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The list of technology companies that have moaned about app store rules includes Coinbase, Match Group, Spotify and Meta. None have managed to upset the status quo set by Apple and Google. Epic Games’ legal fight is unlikely to change that.
The value of the mobile app market is estimated at more than $100bn. Google and Apple take a cut of payments made for digital goods and subscriptions within apps listed on their stores. At Google this is 15 per cent for the first $1mn of revenue and 30 per cent afterwards.
Both companies are keen not to specify what sort of revenue and profit these fees produce. At Google parent Alphabet it is included in the “Google other” segment, which reported revenue of $23.9bn for the first nine months of the year, up nearly a fifth on the previous year. The broader “services” segment it is part of has a 35 per cent operating income margin. Epic argues that the app store margin is far higher.
Three years ago, gaming company Epic attempted to swerve the charges. In response, Apple and Google removed its Fortnite app from stores. Epic sued both companies. It has already lost its case against Apple, but is seeking a review by the Supreme Court. This week it is facing Google. But the case looks weak. The presence of Apple’s app store negates arguments of a monopoly. Plus Google Android phones allow users to upload apps from other app stores.
Clawing back fees would help Epic, which says it spends more than it makes. But even if Epic succeeded in removing in-app purchase fees Google could opt to recoup the lost revenue by charging a fee for distribution of apps.
Google says fees enable it to provide users and developers with a safe service. Still, the negative attention is unwelcome and coincides with multiple antitrust cases. Google has already agreed to let developers use alternative ways to pay. Further concessions are likely.
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