Report: Epic Games Is Behind U.S. App Store Bill

Report: Epic Games Is Behind U.S. App Store Bill
Screenshot: Epic Games, Other
To sign up for our daily newsletter covering the latest news, features and reviews, head HERE. For a running feed of all our stories, follow us on Twitter HERE. Or you can bookmark the Kotaku Australia homepage to visit whenever you need a news fix.

Epic Games lobbyists drafted legislation that will be heard in North Dakota this week, attempting to bar app stores owned by the likes of Apple and Google from taking a cut of app sales, according to a report over the weekend by The New York Times.

U.S. Senate Bill 2333, introduced to the North Dakota Senate last week, seeks to prevent big digital storefronts like Apple’s App Store and Google Play from forcing developers to distribute apps exclusively through their storefronts, or exclusively use their payment systems. It also seeks to prevent the companies behind these storefronts from punishing developers who choose other distribution or payment methods. Epic is currently involved in a legal battle about this issue, taking both Apple and Google to court after both storefronts banned Fortnite when Epic introduced its own payment method last August in protest against the App Store’s 30% cut of sales. The Times writes that debate on the North Dakota bill began on Monday and will be voted on this week.

The Times reports that North Dakota State Senator Kyle Davison was “given the draft legislation by Lacee Bjork Anderson, a lobbyist with Odney Public Affairs in Bismarck. Ms. Anderson said in an interview that she had been hired by Epic Games, the maker of the popular game Fortnite.” Anderson said, “she was also being paid by the Coalition for App Fairness,” a nonprofit that includes Epic Games, alongside other companies such as Spotify, and that seeks “fair treatment by these app stores and the platform owners who operate them.”

Epic hired its first lobbyists in late January, drawing on people from both sides of the political aisle. While it might look self-serving for Epic to be behind the legislation, the US government has been looking into big tech monopolies for a while. The Times reports that several states are exploring bills similar to North Dakota’s, or other measures that limit these companies’ power. While the bill, if it passes, would only apply to businesses operating in North Dakota, and only those that bring in over $US10 ($13) million in revenue, it could change how Apple and its ilk do business. The Times writes that Apple has been pushing back against the legislation, and “Apple’s chief privacy engineer, Erik Neuenschwander, testified that the bill ‘threatens to destroy iPhone as you know it.’”

People with whom The Times spoke are uncertain if the bill will pass.

Even if you don’t want to hand it to Epic — and the company is certainly making it hard to — the issues the Fortnite case raises go beyond whether you can play a cartoon battle royale on your phone. (If you’ve lost track: no, you still can’t.) The case, currently set to go to trial in May, could benefit smaller developers and be a blow to Apple’s dominance over mobile apps if it goes in Epic’s favour. The North Dakota legislation might be another tool in Epic’s toolkit, and yet another example of the company turning its desire to line its pockets into a moral crusade. But either way, it’s about more than just Fortnite.

Comments

  • Quick, someone attach a rider to include…
    *all digital software store fronts (to include Epic Games Store) cause I am guessing the law specially mentions only mobile phone app stores.
    * add a rider that bans exclusivity deals for stores on the same operating system.

    • Has Epic actually done any of the things covered in the bill though?

      Has Epic ever punished a developer for selling games outside of the Epic Game Store? Are microtransactions in games sold through the Epic Game Store required to go through Epic’s payment processing system?

  • Not yet, but that’s more a case that the exclusive contract has not been challenged. But devs had to refund kickstarters for breaking their Steam key commitment.

    If the game is EGS launcher yes, microtransactions and dlc bought go through them, they take a cut. Exception is games that give you codes to a developers own launcher, like Ubisoft and EA Origin launcher… you own the game on the devs launcher therefore DLC is there. (Or can be bought elsewhere by keys)

    For most games I can’t by DLC on Steam, for a game I own on EGS or vice versa.

    • But that’s down to decisions by the game developer. And I don’t think you can really equate “not being paid an advance on royalties” with “punishment” here.

      And if Epic allows game sales that effectively just unlock the game on another launcher/service, presumably that means follow up purchases could be made through that second service (e.g. can you purchase Helix Credits directly from Ubisoft if you buy Assassin’s Creed from Epic?). The fact that it is possible to buy DLC or microtransactions from the Epic store is orthogonal to that.

  • This is rediculous. Google and Apple are entitled to a 30% margin for the
    third party monetizationn of their customer base. If you don’t think 30% is not fair, consider that retail consumer products have an average markup of 50% from cost price.

    Epic got caught breaking the fair terms of service and their app was removed from mobile storefronts as a result. Rather than acting mature about the situation and attempting to rectify it amicably, they have been acting like a toddler throwing a temper tantrum.

