Apple says Epic sought special ‘Side’ deal on Fortnite fee

Apple Inc. fired back at Epic Games Inc. in their fight over the iPhone maker’s app fees, saying the game developer’s boss sought a special “side” deal that would fundamentally upend how the App Store works.

“Having decided that it would rather enjoy the benefits of the App Store without paying for them, Epic has breached its contracts with Apple, using its own customers and Apple’s users as leverage,” Apple said in a court filing Friday.

Epic is set to ask a federal court on Monday to force Apple to restore the Fortnite app to the App Store, and block the company from cutting off Epic’s developer tools and limiting its ability to provide key graphics technology to other apps. Apple is urging a judge in Oakland, California, to reject Epic’s request.

The dispute is shaping up into a major antitrust showdown as friction between developers and Apple has been building for more than a year. Developers have been increasingly calling out Apple’s App Store fee policies and rules, complaining they are unfair and only benefit the company’s own services.

Apple said Epic created a “hot mess” by offering customers a way to directly buy items for Fortnite and circumvent the App Store fees. Apple said it won’t bend its rules for Epic.

Epic Chief Executive Officer Tim Sweeney emailed Apple on June 30 seeking to set up its own competing Epic Games Store app through the App Store, according to Apple’s filing. Despite being told that “Apple has never allowed this,” Epic went ahead and launched its own storefront on Aug. 13, Apple said.

Phil Schiller, head of Apple’s App Store, said in the filing that “Sweeney’s pronouncement undid one of the most fundamental terms of the business relationship that had existed between the parties for many years.”

“If tolerated, Epic’s unilateral and ongoing breach of its contractual commitments will send giant ripples across the entire App Store business model and ecosystem to the detriment of not only Apple, but also the users and developers who depend on the integrity and security of the App Store,” Schiller said.

Epic didn’t immediately respond to a request for comment.

Spotify also has been sparring with Apple, and this week news publishers confronted Chief Executive Officer Tim Cook over why they can’t qualify for a discounted fee -- 15% -- that Amazon.com Inc. gets for its Prime video app.

Match Group Inc., operator of many popular online dating apps, said it’s backing Epic but has stopped short of joining the court fight. “Apple uses its dominant position and unfair policies to hurt consumers, app developers and entrepreneurs,” Match said in a statement.

Of the 2.2 million apps available on the App Store, the 30% fee is billed to more than 350,000. Apple reduces the fee to 15% for subscriptions after a user signs up for more than a year.

The case is Epic Games Inc. v. Apple Inc., 20-cv-05640, U.S. District Court, Northern District of California (Oakland).

Written by Malathi Nayak and Mark Gurman.