By: William Lawton
Apple and Google charge a 30% fee for all revenue that mobile app developers obtain through in-app purchases. Epic attempted to steer clear of this fee by offering consumers an alternative in-game payment method that directed funds solely to Epic as opposed to being processed by Apple’s and Google’s mobile payment system. The fallout from the removal shines even more light on the tech behemoths at a time when both companies are involved in legal battles over potential anticompetitive behavior.
Since the advent of the iPhone, Apple has only allowed the download and purchase of mobile apps through its own App Store. Apple claims this restriction is in place for quality control purposes. By having only one manner in which iPhone users can download apps, Apple is able to keep both iPhones and apps free of viruses and other security threats. However, on other Apple devices such as iMac’s and MacBook’s consumers are able to download apps and games directly from their developers. This leads consumers and companies to believe that Apple’s App Store policies are geared more toward profits and market control as opposed to security.
Google’s Play Store is a service used to download apps on most Android and Google cellular devices. The reasoning for Google’s policy is similar to Apple’s in that it provides users with a better and safer experience. While it would appear based on these facts that Google’s Play Store is also attempting to assert control over a market, there is a key difference. Play Store is not the only service that Android and Google cell phone users can download apps from. Consumers have the option to use the Samsung Galaxy Store on particular Android devices. Also, Android and Google mobile devices allow the process of sideloading. Sideloading is the process of installing applications from a website or online store to a cell phone that is not officially approved or regulated by the cell phone creator. In other words, Android and Google users are allowed to download games such as Fortnite directly from Epic’s website. While this does provide particular security risks to the mobile device, the app developers do not have to pay a 30% revenue cut.
The Clayton Act is a U.S. law passed in 1914 that is intended to protect against monopolistic behavior by companies. The purpose of the act is to protect against unfair competition by businesses. Based on the rationale behind the Clayton Act, Epic will argue that Apple’s policy of taking a 30% revenue cut from all in-app purchases is unfair competition. Epic will base this argument on the fact that the only way for app-developers to offer their apps to iPhone users is through the App Store where Epic is forced to pay a share of their revenue to Apple. Not only does this hurt Epic, but it also hurts the consumers who ultimately are the ones covering the increased cost. Apple will attempt to argue that this behavior is not anti-competitive because if app developers do not want to pay the 30% fee then they can offer their service on other devices or in the form of a website that is not regulated by Apple. In turn, Epic will argue they do not have the ability to offer their product through a website because Apple does not allow the process of sideloading on their devices.
Epic will also make a similar argument against Google that its 30% revenue cut is unfair to both app developers and consumers. Google will likely counter with the fact that a 30% revenue from all in-app purchases on its face is unfair competition. However, Google’s Play Store is not the only way that developers can offer their products on Google or Android devices. The process of sideloading allows for developers to offer their applications through other platforms such as their own websites or another app store. By allowing Google and Android device holders to have multiple ways of downloading an app, Google is allowing competition. The only reason Google has their 30% revenue cut in place on the Play Store is because they want to be able to vet and secure products and services that are offered through a store that bears their name.
Based on the policy rationale behind antitrust laws, the court should side with Epic in their suit against Apple. The App Store’s process of taking a 30% revenue cut from in-app purchases while not allowing other methods of downloading apps appears to be the type of unfair competition that the Clayton Act is attempting to avoid. In Epic’s suit against Google, the court should side with Google. While Google’s Play Store does take a 30% revenue cut from all in-app purchases, Android and Google cell phone owners have alternative options for downloading their applications. Based on the fact that you have more than one option for the download of apps on these devices, it does not appear that the Play Store’s policy is the unfair type of competition the Clayton Act is aimed at preventing.
Student Bio: William Lawton is a second-year law student at Suffolk University Law School. He is a staffer on the Journal of High Technology Law. William received a Bachelor of Arts Degree in Political Science and Psychology from Providence College.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
