INSIGHT: Fortnite Creator Epic’s Battle With Tech Giants Could Harm Consumers

If you have middle school-aged children or older, chances are you’ve heard of Fortnite, an online multi-player game, created by Epic Games Inc., that allows users worldwide to compete in a battle to the last person.

On Aug. 13, Epic filed suit against both Apple and Google in federal court alleging “anti-competitive restraints and monopolistic practices.” While the details of the quarrel are important, the real danger for consumers comes from attaching antitrust concerns to the fight. Tying the dispute up in court for years likely prevents the parties from negotiating a mutually beneficial agreement.

The game is nominally free, but offers in-app purchases that greatly increase a player’s chance of success. It has more than 350 million players worldwide.

The dispute began because the two most popular ways players download the game to their phone is through Apple’s App Store and Alphabet’s Google Play app marketplaces. As a condition of offering Fortnite, Apple and Google both required that in-app purchases be run through them, incurring a 30% commission. The App Store is the only way to download the game onto an iOS device. The game can be downloaded on an Android device by methods other than Google Play.

Deliberately Violated Terms

In August, Epic deliberately violated these terms by offering its own payment system, potentially cutting out Apple or Google and denying their commission. Predictably, Apple and Google removed Fortnite from their app marketplaces. Epic was ready with lawsuits and a snazzy PR campaign the same day.

Apple filed a countersuit Sept. 8 to stop the game maker from using its own payment system for Fortnite.

Apple and Google argue that its terms and conditions assure certain standards of privacy and security for users. They could also argue that their stores are private property and they can set any rules they like.

Similarly, Epic has every right to take their ball and go home. Fortnite is their private property and they don’t have to offer it under any conditions they don’t want to.

Epic and Apple or Google may come to a mutually agreeable contract or they may not. Maybe Apple or Google will decide they’d rather take a smaller percentage than to miss out on all revenue from Fortnite.

Perhaps Epic finds they need Apple and Google’s distribution enough to agree to the 30% commission after all. Possibly some enterprising innovator devises a new way to distribute the game or creates a superior game, causing Fortnite to go the way of Frogger and Minesweeper.

The point is, no one knows what will happen—including federal judges.

Innovation Stymied

The biggest problem with antitrust regulation is the innovation it prevents. In this instance, the antitrust case likely prevents the next revolutionary idea or product from coming to fruition.

Technology is dynamic, not static. Creative destruction, innovation, and ever-changing consumer preferences are at work to tip the scales or even render the whole discussion mute (see, the Microsoft antitrust trial about browsers that took two years and cost taxpayers $9.4 million). Market solutions don’t get pursued when the players are busy waiting on the antitrust authority.

Better to let Apple, Google, and Epic duke it out in the marketplace. The solution from the private sector will be quicker and more adaptable to consumer preferences, developments in technology and changes in the market. A court decision will move glacially and be much more rigid by comparison. The bureaucratic baggage of antitrust regulation has historically included rent-seeking, politicizing of policy, and chilled innovation.

Platforms like Apple and Google’s app stores are on the economic frontier. Frontiers are inherently messy places. The choice is between elites in courtrooms and agency offices controlling them centrally or individual actors dealing with them directly.

It’s best to let Epic and the platforms deal with each other head on and let consumers pick the winner.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Write for Us: Insight Guidelines

Author Information

Jessica Melugin is associate director of the Center for Technology and Innovation at the Competitive Enterprise Institute, a free market think tank.