    • Retail consumer products don’t have an ‘average’ markup of 50% from cost price. That’s just a completely made up statistic.

      And retail consumer shops have retail consumer staff speaking retail consumer English while paying retail consumer wages and rent and utilities bills while moving and storing retail consumer physical goods around retail consumer roads and airways all while making retail consumer profits (ie barely breaking even – see GameStop).

      Google and Valve provide a website and a payment backend while making stupid profits in exchange for fuck all.

      And WTF does “Google and Apple are entitled to a 30% margin for the third party monetizationn of their customer base.” Did you lean English in meaningless but impressive-sounding jargon class at management school?

      • Slow down there chief, no need for hostilities. First of all I have over a decade of experience working in retail distribution across APAC and the US so I am speaking from my own experience. If you have other insights please feel free to share.

        Secondly apple and Google have huge upkeep costs for the servers not to mention the salaries of the army of techs, engineers, programmers and designers and employee support to keep everything running.

        If you have an android device you are a Google customer, and if you have Apple devices you are an Apple customer; simple. Essentially your smart device is vehicle for interactive advertisment, and if a third party wants to use that vehicle for revenue they are expected to pay 30% of the sale to Google or Apple. Keep in mind Google and Apple produce the Operating System, host and manage the storefront, and in a lot of cases manufacture the smart device.

        So how exactly does a 70/30 split seem unfair? Especially when the third party is attempting to piggyback on a customer rich infrastructure owned by Google and Apple

        • If Apple and Google have huge upkeep costs they’re not very efficient businesses, since we know that Epic can do the same thing for around 7.5%, plus another 7.5% pure profit to churn back into discount coupons, free games and the like.

          Once again you’re making assertions without providing any facts. We know that Google and Apple’s monopoly extortion arms are hugely profitable. In fact, these are some of the most profitable businesses on the planet. It frankly requires far more than a little suspension of disbelief to accept that a few tech engineers, no high street overheads, a bit of bandwidth and virtually no customer support equals anything like a high street cost base. You say that you have “over a decade of experience working in retail distribution”. I mean, really…? lol

          But seriously, Economics 101 understands that monopoly markets equal monopoly profits and monopoly rent seeking. There really is no mystery here. Both Apple and Google protect their monopoly profits via OS settings that, at best, require you to delve into obscure parts of your OS where, if you get that far, you’re faced with popups that more or less literally threaten that your bank accounts will be hacked and your assets stripped if you so much as allow one single smidge of access to your device that is not approved by the monopolists first; and even then not at all if you’re an iOS user.

          It’s not a free and fair market of competitive companies offering various products of varying price and quality levels to compete for consumers. No, it’s two massively profitable monopoly providers abusing their market dominance by buying out any whiff of competition and scaring people into paying a vastly excessive cut simply for the right to play. If you don’t think that’s unfair then you really must have to work yourself into some serious ethical contortions.

          You say “Keep in mind Google and Apple produce the Operating System, host and manage the storefront, and in a lot of cases manufacture the smart device”, which is a good point. At every step of the way both companies are extracting huge profits. It’s not like phone manufacture is a loss leader for the app store – it’s just gravy on top of a vertically integrated monopoly extracting excessive profits all along the chain.

          If your choice is between either paying one of two companies 30% of your income, versus not participating in the market at all and going to live in the woods, you’re not actually being offered a choice.

          • You raise some valid points regarding monopoly control, but at the end of the day they actually can circumvent the costs on Android OS. Epic could partner with manufacture such as Samsung, Hawaii, Oppo, and have their software offered on the manufacturer app stores (Fortnite, actually launched exclusively on the Samsung store for S9 and note customers).

            But to circle back, Epic is not attempting to actually be the righteous paragon they pretend to be here, they simply want a more profitable pass to to enact predatory tactics to manipulate consumers to buy more V bucks (in-app premium currency)

          • @glass_ghost Yet again you circle back to unfounded assertion and opinion. Quite frankly, you have no idea what Epic is attempting to actually be here, you’re just spouting cynicism and presenting it as fact.

            And Epic could build its own monopoly operating system in conjunction with a hardware maker somewhere to construct its own vertically integrated monopoly chain from which it too can extract 30% unearned profit off captive consumers and game developers? seriously? I mean, you’re effectively arguing that if EB Games refuses to stock Diablo IV unless it gets a cut of all future microtransaction sales Blizzard should negotiate with a property developer to construct its own chain of shopping centres.

            And regardless, it makes not one smidge of difference what Epic’s motivation is. Breaking Google and Apple’s monopoly opens up the market for all players, not just Epic.

Show more comments

Log in to comment on this story!