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CoRe    1|2021                                                                                                         Blog Highlight          79

Blog Highlight
This section of journal presents a post from the official CoRe Blog which has received significant at-
tention from the online readers in the past quarter. The CoRe Blog is your source of weekly news,
analyses and a case law reference digest on EU competition law and its interplay with regulatory law
but also an interactive discussion platform for the expert community. Visit the blog at
https://www.lexxion.eu/core-blog/ or submit your own blog post by contacting the editors at core-
blog@lexxion.eu.

Epic v Apple: Antitrust’s Latest Big Tech Battle Royale
          Friso Bostoen*

Mid-August 2020, a series of events unfolded in a                             Google’s Play Store and having users ‘sideload’ it in-
short period of time. They may prove a watershed                              stead (ie download it directly from the web), thus by-
moment for the role of antitrust in regulating digital                        passing the 30% fee. However, the Dutch Competi-
markets.                                                                      tion Authority, which examined this experiment in
   It started when players of Epic Games’ popular                             a report on app stores, came to sobering conclusions:
Fortnite game on their iPhone were suddenly faced                             Fortnite downloads dropped an estimated 41%, with
with a choice screen when buying in-app currency                              Epic seemingly losing users to competing game
(V-Bucks). The screen asked users how they wanted                             PUBG.3
to pay for 1.000 V-Bucks, through Apple’s App Store                              Within Apple’s iOS, however, sideloading is made
(for $9.99) or through Epic direct payment (for                               technically impossible. The consequences of being
$7.99).1 Epic thus introduced its alternative payment                         removed the App Store are thus even more severe:
system next to Apple’s. That alternative was cheap-                           the app becomes completely unreachable for new
er: while Apple charges a 30% fee on in-app purchas-                          players and cannot be updated by older players. It is
es, Epic charged only 10%, passing on 20% of cost                             no surprise, then, that Epic had a carefully crafted re-
savings to players.                                                           sponse ready: it immediately filed a complaint with
   Apple then quickly removed Fortnite from its App                           the US District Court for the Northern District of Cal-
Store for bypassing the 30% fee—a violation of its                            ifornia.4 Epic also uploaded a video titled ‘Nineteen
Developer Guidelines.2 This was not the first time                            Eighty-Fortnite’—a parody of Apple’s iconic ‘1984’
Fortnite was yanked from an app store. Epic itself                            commercial (which was directed at the monopolist
had already experimented with pulling its app from                            of its time, IBM).5

*   Friso Bostoen, PhD researcher at Consumer, Competition Market,            2   App Store Review Guidelines, Section ‘3.1.1 In-App Purchase’ (‘If
    KU Leuven (University of Leuven); Fellow of the Research Founda-              you want to unlock features or functionality within your app, (by
    tion - Flanders. In accordance with the ASCOLA Transparency and               way of example: subscriptions, in-game currencies, game levels,
    Disclosure Declaration, the author has nothing to disclose. For               access to premium content, or unlocking a full version), you must
    correspondence: .                              use in-app purchase. Apps may not use their own mechanisms to
    This article is an adapted version of Friso Bostoen, ‘Epic v Apple            unlock content or functionality’).
    (1): introducing antitrust’s latest Big Tech battle royale’ (CoRe Blog,
    4 September 2020)  accessed 22 January 2021, with part of a follow-up blog            ACM/18/032693, 2019) 48–49.
    post added as well: Friso Bostoen, ‘Epic v Apple (3): two perspec-
    tives on app stores’ 30% commission fee’ (CoRe Blog, 3 November
    2020)             4   US District Court for the Northern District of California, Epic
    accessed 22 January 2021. This article and those blog posts draw              Games, Inc. v Apple Inc. (Complaint for Injunctive Relief), 13
    on earlier work, in particular Friso Bostoen and Daniel Mândrescu,            August 2020, available via  accessed 22 January 2021.
    study of app stores’ (2020) 16 European Competition Journal 431.
                                                                              5   Compare the original  accessed 22 January 2021 with the parody
    Fortnite’  accessed 22 January 2021.                                                   22 January 2021.
80           Blog Highlight                                                                                                           CoRe   1|2021

