Apple makes changes to the in-app purchases after Fornite Lawsuit

November 19, 2020

Image from 9to5Mac

Introduction:

Earlier in the year Epic Games, Fornite took on the Tech giant Apple after a long challenging law suite. Since then, Apple has now announced that they will be reducing the cut they take from all future developers by half the amount. This fee will only apply to developers who make up to $1 million per year. This has all come to practice since Fortnite started a lawsuit from the makers of Fornite over their practices.

 

As it is, Apple is currently taking a 30% commission on all paid apps and sales made within apps running with IOS on either the iPad or iPhone.

 

Originally Epic Games announced that they were challenging Apple for the amount of commission by attending the Australian Federal court. As a result of this Apple removed the popular online video game known as Fortnite, since they attempted to bypass the payment system.

 

As a result, Apple has no announced smaller developers will only need to pay 15% rather than the original 30%. This will come into account from January 1st 2021.

At the moment all Developers who make up $1 million from their apps will automatically have their rates cut in 2021. However, those apps that make more than $1 million in 2020 but then go below the threshold in the calendar year will only qualify for the following year.

 

Therefore, If an App developer passes the threshold in a year, then the 30% charge will only apply for the remainder of the year once the marker has been passed.

Unfortunately, Apple was unable to say how much revenue it would forgo from the change although they have said 1.8 million of the App Store Apps will qualify for the new changes and discounts.

 

From what Apple has said, in 2019 they made $159 billion in transactions with 85% of that going to the developers and businesses who own the app.

However, this new discount will not apply to Epic Games who have been trying t hard to get these changes put in place for Fortnite. Epic Games were forecasted to make $5 billion in 2020 from the games transactions.

 

On Wednesday the 18th of November, Epic Games announced that court actions are now being put into place after the recent in App Purchase issue. The Australian Court filing has presented with Epic Games claiming that Apple was misusing its market power by stopping any rival payment system from being inbuilt to apps. This has caused problems with profit for Epic Games, allowing Apple to charge more than the usual rate.

 

So far Epic Games Chief executive, Tim Sweeny has said the following about apple:

“This is much bigger than Epic versus Apple – it goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests,”

So far we have only heard the following from an Apple Spokeswoman. They have pointed to a US Judge’s comments ruling asking Epic Games for seeking a preliminary injunction back in October 2020. In this statement, she has described Epics payment allegation as deceptive and clandestine”. The spokeswoman also said that Epics actions were violating the App Store guidance, which is there to protect customers.

 

Since this initial allegation, Australis watchdog has announced their own investigation into this situation. This will include marketing power from apple and google.

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