Epic Games says Google paid phone and game makers to avoid $1-billion app store hit

"Fortnite" developer Epic Games on Thursday unsealed details about contracts it alleges Alphabet Inc's Google signed with phone makers and other top video game companies to avoid losing $1.1 billion in annual app store profit.

Epic in 2018 launched "Fortnite" through its website and a partnership with handset maker Samsung Electronics Co , bypassing Google's Play Store, which charges developers fees of up to 30 perecnt of their sales.

Google feared other companies copying Epic and blocked that possibility by erecting unlawful hurdles, Epic alleged in an antitrust lawsuit filed against Google last year.

Google said the lawsuit remains baseless and mischaracterizes business conversations. A trial has not been scheduled.

Among new details a judge ordered be unredacted, Google in 2019 estimated up to $6 billion in Play revenue and $1.1 billion in profit would be at risk in 2022 alone if Epic's approach spread and alternative stores found success, according to the lawsuit.

But Google avoided the feared hit.

In 2019, it launched "Premier Device Program" to pay phone makers to ensure the Play Store's exclusivity and limit the appeal of partnerships similar to what Epic had reached with Samsung, according to the newly released details.

Premier partners received 12 percent of Google's search revenues from their phones, compared with 8 percent traditionally, according to the filing. Some partners, including LG Electronics Inc and Lenovo Group's Motorola, also received 3 percent to 6 percent of Google "Play spend."

Separately, Google in 2019 as part of an effort dubbed "Project Hug" approved spending "hundreds of millions of dollars" on over 20 top developers in marketing and other benefits to keep them on the Play Store, according to the details. The "vast majority" accepted Google's offer by December 2020.

According to the lawsuit, Google internally called the new deals a success in stopping a "contagion" of developers sidestepping the Play Store. 

-reuters-

Fortnite maker and Apple duel in filings as App Store trial nears

SAN FRANCISCO, United States - Epic Games and Apple dueled on Thursday in legal filings ahead of a trial over whether to break the iPhone maker's tight grip on the App Store.

Epic, the maker of the massively popular Fortnite game, accused Apple of trapping people in its mobile device world and collecting "outsized commission" at the App Store that serves as the only source of digital content.

Apple countered that it has no monopoly when it comes to digital games and that the suit is part of an effort by Epic to portray "Apple as the 'bad guy' so that it can revive flagging interest in Fortnite."

Apple pulled Fortnite from its App Store in August of last year after Epic released an update that dodges revenue sharing with the iPhone maker, and the companies are now locked in a legal battle.

A trial in the case is set to begin May 3 in US federal court near San Francisco.

Apple chief Tim Cook as well as Epic founder and top executive Tim Sweeney are among those expected to testify.

"Apple constructed the iOS ecosystem, using a combination of technical and contractual means, to restrict distribution of iOS apps, foreclosing competition, harming the competitive process, and harming consumers," Epic contended in a filing.

The iOS software runs Apple mobile devices.

The App Store is home to more than 1.8 million apps worldwide, generating billions of dollars in revenue for developers since it was launched in 2008.

People spent $70.3 billion at the App Store last year alone, according to market tracker Statista.

Apple's commission on App Store transactions ranges from 15 percent to 30 percent, and the online shop has been part of the Silicon Valley titan's effort to ramp up revenue from digital content and services.

Epic has called the App Store bite of transactions an "Apple Tax" and contended that the vetting of apps there is "cursory."

Apple maintains that the commission is standard for the market, and is warranted given the company's investments in security, privacy and innovation.

It has argued that Epic "would like to reap the benefits of the App Store without paying anything for them."

Apple said Epic has benefitted from the iOS ecosystem with some 130 million downloads in 174 countries, which earned Epic more than half a billion dollars, before changing its tune and seeking "special treatment."

The dispute comes with Apple and other tech giants facing increased scrutiny for their dominance in various economic sectors, allowing them to grow even as much of the economy contracts from the impact of the coronavirus pandemic.