                    These are only the first shots in a larger battle that                 rency or Spotify subscriptions, but not from Uber
                 will rage on for some time. Given that app stores are                     rides or Airbnb stays.
                 the quintessential online platform, rulings in this                    2. So-called ‘reader’ apps (including newspaper, book,
                 area will have outsized influence in shaping antitrust                    audio, music and video apps) may allow users to
                 law in the digital era. This article introduces the                       access content they previously purchased/sub-
                 source of the dispute (the Apple ‘tax’), examines its                     scribed to elsewhere. That is why you can subscribe
                 broader context (the gaming industry), describes the                      to Netflix or Spotify through your web browser
                 first battle in this larger war, and assesses its impor-                  and then log in to your app. However, app devel-
                 tance for EU competition law.                                             opers are not allowed to inform their users of such
                                                                                           alternative options (the ‘anti-circumvention rule’).
                                                                                        3. The commission fee on subscriptions that exceed
                 I. The Apple ‘Tax’                                                        one year has been lowered to 15%.

                 After the launch of the iPhone in 2007, Apple opened                   Apple’s policy became the standard for the industry
                 up its ecosystem to third-party developers in 2008                     as other app stores followed its example.9
                 with the launch of the App Store. The announcement                        The list of developers dissatisfied with Apple’s lev-
                 stressed that ‘applications must be approved by Ap-                    el of commission fees, coupled with a prohibition to
                 ple and will be available exclusively through the App                  use other payment mechanisms, is long.10 A growing
                 Store.’6 On pricing, it noted: ‘Developers set the price               number of apps—including Netflix, Amazon’s Kin-
                 for their applications—including free—and retain 70                    dle, and Google’s YouTube TV—have simply disabled
                 percent of all sales revenues.’7 In other words, Apple                 IAP, making it impossible for consumers to pur-
www.lexxion.eu

                 charges a 30% commission fee (or ‘tax’, according to                   chase/subscribe within the app.11 A new e-mail app,
                 critics).                                                              HEY, tried to disable IAP as well but was kicked out
                                                                                                                    Powered by TCPDF (www.tcpdf.org)
                    Over time, the policy was modified slightly. Today,                 of the App Store for doing so because it did not qual-
                 Apple’s in-app purchase system (IAP) applies not on-                   ify as reader app.12 And Facebook alleges it is prohib-
                 ly to app purchases, but also to in-app purchases and                  ited from even informing users about App Store fees.13
                 subscriptions. There are, however, some excep-                            Until recently, Apple could say that its IAP policy
                 tions:8                                                                was applied equally to all developers. During an in-
                 1. Only purchases of/subscriptions to digital content                  vestigation of the US House Antitrust Subcommit-
                    must use IAP; it is not mandatory for in-app pur-                   tee, however, it became clear that some developers
                    chases of physical goods and services. This means                   did get an exemption: Apple lowered the commis-
                    Apple gets a cut from purchases of Fortnite cur-                    sion fee for Amazon’s Prime Video from 30 to 15%.14

                 6    ‘Apple Announces iPhone 2.0 Software Beta’ (Apple Newsroom, 6         Dante D’Orazio, ‘Amazon skirts Apple restrictions with updated
                      March 2008)  accessed 22 January 2021; Chris
                                                                                            Welch, ‘YouTube TV will cancel subscriptions of customers
                 7    ibid.                                                                 using Apple’s in-app payments in March’ (The Verge, 13 February
                 8    App Store Review Guidelines, Section ‘3.1 Payments’.                  2020)  ac-
                                                                                            cessed 22 January 2021.
                 9    See eg Google Developer Program Policy, Section ‘Monetization     12 A work-around solution was finally found, see Nilay Patel, ‘Apple
                      and Ads’.                                                            approves Hey email app, but the fight’s not over’ (The Verge, 22
                 10 For two examples, see Natasha Lomas, ‘Telegram hits out at             June 2020) 
                    Apple’s App Store “tax” in latest EU antitrust complaint’              accessed 22 January 2021.
                    (TechCrunch, 30 July 2020)  accessed 22 January 2021 and Ina Fried, ‘Tinder’s         2020)  accessed 22 January 2021.
                                                                                        14 Kim Lyons, ‘Documents show Apple gave Amazon special treat-
                 11 Brian Fung, ‘The app-store war between Netflix and Apple is            ment to get Prime Video into App Store’ (The Verge, 30 July 2020)
                    heating up’ (The Washington Post, 4 January 2019)  accessed 22 January 2021;       cessed 22 January 2021.
CoRe    1|2021                                                                                             Blog Highlight      81

