Epic Games’ ambush shows how antitrust scrutiny has changed the app store landscape
Will Oremus
11 hours ago·8 min read
Welcome back to Pattern Matching, OneZero’s weekly newsletter that puts the week’s most compelling tech stories in context.
On Thursday morning, Fortnite maker Epic Games made a big announcement to the game’s hundreds of millions of users: It was dropping the price on V-Bucks, Fortnite’s in-game currency, by 20 percent. The “Fortnite Mega Drop,” as Epic called the promotion, took effect immediately on every platform on which the wildly popular battle royale game is available — with one caveat. On iOS and Android mobile devices, you had to choose a new payment method, called “Epic direct payment,” rather than pay through the App Store or Google Play Store, in order to get the discount.
This violated Apple and Google’s rules, and Epic knew it. Both app stores take a significant cut of the app purchases, subscriptions, and in-app payments made on their platforms — 30 percent, in most cases. And, with a few exceptions, they don’t allow apps to advertise ways for users to cut out the middleman by paying their creators directly. But that’s exactly what Epic was doing with its “direct payment” option, which let users pay via PayPal or credit card rather than through Apple’s system, and passed most of the savings on to the gamers. The scheme was calculated to get users’ hopes up — and to dare Apple and Google to dash them. It worked.
The Pattern
The mobile-app duopoly is under siege.
First Apple, then Google, booted Fortnite from their app stores on Thursday, just hours after the game started offering users the promotion. The move does not prevent the game’s existing users from continuing to play on those platforms, for now. But it means no one else can download Fortnite, and Epic can’t update it, which will gradually render the game obsolete unless the companies strike a deal.
Epic Games, the North Carolina-based creator of Fortnite and the widely used game-development framework Unreal Engine, was ready. It immediately responded with a short video called “Nineteen Eighty-Fortnite,” which skewered Apple’s iconic 1984 ad presenting its Macintosh computer as a revolutionary upstart challenging the dominance of corporate giants like IBM. In Epic’s video, which aired first as a virtual event inside the Fortnite game, the company presented itself as the upstart challenging Apple’s hegemony. (I wrote about the growing importance of Fortnite’s in-game events in a previous Pattern Matching.)
The spot was a hit: By Friday morning, it had racked up more than 2 million views on YouTube. An accompanying hashtag campaign, #freefortnite, trended on Twitter.
If you’re wondering why Epic seems to be focusing its fight against Apple more than Google, it’s because Apple maintains a tighter grip on iOS than Google does on Android. Specifically, Android allows third-party app stores, while iOS prohibits them. That means people with Android devices can still download Fortnite from Epic Games’ own app store, which it launched in 2018, even after it disappeared from the Google Play Store. iPhone and iPad users have no such option.
Apple responded with a statement painting Epic’s ploy as disingenuous. It noted that the company has had apps on the App Store for 10 years and has benefited greatly from its presence there. Now Epic’s “business interests” lead it to push for a “special arrangement” that would be unfair to other developers, Apple said. There’s truth in that portrayal. But it doesn’t do much to make Apple look better — because Epic is hardly the only developer that views it as a monopolistic bully.
The timing of Epic’s assault on the app store duopoly is no accident. It comes amid antitrust investigations into Apple’s app store policies by the U.S. Department of Justice, the U.S. House antitrust subcommittee, and the European Union. Google is also in multiple jurisdictions’ crosshairs. Just weeks ago, Apple CEO Tim Cook was pressed on the company’s “Apple tax” by members of Congress in a landmark hearing that dominated front pages. Earlier this year, a series of developers testified to the same subcommittee on Apple’s anticompetitive practices. I wrote in depth in February about those developers’ complaints, the broader antitrust argument against Apple, and why its longstanding App Store chokehold might finally be in jeopardy.
The scrutiny has increasingly emboldened developers to challenge Apple’s rules in ways they hadn’t dared to before. In June, the developer Basecamp launched an email app called Hey without an in-app payment option, prompting an Apple takedown and a public backlash. Apple took a hard line at first, but its stance softened as pressure mounted, and in late June it struck a compromise to bring Hey back to iOS.
For years, Apple has cultivated a fear among developers that one wrong move could ruin their business. While at first blush iOS doesn’t look like a monopoly — it battles Android intensely for market share — its wealthier, more loyal user base allows it to act like one. As Basecamp’s David Heinemeir Hansson told me in February, “If you want to publish modern software, it’s essentially suicide not to have a presence on the iPhone.” Now, it seems, the antitrust spotlight has weakened its deterrence capacities. As antitrust pundit Matt Stoller noted, Epic Games’ lawsuit cites testimony from the recent hearings. Spotify, which has its own battle with Apple, applauded Epic’s stance, and even Facebook criticized Apple’s fees.
Epic Games is not a small business: A recent fundraising round valued the North Carolina-based startup at $17 billion, and the Chinese behemoth Tencent holds a significant ownership stake. Fortnite alone has 350 million registered users, and Unreal Engine is a market-leading game engine.