Agence France-Presse

Epic Games asks court to force Apple to reinstall Fortnite

SAN FRANCISCO, United States - Epic Games is trying to convince a California court to reinstate Fortnite on the Apple App Store pending legal proceedings, arguing that doing so is in the "public interest," court documents show.

If not, the game could suffer "irreparable harm," the company's lawyers said in a new lawsuit delivered Friday.

The gambit comes amid a battle over whether Apple's tight control over the App Store, and its 30 percent cut of revenue, counts as monopolistic behavior.

Apple pulled Fortnite from its online mobile apps marketplace on Aug. 13 after Epic released an update that dodges revenue sharing with the iPhone maker.

Last month a US court rejected Epic's bid to have Fortnite reinstated on the App Store, saying its eviction by Apple was a "self-inflicted wound."

"Over 116 million registered users have accessed Fortnite through iOS — more than any other platform," Epic says in the new complaint.

"By eliminating many of these players from Fortnite, and blocking Fortnite's ability to access over a billion iOS users, Apple is irreparably harming Epic's chances," it continues.

Daily active users have dropped by more than 60 percent since Fortnite was removed, it says, while Epic's reputation has also taken a hit.

"Epic may never see these users again," the lawsuit says.

But it did not back down from its fight against Apple, stating that the tech giant "is a monopolist."

Due to the legal row, Fortnite fans using iPhones or other Apple products no longer have access to the latest game updates, including the new season released at the end of August.

Apple does not allow users of its popular devices to download apps from anywhere but its App Store.

Agence France-Presse

How Apple’s 30 percent app store cut became a boon and a headache

OAKLAND, California — Twelve years ago, Apple introduced the App Store, a peculiar online marketplace for the year-old iPhone. It had 500 offerings. Apple told app makers it would take a 30 percent cut of their sales, and few complained.

Today, the App Store is one of the world’s largest centers of commerce, facilitating half a trillion dollars in sales last year alone. And Apple still takes 30 percent of many apps’ sales.

That commission has proved hugely consequential for Apple. It has been the primary driver of growth in recent years for a company that has nearly $275 billion in annual sales. And it has created some of Apple’s biggest headaches, drawing antitrust scrutiny, fury from app makers and lawsuits from consumers and partners.

The headaches intensified this week when Epic Games, the maker of “Fortnite,” arguably the world’s most popular video game, sued both Apple and Google, accusing the companies of breaking antitrust laws by forcing app makers to pay their 30 percent fees. The lawsuits followed Apple and Google’s removal of “Fortnite” from their app stores because Epic encouraged users to pay it directly, rather than through Apple or Google, to avoid their fees.

“I think we’re realizing that 30% is way too much,” said Phillip Shoemaker, a former senior App Store executive, who left Apple in 2016. Credit card companies charge roughly 3 percent to process payments. “It should be closer to that,” he said.

That is the rising sentiment among app developers, consumers and regulators. Apple and Google, which together are worth more than $3 trillion, make the software that backs virtually all of the world’s smartphones. That dominance has allowed them to keep their commissions high.

But now that the tech giants’ smartphones have become the only way other businesses reach millions of people, those businesses are increasingly pleading: Do you really need a third of my sales?

“There are very few companies out there that have a 30 percent profit margin,” said Andy Yen, the chief executive of ProtonMail, an email service. “The only way we can support this fee is by passing that cost on to customers.” ProtonMail charges 30 percent less for subscriptions purchased on its website, but when the company advertised that to its iPhone users, Apple restricted its app.

Likewise, Spotify increased its monthly subscription to $13 from $10 in 2014 to account for Apple’s fee. A year later, Apple introduced a competing music service — priced at $10. To compete, Spotify opted out of Apple’s payment system, enabling it to avoid the commission. Now customers can still use Spotify’s app, but they must subscribe on Spotify’s website. Yet Apple bars Spotify from saying that in its iPhone app.

“Either we lose because we have to pay them a 30 percent tax just to operate and raise our prices for consumers as a result, or we lose because it becomes much more expensive to convert users from free to premium,” Horacio Gutierrez, Spotify’s chief legal officer, told reporters in June after European regulators opened an antitrust investigation into Apple based on Spotify’s complaint.

