Apple’s and Google’s app store fee policies are turning more companies against them

Apple and Google booted the ultra-popular video game “Fortnite” from their respective app stores last week, after its parent company, Epic Games, attempted to steer gamers to a direct payment system that circumvented the 30% fee levied by the tech giants.

Epic gave gamers the choice of either purchasing virtual “Fortnite” currency from the tech giants’ app stores for $10, or directly from Epic for $8 (not exactly a tough decision). Epic almost certainly knew that the move would result in a ban — the company had even prepared an animated video spoofing Apple’s iconic “1984” ad in retaliation. The ban could bolster Epic’s lawsuit against Apple, which aims to show that App Store fees are anticompetitive.

By banning “Fortnite,” Apple and Google will dissuade other companies from attempting to avoid the 30% fee, but they will also attract greater regulatory scrutiny. A number of prominent companies including Spotify, Match Group, and Netflix have pushed back against Apple over its fee policy.

The companies likely targeted Apple rather than Google because Apple maintains sole control over the apps allowed on iOS, whereas Google allows third-party app stores to operate on Android. Android users can still download “Fortnite” on the Samsung Galaxy Store, for instance, while iOS users now have no means of obtaining “Fortnite.”

Apple’s legal battles in US and European courts will determine whether Apple can continue taking the 30% fee, and would likely impact Google’s ability to do so as well. The tech giants have billions of dollars on the line — in the first seven months of 2020 alone, Apple generated $39 billion in global revenue from App Store fees, while Google took in $21 billion from Play Store fees, according to Sensor Tower estimates cited by The Wall Street Journal.

With more commerce moving to mobile in response to the pandemic, we think powerful companies will join Epic and Spotify in pushing back against the 30% fee policy. The pandemic has accelerated the revenue growth of online shopping, and global mcommerce revenues (shopping over mobile devices, including tablets) are expected to grow 19.4% in 2020, compared with the 16.5% growth of ecommerce, per eMarketer estimates from 2020.

We think that the increased reliance on mcommerce will spark more aggressive backlash against the 30% fees levied by Apple and Google. For example, ClassPass and Airbnb are in conflict with Apple over collecting fees from their new online experiences, per The New York Times. The growing list of powerful corporations opposed to Apple and Google’s fee policy may turn the political tides against the tech giants, both of which are already subject to an ongoing antitrust probe in the US.

Source: BusinessInsider