Major newspapers are asking what it would take for                        Growth has only accelerated during the pandemic.
them to get a similar deal.15                                             As The New York Times put it: ‘People aren’t reading
   So, complaints have been coming in for                                 or watching movies. They’re gaming.’17
years—what makes Epic different? It may just be the                          The gaming industry can be divided into three seg-
straw that breaks the camel’s back. However, Epic is                      ments: console (eg Microsoft’s Xbox, Sony’s PlaySta-
also in a unique position as complainant. To under-                       tion, Nintendo Switch), personal computer (PC), and
stand why, we need take a closer look at the gaming                       mobile.18 Within each segment, a distinction can be
industry.                                                                 made between developing/publishing the game (con-
                                                                          tent) and offering a platform to distribute it (distrib-
                                                                          ution). The largest game companies by revenue are
II. The Gaming Industry—and Epic’s                                        generally those that have a hand in both content and
    Plans for It                                                          distribution (eg Sony, the second largest game com-
                                                                          pany).19 However, the third largest game company is
The gaming industry is big—perhaps surprisingly                           Apple, which is almost solely thanks to the 30% com-
so. Since 2016, it has been larger than the music in-                     mission charged by the App Store for game distrib-
dustry and box office combined. Take, for example,                        ution.
these numbers from 2018/2019:                                                What about the largest game company? It is the
   This year, the global games market is estimated to                     Chinese tech conglomerate Tencent, which operates
   generate US$152.1 billion from 2.5 billion gamers                      the PC gaming platform WeGame, serves as gateway
   around the world. By comparison, the global box                        to the Chinese market for non-Chinese develop-
   office industry was worth US$41.7 billion while                        ers/publishers, and owns or has a stake in a variety
   global music revenues reached US$19.1 billion in                       of game developers/publishers (eg Riot Games, Su-
   2018.16                                                                percell, Activision and Ubisoft). In 2012, Tencent al-
                                                                          so took a 40% stake in Epic.
                                                                             If there is one lesson to be drawn from the above,
15 Nick Statt, ‘Major news publishers ask Apple what can get them
                                                                          it is that the saying ‘content is king’ is no longer
   an App Store deal like Amazon’s’ (The Verge, 20 August 2020)           true—rather, distribution is king.20 Epic has realised
    accessed 22
   January 2021.                                                          this. It disrupted PC game distribution by launching
16 Samuel Stewart, ‘Video game industry silently taking over entertain-   its own platform (the Epic Store) with a 12% com-
   ment world’ (ejinsight, 22 October 2019)  accessed 22 January 2021.
                                                                          30% fee charged by the incumbent Valve (Steam).21
17 Ruchir Sharma, ‘People aren’t reading or watching movies.
   They’re gaming.’ (The New York Times, 15 August 2020)  accessed 22 January 2021.
                                                                          Apple’s guidelines prohibit ‘creating an interface for
18 In terms of revenue, console constitutes 28% of the market,
                                                                          displaying third-party apps … similar to the App
   mobile 48%, and PC 23%, see Tom Wijman, ‘The world’s 2.7               Store’ and iOS makes it technically impossible.22 Epic
   billion gamers will spend $159.3 billion on games in 2020; the
   market will surpass $200 billion by 2023’ (newzoo, 8 May 2020)         does support a variety of other games available on
    accessed 22 Jan-
   uary 2021.                                                             facilitates the creation of 3D graphics.
19 See ‘Top 25 public companies by game revenues’ (newzoo)                   Epic’s plans do not stop at mobile distribution. The
    accessed 22 January 2021.
20 The saying ‘content is king’ originates from a 1996 essay by Bill
                                                                          shared, virtual space that’s persistently online and
   Gates of that title, available via  accessed 22 January 2021.                               with its own economy, jobs, shopping and media to
21 For an updated list with articles on the competition between the       consume.23 (Science fiction fans will recognize the
   Epic Store and Steam, see  accessed 22 January 2021.
                                                                          Ernest Cline’s Ready Player One.) With Fortnite, Epic
22 App Store Review Guidelines, Section ‘3.2.2 Unacceptable’.
                                                                          is closer than anyone to such a metaverse: it is al-
23 Gene Park, ‘Silicon Valley is racing to build the next version of
   the Internet. Fortnite might get there first.’ (The Washington Post,   ready hosting live events including concerts and
   17 April 2020)  accessed 22 Janu-
                                                                          movies, while the game proceeds in ‘seasons’. It faces
   ary 2021.                                                              competition from Roblox, among others.
82       Blog Highlight                                                                                                      CoRe    1|2021

