When the European Union passed a 2022 law to loosen Apple's grip on the app economy, Epic Games, the creator of Fortnite, began planning to launch a competing app store for developers.
But before that law could take effect this week, Apple blocked Epic's European subsidiary from using iPhone software tools, making it impossible for the game developer to create the Epic Games Store.
In correspondence from Apple to Epic Games, the tech giant said that Epic had demonstrated in the past that it was unwilling to follow Apple's rules to protect the App Store and could not return to the Developer Program that supports it. Apple also objected to Epic's criticism of Apple's plans to comply with European technology competition law.
Apple's move is the latest salvo in a long-running battle with Epic. In 2020, Epic broke App Store rules by encouraging customers to pay directly for Fortnite features. Apple kicked Epic out of the App Store, and Epic sued Apple for violating antitrust laws by requiring developers to use its payment system.
With its rejection of Epic's access to development tools in Europe, Apple is testing the limits of the European Union's technology competition law. The Digital Markets Act, which goes into effect Thursday, requires Apple to provide app makers with alternatives to sell software to iPhone and iPad users, including the ability to use alternative payment systems and competing app stores.
An Apple spokesperson said in a statement that “Apple has the right to terminate” any of Epic's games and that it had done so due to Epic's “egregious failure to meet its contractual obligations.”
Tim Sweeney, Epic's chief executive, said his company had invested billions of dollars to create the Epic Games Store and would file a complaint with European regulators over Apple's action.
“We view Apple's decision to prevent us from competing as a blatant effort to defeat its main competitor,” Sweeney said, adding: “This is not just about Epic versus Apple. The DMA tries to guarantee consumers the benefit of competition and better prices.”
In 2018, Epic Games launched a digital store to distribute games on PC and other devices. Currently, the store charges a 12 percent commission for each game it sells, which is less than the 30 percent Apple typically charges.
Epic is one of the first app makers to complain that Apple is blocking competing app stores. But other developers have criticized Apple's plans to comply with the Digital Markets Act and called on EU regulators to investigate the tech giant.
If the European Commission, the executive arm of the European Union, opens a formal investigation into complaints from Epic or other developers, it could trigger a lengthy legal battle that could force Apple to change or risk fines of up to 10 percent of their overall annual income. , which was almost $400 billion last year.
An investigation would deepen the challenges Apple faces over its App Store policies. On Monday, EU regulators fined Apple 1.8 billion euros ($1.95 billion) for thwarting competition between streaming music rivals. Last year, South Korea's telecommunications regulator said that Apple could be fined $15.4 million for “unfair practices.”
Apple's dispute with Epic's plans to create a competing app store in Europe began last month. Epic wrote to Apple saying it planned to use its subsidiary in Sweden to bring the Epic Games Store and Fortnite to iPhones and iPads in Europe. Apple initially granted the subsidiary, Epic Games Sweden AB, a developer account, but later terminated the account.
In an email to Mr. Sweeney, that Epic Games published on its website, Phil Schiller, head of the App Store, questioned Epic's willingness to follow Apple's rules. He said Epic had deliberately violated Apple policies before filing its lawsuit in the United States and that Sweeney had called Apple's plan to comply with European technology law. “hot trash” and a “horror show.”
“Your colorful criticism of our DMA compliance plan, coupled with Epic's past practices of intentionally violating contractual provisions it disagrees with, strongly suggest that Epic Sweden does not plan to play by the rules,” Schiller wrote.
Sweeney responded that Epic was “acting in good faith and will comply with all terms of its current and future agreements with Apple.”
A lawyer representing Apple later wrote to Epic Games to inform it that its Swedish subsidiary's account had been terminated. Sweeney said the correspondence was the entirety of Epic's exchange with Apple.
