Apple’s Epic fail powers up EU tech oversight cred

Once bitten. Apple looks to have pulled off that rare feat: the O-turn. Last month the $2.6 trillion firm video game maker Epic Games a developer account – necessary for Epic to create a competing app store on iPhones in the European Union. Then, on Wednesday, Epic announced that Apple had terminated that permission. Finally, according to an Epic statement late on Friday, Tim Cook’s company approved it again. The about-face hands the EU’s Digital Markets Act (DMA), with which tech giants last week had to officially demonstrate compliance, a handy instant win.

The feud between Apple and privately held Epic goes way back. The games maker had long complained about the 30% cut that Apple’s App Store took when gamers paid Epic for extra features in its apps. It had also lamented the inability of developers to open rival marketplaces on Apple’s mobile platform. Eventually, in August 2020, Epic changed its software to allow players of its flagship “Fortnite” title to purchase in-game items directly from itself rather than via Apple. Tim Cook’s firm promptly booted the game off its store for breaking the rules.

This wrangling left a nuanced legacy. When Epic sued, accusing the Big Tech giant of anticompetitive behaviour, U.S. courts largely ruled that Apple was in the right. But the EU’s DMA, which requires phone makers to allow for rival app stores in the 27-country bloc, meant that Epic could look forward to setting up its own app store on iPhones anyway, at least for European customers.

Hence why Apple’s call to terminate Epic’s developer account was controversial. Though it applied globally, with the iPhone maker citing concerns that past breaches of Apple rules might happen again, Epic was quick to paint the edict as non-compliance with the DMA. Indeed, any Epic mobile store would probably have been one of the larger alternative app stores for EU-based Apple users, along with a yet-to-be-worked-out Microsoft gaming marketplace. As well as the DMA, the Commission said it was also evaluating whether Apple’s actions were compliant with the Digital Services Act, which relates to consumer protection, and the Platform to Business Regulation, which has to do with account closures.

The ability to flog more “Fortnite” gear to European iPhone users is unlikely to move the financial needle too much for Epic, which was valued at $31.5 billion in a 2022 funding round and whose shareholders include Walt Disney and Sony. Documents submitted as part of its 2021 lawsuit with Apple suggested that less than a tenth of “Fortnite” sales previously came from Apple’s iOS, with consoles such as Xbox and PlayStation accounting for the vast majority of revenue.

Either way Apple’s O-turn is helpful for the EU. Had Cook persisted in arguing that his hostility was directed at Epic rather than competition per se, Brussels would have been obliged to work out a response. That would have been a tricky balance to strike – despite last week’s $2 billion fine on Apple, the EU has to have a working relationship with U.S. Big Tech. Now that Apple has backed down, it gives the DMA a sheen of toughness that might not have been so apparent had Epic and its foe played nicely.