Even consumers have spoken up. An enormous class-action lawsuit accuses Apple of breaking antitrust laws to enforce its commission, inflating app prices for iPhone users. The Supreme Court ruled last year the lawsuit could proceed.

On Friday, Facebook chimed in, complaining that Apple is collecting 30 percent of sales on its new live-events service, where people can sell expert talks, fitness classes and cooking tutorials on Facebook’s app. Facebook said it wanted to process the payments itself so it could pass on 100 percent of the sales to the small businesses selling the talks and classes, but Apple declined.

Apple argues that it has actually cut software developers a break. Tim Cook, Apple’s chief executive, suggested to Congress last month that when software was still sold in brick-and-mortar stores, 50 percent to 70 percent of the retail price went to middlemen.

“In the more than a decade since the App Store debuted, we have never raised the commission or added a single fee,” he told lawmakers. “The App Store evolves with the times, and every change we have made has been in the direction of providing a better experience for our users and a compelling business opportunity for developers.”

For Google, the stakes are lower. It allows people to download apps from outside its Android app store, meaning app makers like Epic have ample ways to still reach consumers using Android devices. And Google’s vast online advertising business makes its app store a much smaller portion of its overall business.

Over the past year, Apple has collected $19 billion of the $63.4 billion in sales of digital goods and services on iPhone and iPad apps, according to Sensor Tower, an app analytics firm. Google collected $10 billion of the $33.8 billion in similar spending on its app store, Sensor Tower said.

Before Cook’s testimony to Congress, at a House hearing focused on the power of Big Tech, Apple commissioned a study that showed its cut was in line with what many other platforms charged for similar distribution, including the app stores from Google, Microsoft and Samsung, and the game stores from Nintendo, Sony’s PlayStation and Microsoft’s Xbox.

Amazon’s Twitch gaming platform collects 50 percent, according to the study. By comparison, Amazon, eBay and Walmart charge 6 percent to 17 percent for sales of goods on their websites, the study said.

What the study didn’t note: Apple popularized the 30 percent cut.

It applied that rate on any purchases of an app in 2008, and then a year later on any transactions inside of apps for digital goods and services, such as a virtual currency in a game or a subscription to a music, TV or dating app. Apple does not take a cut of apps’ sales of advertising or physicals goods, and thus most apps don’t pay a fee.

Epic made $1.8 billion on “Fortnite” last year, in large part by selling digital currency that players need to buy new features inside the game. The game itself is free.

On Thursday, Epic started its confrontation with the tech giants by allowing “Fortnite” users to pay it directly in its iPhone and Android apps, rather than via Apple or Google’s payment systems.

Epic also offered a 20 percent discount on all purchases that used its payment system. That meant that if Apple and Google charged a 10 percent commission, their price would be about the same as the one Epic was offering its customers.

Jai Chulani, one Apple executive, said in an email to colleagues that he worried that if Apple charged 30 percent of the first year of a subscription “we may be leaving money on the table.”

Eddy Cue, one of Apple’s most senior executives, responded with a better idea: “For recurring subscriptions, we should ask for 40 percent.”

The New York Times Company

'Fortnite' maker sues Apple over app restrictions

SAN FRANCISCO - The maker of video game sensation "Fortnite" on Thursday sued Apple for the way it rules over the App Store, accusing the iPhone maker of wielding monopoly power.

Epic Games called on a federal judge to order Apple to stop its "anti-competitive conduct" and invalidate the tech giant's rules requiring app developers to pay 30 percent of transactions as the price of doing business in the App Store.

The suit was filed the same day Apple booted Fortnite from the online marketplace, after Epic added a payment system that let player transactions bypass the App Store system, saving money in the process.

"Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and designed to keep the store safe for our users," Apple said in reply to an AFP inquiry.

"As a result their Fortnite app has been removed from the store."

