers who register for the new regime.