Apple and Google launched their app stores in 2008 and have turned them into giants since then.
It is a battle in which both Apple and Google find themselves, unwittingly, on the same side. Last week, Facebook too joined the battle in the opponent’s camp, which already boasted of Microsoft. They can soon count Netflix on their side too.
Over the last few months, a mini-war of sorts has erupted among companies that reach out to consumers through the Apple App Store and Google Play Store. These companies say that the commission being charged by the two technology giants for hosting their apps is too high. Gaming companies, news publishers, rival tech companies–everyone is now seeking a more favorable deal from the app stores.
Apple and Google launched their app stores in 2008 and have turned them into giants since then. The app economy could grow to $157 billion by 2022, a sharp spike from $82 billion in 2019, according to App Annie. Given the pace at which it is growing, the two companies are now being likened to tax collectors, who are hindering the transfer of money from creators to consumers.
The battle lines are now clear.
Battle of ‘Epic’ proportions
The recent trigger in the battle came from a move by Epic Games, the company behind the popular game Fortnite. It implemented a workaround that allowed customers to pay it directly for its popular game, Fortnite. The workaround meant that Apple would forego a cut of 30 percent from the monies that customers would pay Epic Games. Retaliatory action from Apple followed as the App Store removed Fortnight. Soon, it was pulled off from Google Play Store too.
Fortnite has nearly 350 million followers across platforms. When Apple took off the games from the app store, Epic Games has now launched an all-out campaign against Apple, calling its move “unfair and anti-competitive”.
As the battle escalates, Apple is threatening to not just remove Fortnite but also disable the developer accounts of the company. It includes disabling ‘Unreal Engine’, developed nearly 20 years ago, that is a platform built by Epic and used by other companies to build their gaming products. The termination of Epic Games’ developer account by Apple could impact several other games.
Games like Microsoft’s Minecraft Dungeon, PlayersUnknown’s Battlegrounds and others are dependent on the ‘Unreal Engine’ and if it does not work well, the performance of these games could be impacted too since it works across computing platforms.
Apple now said that it wants to keep the Epic account on the App store but will not make an exception for the gaming company.
Seeking a better deal
Exceptions have been made in the past, though. A deal cut by Apple with some companies, first in 2018, is at the heart of the battle that has been unfolding. Apple appears to have made exceptions in select cases.
In April 2020, Amazon Prime Video started selling and renting movies through the Apple App Store on iOS devices without sharing revenue with Apple. Vivendi-owned Canal+ has had a similar offer since 2018 and Altice, a cloud-based video provider, launched its service in February 2020.
The clamour from companies is growing louder. Now, the industry association of news publishers. want to find out how its members too can be given an exception just like others. Spotify and Netflix are also lending their voice to the cause.
If the commission charged by Apple and Google were to fall to a blended rate of 5-15 percent, it could hit Apple’s earnings by 21 percent and Google’s by 20 percent, according to Macquarie. Apple’s Q2 revenue was $59.69 billion, while Google’s Alphabet was $41.16 billion.
It’s all about the money, honey!