- Ruling the App Store -

Apple has in recent months come under fire for the tight grip it has on the App Store, which is the sole source of applications for its popular mobile devices. The issue came up during a heated congressional antitrust hearing last month.

"Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation," the lawsuit argued.

"Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear."

Gamers with Fortnite on their iPhones will still be able to play the game, but won't get updates because those would need to come through the App Store.

The Silicon Valley colossus has defended its position as needed to keep applications, and by extension users, safe from hackers and scammers, claiming that its commission on transactions -- which can drop to 15 percent in the second year for subscriptions -- is earned by minding the shop.

"Epic agreed to the App Store terms and guidelines freely and we're glad they've built such a successful business on the App Store," Apple said.

"The fact that their business interests now lead them to push for a special arrangement does not change the fact that these guidelines create a level playing field for all developers and make the store safe for all users."

Epic's suit, however, accuses Apple of unreasonably restraining trade.

Epic said it is not seeking money or favorable treatment, but instead asking the court order the Apple store rule to be changed for all developers.

Fortnite has been played some 350 million people around the world since its release in 2017 -- a game where players in a virtual world must survive by searching for weapons and resources while eliminating competitors.

It is also a popular e-sports title in which spectators watch experts players and personalities compete, in some cases for cash prizes.

"Apple imposes unreasonable and unlawful restraints to completely monopolize both markets and prevent software developers from reaching the over one billion users of its mobile devices unless they go through a single store controlled by Apple," the suited contended.

"Where Apple exacts an oppressive 30 percent tax on the sale of every app."

Agence France-Presse

Fortnite launches 'Chapter 2' after Call of Duty challenge

Epic Games' launched a "Chapter 2" reboot of its battle royale smash hit Fortnite on Tuesday, as it bids to halt defections of gamers to mobile rivals Apex Legends and Call of Duty.

Fortnite has been down since Sunday giving players no option other than staring at a black screen after a season-ending in-game event where its original island was sucked into a black hole.

The new version of the game features 13 new locations, water gameplay where characters can swim, fish and ride motorboats; as well as new places to hide and a host of new avatars and guns.

Fortnite and its early rival Tencent-backed PlayerUnknown's Battlegrounds (PUBG), popularized an arena-style battle royale survival concept where 100 gamers are dropped onto an island to fight each other to the death.

The games are free to download and play but users pay for upgrades, like the "skins" displayed on characters. Fortnite raked in $2.4 billion in revenue in 2018, more than any other single title, according to Nielsen data.

After the runaway successes of those games, gaming giant Electronic Arts launched the similarly-themed Apex Legends earlier this year.

The mobile version of Activision's long-running Call of Duty franchise was also launched on October 1, and has already racked up 125 million unique downloads and generated more than $28 million in gross player spending, according to app data website SensorTower.

Spending on Fortnite has fallen 23% since the launch of Call of Duty, the website's data also showed.

source: news.abs-cbn.com

Call of Duty Mobile smashes records with 100M downloads in 1st week

The mobile version of videogame franchise "Call of Duty" racked up 100 million downloads in its first week, industry site Sensor Tower said on Tuesday, dwarfing the debuts of previous smashes including "Fortnite" and "PlayerUnknown's Battlegrounds" (PUBG).

PUBG, Fortnite and Electronic Arts' "Apex Legends" scored 26.3 million, 22.5 million and 25 million respectively in their first week of release.

"This is by far the largest mobile game launch in history in terms of the player base that's been built in the first week," said Randy Nelson, head of mobile insights at Sensor Tower.

"Call of Duty: Mobile" was launched by its publisher Activision Blizzard Inc on Oct. 1 and Sensor Tower said the numbers reflected worldwide unique downloads across Apple's App Store and Google Play in the period since.

The smash hit is a "first-person-shooter game" that allows gamers to portray elite soldiers hunting down targets in different parts of the world.

The game's console-based editions have enjoyed a loyal following but the meteoric rise of free-to-play online games have forced companies to adapt and develop their games for the smaller screen.