   While the metaverse is still some time away, a                      with Apple and those agreements have not been
more immediate innovation is cloud gaming: a type                      breached.’29 Moreover, Apple’s conduct is not only
of online gaming that runs games on remote servers                     detrimental to the Unreal Engine, but also affects
and streams them directly to a user’s device (one ben-                 many other developers who have built their games
efit being that your device must not be state-of-the-                  using the engine. According to the judge, ‘Epic Games
art in order to play advanced games). But Microsoft’s                  and Apple are at liberty to litigate against each oth-
xCloud—a ‘Netflix for games’ as subscribers have ac-                   er, but their dispute should not create havoc to by-
cess to 100+ games—is not allowed on the App Store:                    standers.’30
Apple decrees that every game must be submitted in-
dividually, which of course beats the purpose of
xCloud.24 It is no real surprise then that Microsoft                   IV. What’s Next? Two Perspectives on
submitted a declaration in support of Epic.25                              the 30% Commission Fee
                                                                       As the district judge noted, a number of ‘serious ques-
III. After the First Shots, the First Battle                           tions’ remain to be answered. The relevance of those
                                                                       questions for the EU cannot be overstated. The Eu-
Days after Epic submitted its complaint to the US Dis-                 ropean Commission (EC) is investigating both the
trict Court, it filed a motion for a temporary restrain-               App Store and Apple Pay.31 Those investigations are
ing order.26 Apple had not only removed Fortnite from                  driven in part by Spotify, which was quick to support
the App Store but also revoked all developer tools,                    Epic’s complaint against Apple.32 The Dutch Compe-
which makes updates to other programs—including                        tition Authority is also investigating whether Apple
the Unreal Engine—impossible.                                          is abusing the position it has attained with its App
   When it came to the Fortnite removal, the judge                     Store.33 And the president of Germany’s Federal Car-
had little sympathy. She noted that ‘Epic Games made                   tel Office said that Epic’s case ‘has most certainly at-
the calculated decision to breach its [developer] agree-               tracted our interest … [W]e are looking at this very
ments with Apple’.27 Given that ‘the current predica-                  closely.’34
ment appears of its own making’, Epic did note                             Most recently, Epic brought its case to Europe, reg-
demonstrate irreparable harm.28                                        istering its claim with the UK’s Competition Appeal
   Apple’s revocation of all developer tools was con-                  Tribunal. A summary of its claim, published in Jan-
sidered different. Epic’s access to those tools relies                 uary 2021, holds that Apple infringes Articles 101 and
on ‘separate developer program license agreements                      102 TFEU (and their UK equivalents) by:35

