The legal battle involving the maker of ‘Fortnite’ could have wide implications in the global market for mobile apps.
Photo: cj gunther/EPA/ShutterstockA California federal judge granted the maker of “Fortnite” a partial reprieve in its battle against Apple Inc., AAPL -0.82% saying Epic Games Inc. can maintain access to the tech giant’s software-development tools but that its blockbuster videogame, for now, would remain out of the App Store.
U.S. District Judge Yvonne Gonzalez Rogers issued the decision late Monday after a virtual court hearing in which attorneys for Epic and Apple defended their companies’ positions. “Apple has chosen to act severely, and by doing so, has impacted non-parties, and a third-party developer ecosystem,” Judge Gonzalez Rogers wrote in her ruling.
A spokesman for Epic declined to comment on the ruling Tuesday.
“We thank the court for recognizing that Epic’s problem is entirely self-inflicted and is in their power to resolve,” Apple said in a Tuesday statement. “We look forward to making our case to the court in September.”
Apple planned to revoke Epic’s access to tools needed to distribute and update software across its devices on Friday unless Epic removed the mobile-payment system it introduced in “Fortnite,” which skirted Apple’s 30% commission on in-app purchases.
Though “Fortnite” is free to play on videogame consoles, computers and mobile devices, Epic sells virtual perks and access to special game modes. The shooter-survival game has more than 350 million players world-wide, according to Epic.
The judge’s ruling means that “Fortnite” players using an iPhone or iPad won’t be able to download the game’s next season when it launches Thursday. Android device users who previously obtained the app through Google Play would have to download it from Epic’s website or the Android app marketplace on Samsung devices.
Apple has said that the unapproved modification to “Fortnite” violated its guidelines. At Monday’s hearing, Richard Doren, a Los Angeles-based partner at law firm Gibson Dunn & Crutcher LLP, described Epic as willfully breaching a contract and thus responsible for its customers’ plight. Mr. Doren also defended Apple’s role as a gatekeeper in protecting users’ privacy and security as well as collecting fees to support those efforts.
Closely held Epic has said that losing its Apple developer credentials would harm its reputation and trust with customers in ways that are unquantifiable and irreparable. Its flagship product, the Unreal Engine, is used by millions of developers world-wide for making games, television and movie special effects and other types of digital content.
The next hearing in the case is scheduled for Sept. 28. In its complaint, Epic asked the court to stop Apple from engaging in anticompetitive conduct with its App Store practices and take steps to restore competition.
Epic sued Apple and Alphabet Inc.’s Google on Aug. 13 in federal court after the companies pulled “Fortnite” from their respective app marketplaces. “It was the only way to try and break the chokehold that Apple has on its payment system, and it’s a prohibition on any kind of competition,” said Epic attorney Katherine Forrest, a former New York federal judge and Justice Department antitrust lawyer now with Cravath, Swaine & Moore LLP, during Monday’s hearing.
The legal battle could have wide implications in the global market for mobile apps, which last year reached $120 billion in consumer spending, according to App Annie Inc. It could also upend how app stores and developers divvy up sales for paid downloads and virtual goods—or how apps accept payments all together.
Companies including Microsoft Corp., Facebook Inc. and Spotify Technology SA as well as small, independent game studios have criticized Apple and Google for the power they wield in their app stores.
Microsoft, the maker of the Xbox gaming system and owner of 15 game-development studios, on Sunday issued a statement supporting Epic’s petition as an Unreal Engine user, saying that restrictions on Epic could hamper its game-development business. The company declined to comment further Tuesday.
To win its antitrust case, a key point Epic could raise is that the 30% commission Apple and Google charge isn’t based on negotiations with developers on equal footing, said Florian Mueller, an independent analyst in Munich focused on antitrust issues. Rather, Epic could argue that the tech giants have taken advantage of their control over their app stores to extract that amount unfairly, he said.
Apple and Google also have a strong defense, though, in that they took risks in creating their app stores in the first place and haven’t raised commissions since their inception in 2008 and 2012, respectively, despite accepting more apps over the years, Mr. Mueller added. “That 30% to some degree constitutes the reward they get for creating and growing those platforms,” he said.
Judge Gonzalez Rogers is hearing the case between Epic and Apple as well as a 2019 case brought by app developers who claimed the iPhone maker’s App Store operations violated federal antitrust law. The developers’ lawsuit came a month after the Supreme Court, in a 5-4 opinion, determined individual consumers could sue Apple for being forced to buy apps exclusively from the company.
Epic has been an outspoken critic of Apple and Google’s app-store practices for years, saying the companies’ 30% commission on in-app purchases and download fees is excessive and that developers shouldn’t be restricted to using only their payment systems to process sales. Epic itself charges a 12% commission in its PC game marketplace.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
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