"Call of Duty" was developed for mobile by Chinese internet giant Tencent Holdings Ltd, which also has a stake in PUBG's Bluehole and Fortnite's Epic Games and is credited with popularizing the battle-royale format, where dozens of online players battle each other to death.

The United States was mobile edition's main draw, with 17% of the downloads in its launch week, followed by India, where PUBG has a strong foothold. Tencent is yet to launch the game in China.

Activision, which will launch the next console edition of "Call of Duty" on Oct. 25, has labeled 2019 a "transition year".

The company said in May it would cut 800 jobs and invest heavily to develop its key game franchises "Call of Duty", "Candy Crush", "Overwatch", "Warcraft", "Hearthstone" and "Diablo".

source: news.abs-cbn.com

'Fortnite' frenzy reigns at E3 gaming expo

LOS ANGELES -- The Electronic Entertainment Expo (E3) wrapped up in Los Angeles on Thursday with the video game "Fortnite" knocking out other contenders to emerge as the star of a show which highlighted the surging interest in competitive eSports.

"Fortnite" maker Epic Games has found a groove with its "battle royale" title in which scores of players fight against each other to be the last one standing in a post-apocalyptic world.

"Fortnite" was the focus of a pro-am tournament which packed a Los Angeles stadium during the annual E3 video game extravaganza and Epic Games has put up $100 million in prize money for competitions.

Reasons for the popularity of "Fortnite" include that it can be played for free on a range of devices including smartphones, personal computers and consoles. Nintendo added "Fortnite" to its Switch consoles this week.

"Battle royale is a proven and popular game style," Twitch eSports program head Justin Dellario told AFP.

"Fortnite" is the most popular game now on Amazon-owned Twitch, with more than six billion minutes of play in April alone, according to Dellario.

Hip-hop superstar Drake set a streaming record at Twitch in March drawing 628,000 viewers for a live stream of him battling for survival in the shoot-'em'-up adventure with players including Tyler "Ninja" Blevins, one of the emerging stars of the sector.

"Fortnite" became an eSports phenomena after the release late last year of a free "Battle Royale" mode that lets up to 100 players vie to be the last character standing on ever-shrinking terrain.

Players in the spotlight

"Fortnite" was crafted to be easy to jump into and fun including goofy stunts, for example, such as riding rockets or shopping carts, according to Celia Hodent, who worked on user experience at Epic Games before leaving late last year.

"There is no recipe for making for sure a game is a huge hit, but now you have specific ingredients you use," Hodent, author of the book "The Gamer's Brain," told AFP. "What you are talking about is more a social phenomenon; when something is very popular then more people want to play it."

The three-day E3 event, once restricted to members of the multi-billion-dollar video game industry, was open to gamers for the second year in a row with 15,000 tickets sold.

Throughout an E3 gathering rich with eye-popping game software, players themselves were in the spotlight.

Live game action and pithy commentary were streamed online television studio-style by platforms such as Twitch, YouTube, Facebook and Mixer.

"Game publishers understand their community is fundamental and allow the players to contribute to the games themselves," Facebook director of console and online gaming Franco De Cesare told AFP.

French video game giant Ubisoft announced at E3 that it is teaming up with a firm founded by actor Joseph Gordon-Levitt to crowd source material for a forthcoming title.

Ubisoft has long tapped into feedback from players while designing games, but the latest step will allow some to make content woven into scenes.

An invitation to collaborate went live on the website of Gordon-Levitt's Hit Record, with the first project being to make music that one might hear on a space pirate radio station in Ubisoft's "Beyond Good and Evil 2," a science fiction shooter crafted to be a space opera.

"These growing communities of players are already present," Ubisoft chief executive Yves Guillemot said. "Hundreds of millions of people are part of eSports; build shared maps block by block, or battle for victory in online arenas."

A coming sequel to the blockbuster "Fallout" franchise will be an open world hosted online and populated by other players instead of computer generated characters, Bethesda Game Studios director Todd Howard said at E3.

In the game "each of those characters is a real person," Howard said.

source: news.abs-cbn.com