Epic Games, best known for creating the viral video game Fortnite, received a favorable ruling regarding Google’s Google Pay system. It was a big win in the company’s fight for the right to process its in-app payments. The company, which recently acquired Bandcamp, argues that it should be able to use any payment platform it wants with its games and other software instead of being forced to use Google’s Google Pay system. The feud is far from over, but the eventual ruling could ripple across all app stores.
First, why does it matter?
It matters because when Epic games designed Fortnite, they made sure that gamers could pay real money to buy digital in-game accessories and items. That’s a big deal because when you buy things in Fortnite, you don’t download them. Instead, Epic stores them on servers for as long as your account is active.
More importantly, app stores take commissions from purchases. For example, Apple infamously charges between 15% and 30% on app-store purchases as commission. Google Play charges subscription apps 30% during their first year on the app store. After that, it’s 15%. Third-party, non-subscription apps pay a 15% commission. If Epic is allowed to use its own payment systems, other developers might seek to avoid paying Google their commission too.
Epic doesn’t have the best track record with publishers
The company has had issues with Fortnite on Android phones, putting them at risk of catching malware when they first tried going around Google’s Play store. In addition, it acquired popular indie music service Bandcamp earlier this year, presumably to get its hands on its payment processing services.
Google isn’t a fan of competition either
Epic filed the lawsuits in response to Google’s decision to pull its apps from Bandcamp. The tech titan uses its strength in search, advertising, and cloud computing to coerce developers into using its payment services by playing hardball with app store approval.
However, Epic isn’t going down without a fight; it’s fought back against Apple in the past – they lost that battle. Epic’s Bandcamp is also going up against Google. For their part, the search engine giants are seeking to model Microsoft to defeat antitrust lawsuits.
How else could this affect consumers?
If successful, Epic’s move could be a watershed moment for mobile app makers. Mobile payments are big business, with consumers expected to spend $6 billion on in-app purchases in 2018. Bandcamp is a crucial part of that market; despite only supporting digital sales, it racked up millions in revenue last year by selling concert tickets and merchandise from some of music’s most popular acts. Bandcamp is known for providing artists with better revenue options than other streaming services.
Big picture background
Epic Games is one of gaming’s most prominent developers. Fortnite and other titles accounted for $840 million in revenue from in-game purchases last year. You can see why Google is keen to keep 15%-30% of that. Despite being based in the US, Chinese conglomerate Tencent owns part of Epic Games.
While the gaming community is vocal about avoiding politics, that can’t always be the case. While not precisely a proxy battle, this clash between Google Play and Epic Games is an example of globalizing markets. Reports allege Google considered going around Epic by teaming up with Tencent to buy out Epic. That would have given the Android company more control over Epic and avoided this legal tussle.