But that’s exactly what makes it a potent standard-bearer for the fight against Apple. Fortnite’s massive user base spanning numerous platforms, including consoles and PCs, makes it one of the very few apps that could survive without iOS, if it needed to. CEO Tim Sweeney has been publicly railing against Apple’s policies and positioning Epic Games as a platform in its own right. Last month he blasted Apple for trying to grab a 30 percent cut of classes booked through apps on its platform after the pandemic forced them to move online. (Apple makes an exception to its fee rules for apps that connect users with certain classes of physical, offline products and services, as opposed to online ones.) Epic can afford to take a stand that others can’t.
Epic’s gambit has left Apple with few winning moves. If Apple bends its payment rules for Fortnite, the floodgates will open to challenges from other developers. If it holds firm, it risks losing avid Fortnite players to Android, gives high-profile fodder to antitrust investigators, and comes out looking like the bad guy. And that’s before we even get to the lawsuit itself. As the New York Times put it: “In Epic, Apple has met arguably its toughest adversary in years. The game maker has calculated exactly how to hit Apple where it hurts: by making iPhones less attractive and Apple less cool.”
No doubt Apple is already scrambling to find a face-saving compromise that keeps its rules largely intact. But if Epic isn’t interested in compromising, Apple may find itself having to back down on at least one of three fronts: the size of the cut it takes, its restrictions on third-party app stores, or its restrictions on apps encouraging users to pay directly. Allowing third-party app stores would probably do the most to appease regulators, while losing Apple the least money in the short run, because relatively few users would likely take advantage of those ancillary app stores anyway. But it would represent the biggest hit to Apple’s control over the iOS ecosystem, and would come with security risks that could impact users. A more palatable, if financially painful, option might be to ease its restrictions on apps that inform users of direct payment alternatives — a solution that might look a lot like the V-Bucks scheme that it just banned.
One thing is clear: The antitrust investigations are already having an impact, even before they’ve concluded or led to any new laws or charges.
Undercurrents
Under-the-radar trends, stories, and random anecdotes worth your time
Kamala Harris is viewed as a tech-friendly VP pick, though there should be some caveats. As Politico reported in a 2019 profile, she rose to prominence with the backing of the Bay Area’s elite. Emails uncovered by HuffPost last month showed she has been friendly with Facebook COO Sheryl Sandberg and other tech leaders. She raised money for her presidential primary campaign from LinkedIn’s Reid Hoffman and Kleiner Perkins’ John Doerr, Recode reported; she has been praised by Salesforce’s Marc Benioff and was invited to early Facebook executive Sean Parker’s wedding. Those ties were reflected in her campaign platform: While rivals such as Elizabeth Warren called for breaking up Big Tech, Harris told the Times she would focus instead on basic privacy protections. All of which helps to explain why Biden’s selection of Harris as his running mate, and heir apparent should he win the election, prompted headlines such as Fortune’s “Kamala Harris could be the best thing that ever happened to Big Tech.” But Harris’s policy planks have often proven malleable, including on police reform, and no one should be shocked if she turns against big tech companies at some point. If she does, she could prove a formidable foe, given her background as a prosecutor. Here’s a clip of her pressing Mark Zuckerberg on why Facebook didn’t inform users of the Cambridge Analytica breach, from a 2019 hearing.
Companies are increasingly using race-detection software for marketing and data analysis. “Facial analysis has largely flown under the radar, even as facial recognition has come under fire because poorly trained systems have misidentified people of color,” the Wall Street Journal reported. Brian Brackeen, the former CEO of face recognition company Kairos, once backed the technology, but now worries it could fuel discrimination. Those fears are not merely theoretical: In China, “surveillance cameras have been equipped with race-scanning software to track ethnic minorities,” the Journal pointed out.
Thanks for reading Pattern Matching. Reach me with tips and feedback by responding to this post on the web, via Twitter direct message at @WillOremus, or by email at oremus@medium.com.
The new 12.9-inch iPad Air, the report claimed, would have the same miniLED backlighting currently found on the larger iPad Pro, using the leftover inventory from the current Pro as that model switches to OLED. That was exciting news.
But now, Ross Young, the analyst who made the claim, has changed his mind. The new prediction, shared with paid subscribers only, is that the miniLED technology won’t be coming to the iPad Air, in either size.
While it made sense that the inventory could be maximized in this way, it now “makes sense” that it won’t.
Young says that while he’d heard from supply chain sources that it would, he’d now had contact from “even more supply chain sources” that it won’t.
And the reason this change of heart now makes sense is that this miniLED technology is expensive, so it would be surprising if it made it to the iPad Air, which is more affordable than the Pro.
That’s not quite all the analyst shared. He also said that there are now reports of a new iPad coming later in the year. This is a 12.9-inch iPad, with miniLED backlighting and it could arrive between October and December this year.
