Well, that sure escalated quickly.
We brought you the news that Epic was making changes to their approach to charging for in-game currency in Fortnite yesterday. Upon hearing about Epic’s plans to circumvent Apple App Store and Google Play policies related to payment processing, we said the following:
“Depending on whether Epic has agreed to this new payment arrangement with Apple or Google, it’s going to be curious to see how they react to this update. Attempts to circumvent their store payment mechanism is something that could very easily result in a game being pulled from the store in some cases, Apple has taken a hard line against this in the past, although perhaps Epic is hoping that Fortnite is a big enough deal that the rules don’t apply to them.”
Well, it looks like we were pretty much on the money. It would appear that Epic had not reached an agreement with Apple or Google to allow them to bypass these payment policies and as such both Apple and Google responded with removing Fortnite from their stores. This was a fairly predictable outcome, but still a significant development in this story.
What we did not predict was that Epic was setting a legal bear-trap. It would seem that Epic took this action of deliberately breaching the app store terms on payment processings in the knowledge that it might result in their game being removed from sale, perhaps in the expectation that this would help their case going forward.
Epic Games has filed legal papers in response to Apple, read more here: https://t.co/c4sgvxQUvb
— Fortnite (@FortniteGame) August 13, 2020
Within hours of Fortnite being removed from sale on these App stores, Epic filed lawsuits against both Apple and Google. It’s a pretty bold move to take on two of the world’s largest companies, where these tech and computing giants are perhaps as well placed to mount a well-resourced legal defense as anyone out there.
What’s clear is that not only were Epic very much prepared to go in the direction of legal action, they have also had a promotional marketing campaign ready to go for this lawsuit. Epic has taken the bizarre approach of screening a corporate propaganda short film “Nineteen Eighty-Fortnite” inside the game, so their playerbase (of which a significant portion are children) can be drawn into this ongoing tussle.
I’m not actually convinced that anyone involved in producing this video has read 1984.
I’m not a legal expert, so beyond simply googling “is this legal?” I turned to YouTube gaming lawyer Richard Hoeg, Managing Member of the Hoeg Law Business Law Firm of Northville Michigan. He broke down some of his thoughts on this story in his in-depth analysis of the case Epic is bringing against Apple. If you pay close attention, you may see a cameo of a gif I posted in this video.
The above video was recorded shortly prior to Google’s decision to remove Fortnite from Google Play, prompting Epic’s lawsuit against Google, but he has pledged to continue to cover this story as it develops, so keep an eye on his channel for future legal analysis.
I wanted to get some further insight into this story from his perspective (although it should be noted that his comments here don’t constitute legal advice), so I followed up with a few specific questions for Hoeg.
What do you think could realistically be the quickest way this situation gets resolved, all relevant parties reach an agreement, and Fornite returns to the app stores?
Hoeg: I don’t know what Epic’s plan is now that updates to Fortnite are off the table on mobile. Are they going to hold all versions? If so, then they are risking a lot, and will be inclined towards a speedy conclusion. Like almost all cases, settlement is the likely outcome, but in the first instance Apple/Google will try to get their respective cases kicked out for failure to state a claim (aka, summary dismissal). It’s only if Apple/Google lose at dismissal that settlement is likely, unless Epic completely folds.
The opposite question: How long could this process be drawn out if no party is willing to compromise or back down?
Hoeg: A federal antitrust case of two of the largest tech companies on Earth? Years and years. (Especially in 2020 where court resources are practically non-existent)
Do you think Epic is perhaps opening Pandora’s box? If they are successful in their case against Apple and Google, could Epic perhaps be forced to allow third parties to sell Fortnite skins and emotes without Epic taking a cut? Any other interesting potential ramifications?
Hoeg: While I think there are potential risks to an Epic win here for software platforms (like EGS), the bigger risk is to the consoles who are more closely analagous. Why can Sony charge 30%? Or stop a consumer from loading up an Xbox live store app?
What impact (if any) do you think Epic’s attempt to fight this case from a PR/Marketing perspective with their “Nineteen Eighty-Fortnite” campaign etc could have on legal proceedings?
Hoeg: It wouldn’t affect the outcome, but could get a snide remark or two from a judge (and certainly in the response documents). Epic wants to say “We knew they would use their market power in this illegal way”, but the reality is “When you flagrantly breach a contract, reprisal is swift.”
Have you ever seen a lawsuit that has been launched with an official hashtag before?
Hoeg: I have not. Doesn’t mean it hasn’t happened, but I can’t think of one.
So there’s one lawyer’s take on how things stand as of right now. This is a wild story, with no predictable outcome. This legal tussle could help shape the market for software on various platforms going forward, so we’re certainly going to be paying attention to it as it develops. These cases could result in tearing down existing precedents, or it could ultimately entrench them further, but we’re very curious to see how it plays out.