Apple cuts commission costs for small business as Epic Games sues after App Store removal

The charges have landed the world’s most valuable company in multiple court battles but they’re about to get cheaper.

Apple has announced it will cut the commission it charges to some developers on its App Store, as it faces another lawsuit from a company that tried to get around it.

Apple charges 30 per cent commission on in-app payments.

The company runs the App Store and decides what is on it.

It’s also the only way to install an app on an iPhone or iPad.

The company has announced developers who earn less than $US1 million ($A1.37 million) a year (after Apple takes its cut) will instead be charged 15 per cent commission on in-app payments, beginning in 2021.

It comes as the company faces a lawsuit from a company who had its apps removed when it tried to add its own way for customers to pay that cut Apple out of the transaction.

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A Fortnite player logging in on their iPhone. Picture: Chris Delmas/AFP

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Fortnite maker Epic Games has filed another lawsuit against computing giant Apple, this time in Australia, but the creators of the viral video game phenomenon aren’t asking for any money.

Instead, it wants a court to rule that Apple has to allow it to take payments from customers using its own systems rather than relying on the ones Apple mandates, for which the company also receives a 30 per cent commission.

In response, Apple has accused Epic of “reckless behaviour” that “made pawns of customers”, and said it looks “forward to making this clear to Australian courts”.

A lawsuit was lodged in the Federal Court on Monday, alleging Apple’s conduct in its App Store is a misuse of market power that restricts competition.

Epic claims Apple’s alleged conduct breaches Australian Consumer Law, but the company’s founder is adamant it’s more than just an argument over money between two massive corporations.

“It goes to the heart of whether consumers and creators can do business together directly on mobile platforms or are forced to use monopoly channels against wishes and interests,” Epic founder and CEO Tim Sweeney said.

He said Apple’s current business practices go against the spirit of its original products from when the company were “pioneers of the personal computer”.

“Anyone could write code, anyone could release software and users could install software from sources of their choosing. Today’s digital platforms must be similarly open to fair competition,” Mr Sweeney said.

After the lawsuit was filed in Australia, Apple announced the commission cut, which Mr Sweeney said “would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments”.

He said both “iOS and Android need to be fully open to competition in stores and payments, with a genuinely level playing field among platform companies, app creators, and service providers”.

“That, and not gerrymandering the community with a patchwork of special deals, is the only path to a fair app marketplace.”

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Epic Games founder Tim Sweeney is launching a lawsuit against Apple in Australia over App Store commissions.

Fortnite was removed from Apple’s digital marketplace in August after Epic “defied the App Store monopoly” by adding a new way to pay that cut Apple out of the deal, in violation of the store’s policies.

Epic alleges those policies are so strict they “would have even blocked the World Wide Web if it had been invented after the iPhone”.

Apple said the policies are there to protect consumers and pointed to a judge’s description in a separate US lawsuit of Epic “clandestinely” adding the payment option, which it “intentionally omitted” when seeking Apple’s approval for the update that activated it.

“Our priorities have always been to provide customers with a safe and trusted place to download software and to apply the rules equally to all developers,” a statement from Apple reads.

The company added that Epic had been one of the most successful developers on the App Store, which allowed them to reach millions of iOS customers as it grew into a multi-billion dollar business. (In contrast Apple’s value is measured in trillions.)

Fortnite is playable on a variety of devices including computers, consoles and mobile phones. Picture: Andrew Harrer/Bloomberg/Getty Images

Apple claims Epic knew what it was doing when it violated the policy that led to Fortnite being removed.

“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines that apply equally to every developer and protect customers.”

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims told news.com.au the case will be “fascinating” to watch.

Mr Sims said that “it’s good to see a case of this nature being brought” under the recently revised Section 46 of the Competition and Consumer Act – revisions “which were so heavily contested, which the business council so strongly opposed”.

The law was revised in 2017 and “now prohibits a firm with a substantial degree of market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in a market” according to the consumer watchdog.

The ACCC is currently investigating app marketplaces, with a report due in March.

“We’ll follow this with great interest,” Mr Sims said.