24 Ron Amadeo, ‘Apple won’t let Stadia or xCloud into iOS, citing      31 EC, ‘Commission opens investigations into Apple’s App Store
   App Store guidelines’ (Ars Technica, 7 August 2020)  accessed 22 January 2021.      2020) IP/20/1075.
25 US District Court for the Northern District of California, Epic     32 Mikey Campbell, ‘Spotify supports Epic Games’ private antitrust
   Games, Inc. v Apple Inc. (Declaration of Kevin Gammill), 24            action against Apple’ (Apple Insider, 13 August 2020)  accessed 22 January
                                                                          2021.
26 US District Court for the Northern District of California, Epic
   Games, Inc. v Apple Inc. (Motion for Temporary Restraining          33 ACM, ‘ACM launches investigation into abuse of dominance by
   Order), 17 August 2020, available via  accessed 22 January 2021.
27 US District Court for the Northern District of California, Epic     34 Douglas Busvine, ‘Apple-Epic row being closely watched by
   Games, Inc. v Apple Inc. (Order Granting in Part and Denying in        German antitrust chief’ (Reuters, 2 September 2020)  accessed 22 January 2021.
28 ibid 5.                                                             35 Competition Appeal Tribunal, Case 1377/5/7/20, Epic Games,
                                                                          Inc. and Others v Apple Inc. and Another (Notice of Claim),
29 ibid 6.
                                                                          available via  accessed 22 January 2021.
CoRe    1|2021                                                                                            Blog Highlight      83

(a) reserving to itself the sole channel for the distri-                1. Exploitation: Is 30% Excessive?
   bution of apps to and/or the payment processing
   mechanism for purchases of in-app content for                        Article 102(a) TFEU prohibits ‘imposing unfair …
   and by consumers who use iPhones and iPads;                          prices or other unfair trading conditions’. Could Ap-
(b) using its position of dominance to charge unfair                    ple’s 30% commission fees constitute such an unfair
   prices for the distribution of apps via the App Store                price? According to the ECJ, a price is unfair—or
   and/or use of the Apple IAP;                                         excessive—when ‘it has no reasonable relation to the
(c) its response to the introduction by Epic of price                   economic value of the product supplied’.37 This for-
   competition for purchases of in-app content in                       mula has been operationalised through a two-
   Fortnite.                                                            pronged test: first, one has to determine whether the
                                                                        difference between the costs actually incurred and
The claim thus focuses on alternative avenues for                       the price actually charged—ie the profit margin—is
app distribution on iOS and the App Store’s 30%                         excessive; second, if the profit margin is excessive,
commission fee. Focusing on the latter,36 there are                     it must be established whether the price is unfair in
two possible perspectives, both of which seem                           itself or in comparison to the prices of competitors.38
present in the complaint. One the one hand, you                            The App Store’s profit margin is undoubtedly
could focus on the (high) level of the commission                       high: while the number is not public, analysts put it
fee—the perspective of exploitation (cf ‘charg[ing]                     at 90%.39 But is the 30% fee comparatively high? This
unfair prices for the distribution of apps’). One the                   depends, of course, on the chosen point of compari-
other hand, you could examine how the commission                        son. Play Store fees are also set at 30%, but this point
fee is sustained, ie by not allowing others to pro-                     of comparison is unhelpful given that Google also en-
vide app store payment processing—the perspec-                          joys market power. And even app stores without mar-
tive of exclusion (cf ‘reserving to itself … the pay-                   ket power model their fees on the market leader Ap-
ment processing mechanism’). Let us dive deeper                         ple.40
into those two perspectives, focusing on EU com-                           Perhaps PC game stores offer a more useful point
petition law.                                                           of comparison. Here too the incumbent (Steam)
                                                                        charges a 30% fee for distribution. As noted before,
                                                                        however, this fee is being challenged by Epic, which
                                                                        set up its own store, charging only a 12% fee. (With
36 On the former, see Daniel Mândrescu, ‘Epic v Apple (2): market       the first part of its claim, Epic seeks to achieve exact-
   power and foreclosure in the app distribution market(s)’ (CoRe
   Blog, 22 September 2020)  accessed 22 January 2021.
37 Case 27/76 United Brands Company v Commission EU:C:1978:22
                                                                        ecosystem.)
   [1978] ECR 207, para 250 and Case C-177/16 Autortiesibu un              Finally, Damien Geradin and Dimitrios Katsifis ar-
   komunicešanas konsultaciju agentura v Latvijas Autoru apvieniba
   v Konkurences padome EU:C:2017:689, para 35.                         gue that Apple does not offer distribution services,
38 Case 27/76 United Brands Company v Commission [1978] ECR             but just payment processing and related services.41
   207, para 252.                                                       One would then have to compare Apple’s 30% fee
39 Adam Levy, ‘Apple’s App Store revenue growth is accelerating’        with those of PayPal, Stripe and the like, which hov-
   (The Motley Fool, 9 September 2019)  accessed 22 January 2021.                        fee).42 While Apple’s price does look excessive from
40 See eg Samsung, Galaxy Store Seller Portal, Section 6. ‘Revenue
   Share and Tax’, available via  accessed 22 January 2021.                knowledged that the App Store offers more than sim-
41 Damien Geradin and Dimitrios Katsifis, ‘The antitrust case against   ple payment processing.
   the Apple App Store’ (2020) 18–26 and 34–38  accessed 22 January 2021                              However, this quantitative method may not be the
42 See eg  accessed 22 January 2021 and  accessed 22 January 2021.
                                                                        (these include ‘free’ apps that are monetised through
43 House Committee on the Judiciary, ‘Apple responses to Steube
   questions for the record’ (Online Platforms and Market Power,        advertising).43 This means that a small minority of
   Part 2: Innovation and Entrepreneurship, 16 July 2019), available
   via  accessed 22 January 2021.                             opers: they overpay while others benefit freely from
84     Blog Highlight                                                                                               CoRe    1|2021

