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Epic capitalizes on new law and asks Apple to reinstate Fortnite in S. Korea. Will Apple agree?

Although the new South Korean law allows third-party in-app payment systems, the law is yet to go into effect and Apple will likely wait for the verdict in the lawsuit filed by Epic before taking any action.

“Epic intends to re-release Fortnite on iOS in Korea offering both Epic payment and Apple payment side-by-side in compliance with the new Korean law,” the gaming company tweeted on Friday while asking Apple to restore its developer account.

Why was Fortnite removed from app stores?

Violation of in-app payment policy: At the heart of the issue was Epic Games’ decision to provide Fortnite users with a payment mechanism to pay directly to the developer. This went against the policies of both the Apple App Store and Google Play Store which mandate that all apps must use their proprietary in-app payment systems. Due to this violation, Fortnite was removed from both stores in August 2020. While the company did not specify why it introduced this payment method, it is safe to assume that it was done to avoid paying the 30 percent commission that Apple and Google levy.

Lawsuit filed by Epic: Epic Games eventually filed a lawsuit against both Google and Apple in the US alleging that the two companies have a monopoly over the market for distribution of apps and the market for in-app payments in Android and iOS operating systems respectively. In addition to asking for third-party payment systems to be allowed, the lawsuit also asks that third-party app stores be allowed.

What does the new South Korean law say?

Allow third-party payment systems: South Korea’s National Assembly on August 30 passed a first-of-its-kind bill that forces Google and Apple to open their app stores to alternative payment systems for in-app purchases. By allowing developers to use their choice of payment system, the new law effectively allows them to avoid the commissions charged by Google and Apple. Failure to comply with these new rules could result in companies being fined up to 3 percent of their revenue earned in South Korea.

Response from Google and Apple: Both Google and Apple were understandably not happy with the new law. Google said that commissions allow it to keep Android free and give developers the means to access billions of consumers around the world and Apple said it was concerned that users will be at greater risk of fraud and privacy violations when using other payment systems.

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Reaction from Epic Games: Tim Sweeney, CEO of Epic Games, called the new South Korean law a major milestone in personal computing.

Will Apple restore Epic’s developer account?

In a statement to Bloomberg, Apple said that there’s “no legitimate basis” for the reinstatement of Epic’s developer account. “As we’ve said all along, we would welcome Epic’s return to the App Store if they agree to play by the same rules as everyone else,” Apple said. This vague statement makes sense because Apple’s developer rules remain the same. The South Korean bill still awaits to be signed into law by President Moon Jae-in. Although his party strongly endorsed the legislation and he is expected to sign it this month, Apple does not have to do anything until the law goes into effect.

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Furthermore, although the Korean law states that companies that run app stores cannot unreasonably delay the approval of apps or inappropriately remove them from the store, preventing companies from taking retaliatory measures when developers choose to use alternate in-app payment systems, just as it happened in the case with Fortnite, this law likely applies going forward and not retroactively. The South Korean law also does not oblige Apple to approve or reinstate any developer program account.

Ultimately, what Apple will do depends on the verdict from the Epic lawsuit. The hearings in the much-publicised lawsuit concluded last month and a verdict is awaited, but this could take months to arrive.

Has Epic approached Google as well? 

Fortnite was removed from both Apple and Google app stores for the same reason, and it makes sense that Epic will want to game back on Play Store as well, but the company has not publicly disclosed if it has asked Google to restore its Play Store developer account. Two reasons why Epic might be slower in reaching out to Google:

  1. Android users still have the ability to install the game from other app stores or manually with an APK file
  2. The Fortnite iOS app generates much more revenue than the Android version

How are other countries dealing with app store regulations?

India: In India, both Google and Apple are facing regulatory scrutiny over their app stores. While the Competition Commission of India ordered a detailed investigation into Google Play Store last November, it is currently reviewing an antitrust complaint filed against Apple App Store last month.

US: The United States is contemplating a law that is wider in scope than the South Korean one. On August 11, US lawmakers introduced a new bill titled Open App Markets Act that proposes:

  • Operating systems must allow third-party app stores
  • Developers must be allowed to choose their choice of in-app payment system
  • Pricing for various app stores or in-app payment systems can be determined by developers
  • Developers can freely communicate pricing offers with users
  • Google and Apple cannot use non-public data to build competing apps
  • No self-preferencing in app stores
  • Third-party developers must be provided with the same access to developer tools

EU, UK, and Japan: The European Union has launched an investigation into Apple App Store following a complaint from Spotify and the United Kingdom has launched a broad investigation into Google’s and Apple’s effective duopoly over the supply of operating systems (iOS and Android), app stores (App Store and Play Store), and web browsers (Safari and Chrome). Both investigations are ongoing. Japan’s Fair Trade Commission too had been investigating Apple App Store, and earlier this month Apple made a concession to settle this investigation. The concession allows developers of “reader apps” like Netflix and Spotify to include an in-app link to their website for users to set up or manage an account.

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