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This is intriguing. What could it be? Assuming that the iPad Pro and iPad Air are released in May, it’s extremely unlikely either will be updated later in the year. And if the iPad Air isn’t pricey enough for miniLED to be included, what tablet could Apple be introducing that is the same size as the bigger Pro, with a pricey screen tech, which would sit between the Air and the Pro, it seems?
Young is highly reliable, but this seems slightly preposterous to me. The only other iPad in the range due a refresh is the regular iPad (at 12.9-inches, the iPad mini is clearly out of the picture) and that doesn’t seem likely either.
It seems to me that any regular iPad will almost certainly have the same screen size as now, 10.9 inches. The regular iPad only grew to this size screen in the current generation, and Apple almost never changes designs after one iteration.
Perhaps things will become clearer as the year goes on.
A Calgary woman who abused her sick, 77-year-old father was “overwhelmed” at the task of caring for him, a judge heard Wednesday at a sentencing hearing.
In January, Tara Picard, 52, pleaded guilty to charges of assault and failing to provide the necessaries of life after her father (whom CBC News is not naming) was found injured on a basement floor, where he’d been lying for two days.
On Wednesday, prosecutor Donna Spaner and defence lawyer Shaun Leochko asked the judge to allow Picard to serve her sentence in the community under conditions as part of a conditional sentence order.
Justice Indra Maharaj agreed to a two-year conditional sentence for Picard followed by a year of probation.
“There is no doubt she became overwhelmed,” said Spaner in her submissions. “There is no question Ms. Picard has remorse.”
Leochko told the judge that caring for her father “was really more than [Picard] could handle.”
Maharaj heard that Picard is Indigenous and was the victim of abuse growing up. She lives in a sober dorm-style facility and is working with a mental health and addictions navigator, according to Leochko.
A ‘willingness to give back’
As part of the sentence, Picard must complete 300 hours of community service.
Justice Maharaj commended Picard for “taking that on.”
“That shows me Ms. Picard sincerely does recognize what has happened here,” said the judge.
“What I interpret from that is Ms. Picard’s willingness to give back to her community.”
During Picard’s plea, court heard that in November 2021, Picard and her father fought over his drinking.
Nurses discover victim
The victim suffers from a number of medical issues, including diabetes, heart disease, dementia and alcoholism.
At the time, home-care registered nurses were assigned to help provide supplementary care.
Nurses found the victim wearing a soiled adult diaper and suffering from two black eyes with blood on his head.
He told the nurses who discovered him that he’d been there for two days.
Picard admitted she knew her father had fallen and she had “administered a number of physical blows.”
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Leaving her elderly father on a basement floor for two days in a soiled adult diaper won’t mean jail for a Calgary woman.
Justice Indra Maharaj accepted a joint Crown and defence submission on Wednesday for a two-year-less-a-day conditional sentence order for Tara Picard to be followed by 12 months of probation.
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Prosecutor Donna Spaner and defence counsel Shaun Leochko proposed a community-based term which will include eight months of 24-hour house arrest followed by a nightly curfew for the second eight months.
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Maharaj also agreed with the lawyers to order Picard to commit 300 hours of community service over the length of the three-year sentence.
The Calgary Court of Justice noted that amount of community-service hours was “a lot” to commit to.
But Maharaj said it showed Picard, 52, was truly remorseful for her conduct towards her father, whom Postmedia is not identifying because of the embarrassing nature of the facts of the case.
“What that shows me is Ms. Picard does sincerely recognize what has happened here,” the judge said of her willingness to complete community service.
“What I interpret from that is Ms. Picard’s willingness to give back to the community.”
Picard pleaded guilty in January to charges of assault and failing to provide the necessaries of life to her 77-year-old father.
Court heard caregivers found the elderly Calgary man on the basement floor of his daughter’s southeast home wearing a soiled adult diaper.
At the time, Picard was responsible for her father’s day-to-day care after he was moved to her residence, Spaner, reading from a statement of agreed facts, told court at the time.
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“He had a number of medical ailments, including non-insulin dependent diabetes, coronary artery disease, some early onset dementia-like symptoms and chronic alcoholism,” Spaner said.
“(He) had been living independently in a Calgary apartment building. Family members became concerned that he was not caring for himself safely.”
With the help of Alberta Health Services he was moved to a home where Picard resided.
A registered nurse assigned to his care attended the 38 Street S.E. home on Nov. 15, 2021, to drop off food bank supplies for him and was told he was sleeping downstairs.
When the nurse called about an hour and a half later and spoke to the man on the phone he said he was lying on the floor, had fallen and was unable to get up.
When she returned to the home with a co-worker she found the victim lying on his back on the floor.
“(He) said that he had been lying on the floor for two days,” Spaner said.
Leochko said Picard was overwhelmed by the situation she was thrust into.
“It really was more than she could handle,” he said.