the App Store. Perhaps the unfairness of the fees is          droid OS, which does allow for competing app stores
rather found in this imbalance, even though such an           (such as Amazon’s), although they have to be side-
analysis does not fit naturally with the established          loaded.47
excessive pricing test.                                          Importantly, however, one has to consider whether
                                                              this potential abuse can be justified. Apple prides it-
                                                              self on the user-friendliness and security of its ecosys-
2. Exclusion: Is App Distribution Tied to                     tem, which is attained—at least in part—by exclud-
   Payment Processing?                                        ing other app stores from iOS. We must thus ask
                                                              whether this restriction is proportionate to the ben-
Instead of focusing on the level of fees, one could ex-       efits achieved by it. Is Android, which is policed less
amine how they are sustained, namely through a                restrictively (eg through flagging, hiding and sus-
form of tying (prohibited by Article 102(d) TFEU).            pending of app stores considered unsafe), significant-
There is no way to distribute apps within iOS other           ly less secure?48
than through the App Store, which may be viewed                  Processing (in-)app purchases exclusively through
as a tie between the operating system (tying product)         IAP can also reasonably be explained by a concern
and the app store (tied product). And there is no oth-        for free-riding: if every app developer could use al-
er way to pay for certain apps in the App Store than          ternative payment processors, Apple would be un-
through IAP, which may be considered a tie between            able to fund its continuous investment in the App
the app store (tying product) and payment process-            Store. At the very least, it would have to start actual-
ing (tied product).                                           ly competing with those other payment processors,
   In order for tying to be abusive, the products in          which would certainly lead to a lower fee. Again, the
question must be separate products, customers must            question is whether this restriction is proportionate
be unable to get the tying product with the tied prod-        to its goal.
uct, there must be foreclosure in either the tying or
the tied market, and the tie must not be justified.44
   To test whether separate products are being tied           V. Conclusion
together, the EC generally examines whether there
is distinct demand for the tied product. When it              A consensus is building that the fees charged by app
comes to app stores, this does seem to be the case:           stores are too high. While app developers have long
app developers have been complaining about the lack           complained, they are now joined by prominent tech
of alternatives to the App Store for years (and Epic          commentators (eg Ben Thompson49 and Ben
seems ready to supply one), while consumers go as
far as jailbreaking their iPhone to access other app
                                                              44 See Case T-30/89 Hilti v Commission EU:T:1991:70 [1991] ECR
stores. IAP also seems to be a distinct product: Ap-             II-1439 and Case T-201/04 Microsoft v Commission
ple only introduced this feature after the App Store,45          EU:T:2007:289 [2007] ECR II-3601, paras 814–1229. See also
                                                                 Guidance on the Commission’s enforcement priorities in applying
and payment providers already take care of billing               Article 82 of the EC Treaty to abusive exclusionary conduct by
of App Store transactions that are not obliged to use            dominant undertakings [2009] OJ C45/7, paras 47–62.

