• 99 days Could Crypto Overtake Traditional Investment?
  • 104 days Americans Still Quitting Jobs At Record Pace
  • 106 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 109 days Is The Dollar Too Strong?
  • 109 days Big Tech Disappoints Investors on Earnings Calls
  • 110 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 112 days China Is Quietly Trying To Distance Itself From Russia
  • 112 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 116 days Crypto Investors Won Big In 2021
  • 116 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 117 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 119 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 120 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 123 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 124 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 124 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 126 days Are NFTs About To Take Over Gaming?
  • 127 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 130 days What’s Causing Inflation In The United States?
  • 131 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Investing
  3. Stocks

Apple May Be Worth $2 Trillion, But Its Payment Monopoly Is Under Fire

Apple

Apple is one of the most thrilling stories of the year as it trounces tech, gaining some 400% this year, reaching a valuation of $2 trillion in a first for a U.S. company, and now gearing up for a stock split that will make it easier for more retail investors to own it. But there is sometimes a point where a company on a major high can get shot down for overshooting. Now, it may not be able to keep taking large chunks of revenue eternally from apps that are powers in their own right.   

Last November, Epic Games, the maker of wildly popular "Fortnite," introduced its own payment system in mobile versions of the game, bypassing Apple's commission. In response, both Apple and Google pulled the game from their app stores two weeks ago.

The App Store conditions state that Apple takes 30% of revenue generated from in-app digital purchases, and developers are not allowed to advertise that prices may be cheaper outside the app. Google takes the same cut on its Play Store. Fornite’s parent company, Epic Games, itself charges a 12% commission in its PC game marketplace. 

But Epic is big, too. So when it got booted from the app stores, the giant game-maker sued both two companies, accusing them of monopolistic practices. The lawsuits are apparently not seeking any monetary damages.

Epic Games CEO Tim Sweeney criticized Apple for having an absolute monopoly on app stores.

“Apple has locked down and crippled the ecosystem by inventing an absolute monopoly on the distribution of software, on the monetization of software,” Sweeney told CNBC. He shared the same sentiment on Google.

Epic Games won a partial victory earlier this week when a federal judge barred Apple from kneecapping the “Fortnite” maker’s trademark development tool.

Related: Emerging Economies Could Get Left Behind In Race For COVID Vaccine

According to the ruling, Apple can continue to block Fortnite from its App Store. However, it cannot terminate Epic Games' developer accounts or compromise its graphics tool Unreal Engine, which is used by many third-party developers. 

Saying that Apple’s move that could cause “significant damage to both the Unreal Engine platform itself, and to the gaming industry generally”, US District Judge Yvonne Gonzalez Rogers Rogers wrote in the decision that “Epic Games and Apple are at liberty to litigate against each other, but their dispute should not create havoc to bystanders.” 

A full hearing is now scheduled to take place in September. 

Refusing to order Fortnite reinstatement, Judge Rogers said that “the current predicament appears of its own making”, but also stressed that she saw no competition in commission to Apple’s App Store.

“The question is, without competition, where does the 30% come from? Why isn’t it 10? 20? How is the consumer benefiting?” she asked.

Epic isn’t the first company to speak out against Apple and Google’s 30% fee.

Last week, Apple threatened to block updates to the website builder WordPress iOS app until the company enabled in-app purchases through Apple’s payment system. However, earlier this week, Apple decided to back down from the conflict and even apologized to WordPress.

In June, the European Commission opened formal antitrust investigations against Apple following last year’s unfair competition complaint by Spotify, citing the fee as forcing them to artificially inflate the price of its Spotify Premium membership.

Last Year, online dating application Tinder also introduced a default payment process meant to bypass the fee.

By Tom Kool for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment