I was all ready to finally start writing about Apple’s new subscription bundles, which I have been waiting three years for, and Apple has to go and put a nuclear football and launch codes in Epic’s hands.
So what’s happening now?
If you’ve been living under a rock and don’t know what happened between these two today, here are the cliffs. We already know that Epic stuck a finger in Apple’s eye last week when they slipped an alternate payment system into the iOS version of Fortnite. As Epic knew they would, Apple booted Fortnite from the App Store. Then Epic responded very quickly with a video parody of Apple’s famous 1984 commercial and an antitrust lawsuit. Since then, Apple has stuck with its brief press statement, while Tim Sweeney has slobbered all over Twitter on a daily basis.
In a bit of a surprise move today, Apple informed Epic that their developer account will be revoked in 14 days if they don’t amend the Fortnite app to conform to the App Store rules as they currently stand. You see, Fornite is still available to anyone who previously downloaded it and the app still has the In App Purchase workaround bypassing App Store payments available to them. Evidently, Apple isn’t going to let that stand all the time it will take for this lawsuit to play out.
What are the stakes?
So, if Apple removes Epic from the Apple Store and revokes their certificate, then not only is Fortnite banned, but all copies of it go dark. That means all of the IAP revenue that Epic is still making today will be turned off in an instant. Also, in what could be a more damaging blow, Epic’s Unreal Engine will no longer work on iOS or on the Mac.
For Apple, the stakes are high, as well. It will do even more damage to its reputation, which has been taking hits right and left over the last two months. Epic wanted to paint them as a bully and this is pretty much as big and bad as Bully Apple can get. This is a game of high stakes-chicken with a whole lot of scorched Earth at the end if things play out t. he wrong way.
What are the options?
Epic has three options. First off, they have filed for an injunction to prevent Apple from being able to boot them off the App Store. However, I think that’s really just a Hail Mary. If the previously filed antitrust case goes to trial, they will be able to argue the legality of the App Store’s Terms of Service. However, they knowingly broke them to get here. They very likely aren’t going to be able to use their actions to get an injunction before they get to argue against the TOS. The judge will likely tell them that they made their bed getting here and now they’re stuck in it until trial.
Door number two is that Epic can back down. Per Apple’s normal App Store process, if Epic will remove it’s IAP hack from Fortnite, then not only will Apple not wack them with the banhammer, but Fornite will be back in the store to download as usual. Epic will even be able to update it soon with their new season of the game. But it will require eating a little humble pie, which doesn’t seem like Sweeney’s preferred taste.
Option three is the poison pill. It’s turning the keys at the same time in the silo after checking phonetic alphabet codes. It is Epic taking a massive revenue hit and losing all access to Apple’s platforms and Apple taking its biggest PR body-blow yet.
Who wins and who loses?
First off, Epic would be a huge winner if they get an injunction against Apple. However, that is highly unlikely.
No one wins the nightmare scenario. Both companies lose. Developers who use Unreal on iOS lose the most because they don’t have Epic’s revenues and warchest as a backstop. This would be a terrible bit of collateral damage thanks to some bickering billionaires. And yes, that definitely applies to both sides. Consumers definitely lose, as well, with other apps potentially either disappearing or switching engines if Unreal can’t be used anymore.
I think Apple loses less than Epic in pure dollars and cents, because they have the money and the platform to ride this out, despite those losses. Regulation may be coming, but not tomorrow. That will take time and Epic will be losing a lot of potential revenue during that time. Epic will still make money without Apple, but they will make a LOT less of it. While they don’t have shareholders since they are a private company, Chinese giant Tencent is a big stakeholder and I find it unlikely that they will be happy if revenue dips for a prolonged period. This trial could take years, so that is a very real possibility. I think if Fornight pulls this trigger, they will eventually be pulled into a settlement unless the government comes to their rescue.
If Epic steps back from the ledge, they will be able to spin up a win in their fans’ eyes, but it will look like an unforced error to those who are more impartial. It would be a small loss, but it would dull the shine of their highly sucecssful stunt last week.
I call this an error on Epic’s part for this reason: If they had removed the IAP hack for Fortnite’s existing users ahead of time, it could have spun the move as being done to keep them online while the fight is on. It would have headed off Apple’s ability to make this play in advance, making it the smarter decision because Epic had all the PR momentum heading into today. This would have been the thinking three moves ahead move.
Good or bad from a PR or business standpoint, Apple forced Epic into react mode today by playing one of the three cards left to it (with the others being go to trial or settle). If Epic wanted to force this move, then it was a bad business decision, either way it could work out, because there is no way they can bank on the court bailing them out after purposely breaking Apple’s TOS.
While Apple will look like the bully because they are bigger, the ball is still in Epic’s court now. The one thing in Apple’s favor here is that there is a set path to a peaceful temporary resolution allowing Fornite players to go back to business as usual. The only way we get scorched Earth is if Epic turns the key themselves. Personally, I think they have to blink. The nuclear option isn’t in anyone’s interest and I think Tim Sweeney understands their no amount of spin that can save his company from some blowback if they go all in here. They look like they actually give a damn about other developers making this concession.His rhetoric gets harder to swallow going the other way, even if he claims his hand was forced.
I think this will all come to naught within two weeks. Epic will back down, complaining loudly online that they were forced to do so by the very power they are fighting. Apple will say that they were just enforcing their standard policies and that they are thrilled that Epic made the move to comply with their rules. Then both will hunker down for the real fight still to come- a long, drawn out conventional war in a court of law. That beats this thermonuclear stuff we’re looking at now any day.