IAP.46                                                        45 See ‘Apple launches subscriptions on the App Store’ (Apple
                                                                 Newsroom, 15 February 2011)  accessed 22 January 2021
                                                              46 See The App Solution, ‘How to integrate payment system into
other app store than the App Store (of course, it is             the existing app’  accessed 22 Janu-
                                                                 ary 2021.
iOS in the first place). And when selling digital prod-
                                                              47 Amazon Appstore can be sideloaded via  accessed 22 January 2021.
less they qualify as reader apps).                            48 On the use of this mechanism, see eg Natasha Lomas, ‘Aptoide, a
   Insofar as there is foreclosure in this case, it is sit-      Play Store rival, cries antitrust foul over Google hiding its app’
                                                                 (TechCrunch, 4 June 2019)  accessed 22 January 2021.
                                                              49 Ben Thompson, ‘Apple, Epic, and the App Store’ (Stratechery, 17
markets is being restricted if not made impossible.              August 2020)  accessed 22 January 2021.
CoRe    1|2021                                                                                                     Blog Highlight          85

Evans50) and other big tech companies (Microsoft51                       duced at zero marginal cost—is a 30% fee then re-
and Facebook52). The hardest part may be figuring                        ally problematic? By contrast, firms like Spotify and
out a suitable remedy.                                                   Netflix have high marginal costs—for them, the
   An excessive pricing perspective calls for lower-                     30% fee can mean the difference between profitabil-
ing App Store fees. A tying perspective would result                     ity and losses. However, drawing a clear dividing
in the unbundling of the App Store and payment pro-                      line between these two categories of app is no easy
cessing. In that case, however, Apple would be pro-                      feat.
viding (even more) developers with free distribution.                       Finally, the solution may end up being a techno-
Would it then start charging a separate distribution                     logical rather than legal. When Apple did not allow
fee? Derive its profit from a more competitive com-                      cloud gaming services such as Microsoft’s xCloud in
mission fee? Or increase its annual developer fee of                     the App Store, Microsoft decided to bring its service
$99? (Of course, Apple also profits indirectly from                      to iOS as a web app.53 And even Fortnite is return-
the App Store and the apps in it, through the sale of                    ing to iOS via a web app.54 However, while such in-
iPhones.)                                                                novation should be applauded, it remains to be seen
   Some argue for a differentiated solution. After all,                  whether web apps can truly compete with native
the digital goods sold by Fortnite (‘skins’) are pro-                    apps.55

50 Benedict Evans, ‘App stores, trust and anti-trust’ (Benedict Evans,       enforcement decisions that privilege its own services and revenue
   18 August 2020)  accessed 22 January 2021.
                                                                         53 Tom Warren, ‘Microsoft is bringing xCloud to iOS via the web’
51 See the earlier declaration of support of Epic (n 25) and Steven         (The Verge, 8 October 2020)  accessed 22 January 2021.
   scrutiny of app stores’ (Politico, 18 June 2020)                gaming web app’ (The Verge, 19 November 2020)  accessed 22 January 2021.
52 See in particular the statements in the Facebook Response to the      55 In its market study, the ACM found that web apps cannot be
   EC Public Consultation on the Digital Services Act (DSA), 81–82          considered a realistic alternative to most native apps, although
   available via  accessed 22 January 2021 (‘Apple has made policy and          42–44.
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