Epic Games files complaint against Apple with DG COMP

Epic Games’ bitter fight with Apple has officially reached the EU. Earlier today Epic Games announced it has filed an antitrust complaint against Apple with DG COMP, arguing the iPhone maker has “completely eliminated competition in app distribution and payment processes.” This is the latest development in a now-global dispute between Apple and Epic Games, with the Fortnite publisher having sued Apple in the US, Australia and the UK.

The litigation drama started when last summer Epic Games bypassed the App Store’s proprietary payment solution In-App Purchase (which all iOS apps selling goods or services consumed “inside” the app have to use) and the related 30% commission of Apple by offering Fortnite users the ability to purchase V-Bucks (an in-game currency) through its own payment solution at a lower price. Apple responded immediately by kicking Fortnite out of the App Store (note: users that had already downloaded Fortnite on their iPhones may continue to use it but cannot access any updates). Fortnite then sued Apple before the US District Court for the Northern District of California (see Damien’s analysis of the lawsuit here). Epic Games also sought a Temporary Restraining Order and a Preliminary Injunction to reinstate Fortnite in the App Store and prevent Apple from blocking its Unreal Engine (a game engine used by other games), but Judge Gonzales Rogers granted the requested relief only with respect to the Unreal Engine.

While today’s antitrust complaint with the European Commission is not public, judging from Epic Games’ press release it seems that the claims raised are similar to those Epic Game has made in the various overseas proceedings. There are essentially two main claims:

• First, Apple has used its monopoly power over iOS devices to foreclose competition in the market for app distribution, in that the App Store is the only app store allowed on iOS devices, which has allowed Apple to extract monopolistic rents (the 30% fee). Put simply, Epic Games would like to bring its own app store on your iPhone (note that on PCs Epic Games offers the Epic Games store).
• Second, Apple forecloses competition in payment processing by obliging apps selling digital goods or services to exclusively use IAP to accept user payments.

The first claim is quite bold, as it goes at the heart of Apple’s model of a closed ecosystem (tight integration between the hardware, the OS and the app store). Apple’s traditional defense to claims that it should “open up” iOS to third-party app stores is that doing so would compromise the safety and security of the device and ultimately the latter’s quality. Epic Games, on the other hand, has pointed out that other platforms have always allowed users to download content from external sources without compromising the device’s security/safety (think of your PC or Mac, where your may use your browser to download software for free), and there is nothing special about a smartphone (one could think of Android phones as another example).

All this sounds very interesting, but what about the Commission’s ongoing investigation into Apple in response to Spotify’s 2019 complaint (and where rumours have it that the Commission will soon issue a Statement of Objections)? One could superficially consider that the Epic complaint overlaps with that of Spotify insofar the latter challenged the obligation to use IAP to accept user payments (and thus pay Apple a 30% commission). At closer look, however, it seems that the two complaints raise separate issues, so there should be nothing preventing the Commission from launching a separate investigation in response to Epic Games’ complaint. The Spotify investigation is in fact quite narrow, since it only concerns app developers directly competing with Apple’s own apps – hence any imposed remedy (assuming of course the Commission adopts an infringement decision) would be correspondingly limited. The Epic Games’ complaint on the other hand is much broader (and ambitious) as it challenges the core of the system, that is the fact there is only one App Store. That is not to downplay the importance of the issues raised in the Spotify case though; even if Apple were to allow third-party app stores on iPhones, then at least in the short term it is likely the App Store would maintain its dominance (after all, Android devices accept third-party app stores, yet Google Play is arguably dominant). In these circumstances, there would still be a case to ensure Apple is not using its dominance as an app store to distort competition in adjacent markets where it also competes.