The worldwide popular ‘Fortnite’ game developer has launched the Internet’s first ‘World War’ with separate antitrust lawsuits against Apple and Google (with a very clever stab at Apple’s “1984” campaign for what might be arguably one of the most creative tech activist movements ever). The lawsuit accuses the two companies of removing its app from both the App Store and the Google Play Store after it’d updated its payment system to offer a separate, discounted method that bypasses both companies’ taxed system.
This has been the talk of most tech-related news over the last couple of weeks, and while it may seem like fair game considering Epic Games knew it was violating app store guidelines, the issue is rooted at a much deeper level, which was brought to light in the recent “Big Four” tech hearing that saw Facebook, Apple, Google, and Amazon address more-than-slightly-uncomfortable questions about the way they do business — and, essentially, crush any hope of competition for both small and increasingly big players.
The issue surrounding high developer fees is nothing new — it’s been a time bomb for years. But Epic Games, with revenues reaching US$ 5.6 billion in 2018 and targeting a US$ 17 million valuation, has the might to take on other giants while unofficially calling on all gamers to “rise”.
Context: more harm than good?
The 2016 US presidential election was a pretty big wake-up call about the power of social media platforms like Facebook to be used for harm, not just for entertainment and good, both in Washington, D.C. and across the world . Those concerns were picked up again by presidential candidates in the 2020 election race, mirroring reports from a few years back about venture capitalists referring to those tech companies as a “Kill Zone” for young startups. Their aspirations of making a dent in a potentially ripe-for-disruption market are often short-lived when one of the “Big Four”s sets its eyes on taking it over through talent/company acquisitions or, in some cases, innovation replicas.
Breaking those giants apart has been suggested by politicians across the board, but while we sit back and wait to see if that day will ever come, the existing reality is:
- Amazon reportedly abuses its power to make sure that their own products will always perform better than other third-parties, and use the data they have access to in order to suppress them.
- Apple unfairly uses its App Store (currently hosting more than 1 million apps) to “block” rivals and force apps that are on it to pay a 30% commission.
- Facebook is accused of being a monopoly in social networking and the way it has acquired rivals like Instagram to maintain its monopoly.
- Google uses its dominant position in search, online advertising, and its Android smartphone market to crush rivals (The New York Times provides a nice summary of the hearing here.)
Centralized. Centralized. Centralized.
Although Facebook had been under public scrutiny for several years, other big tech firms hadn’t received as much public backlash up until this point, opening millions of eyes about the highly centralized practices embraced by those giants. Despite being different businesses with different business models, they are, essentially, gatekeepers — “the choke points on the Internet” as Cecilia Kang, a technology and regulatory policy reporter for The New York Times, pointed out in an episode of The Daily podcast.
They control as much of commerce, communication, and overall search of information as one can get their hands on.
Epic Games’ lawsuit is timely and important
Apple was put on the spot during the hearing when asked “What’s to stop Apple from increasing its commission to 50%?”, echoing growing dissatisfaction among app developers who have seen large chunks of their revenue gobbled up since Apple first starting imposing this commission in 2008, leaving developers feeling very uncertain about the future of their partnership with the iPhone giant.
Epic Games decided to do something about it by introducing a new direct payment system for its video game ‘Fortnite’, bypassing the developer fees that Apple and Google charge for all in-app purchases — which is against their rules. As of last week, it’s impossible to download the game from either platform. In response, Epic sued them both, taking on two of the most powerful companies in the world in a high-stake legal battle.
In the case of Apple specifically, app developers cannot choose any other alternative of payment other than the App Store, whereas Google allows apps to accept payments from other app marketplaces on Android. Apparently, not all apps are treated equally: while Apple reminded Epic Games that it’d agreed to their terms when it signed their contract and that all developers pay the same fee, the Fortnite developer called BS by mentioning a plethora of apps on the App Store, including Amazon, Nike Sneakers, Best Buy, McDonald’s and Uber, which are allowed to accept direct payments, approved by Apple. Security and user privacy are cited as the main reasons behind their high fees to fund their efforts.
Apple’s commissions are estimated to be their single most profitable revenue stream. In other words, Epic Games is hitting Apple where it hurts in a time when the general public’s mood (including angry politicians) is increasingly anti-tech.
Envisioning a decentralized world
Its concepts are as complex as one not-so-tech-savvy outsider may perceive them to be, but the fundamentals are fairly straightforward to comprehend: the original intent of Bitcoin and subsequent cryptocurrencies within the blockchain is to provide a fully autonomous, programmable, entirely decentralized medium of exchange between individuals and legal entities, thereby bypassing the need for an intermediate party altogether (such as Apple, Google, or banks for the transfer of money), wherein security and privacy are also prioritized by virtue of “digital blocks” that contain transaction records (this is a separate topic in and of itself.)
This validates the idea that this sort of battle wouldn’t happen in a decentralized and organized world, where different ecosystems would be able to control their terms in different ways, and where people would have the ability to use bitcoin or other cryptocurrencies inside applications such as Fortnite.
And although Epic Games itself isn’t exactly “decentralized” (their entire gaming ecosystem is run on a proprietary currency called V Bucks, which has nothing to do with outside applicability), the coming weeks and months will undoubtedly raise more questions regarding existing practices and, perhaps, turn more than a few curious eyes away from “traditional” models (i.e. systems from the past 10+ years) to look towards other ecosystems that prioritize people over profits.
In the words of Anthony Pompliano, host of the “Pomp” podcast: “The future will be decentralized not because it’s cool, but because it will be necessary.”