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How the Epic Games vs. Apple Lawsuit Could Spell the Start of the Metaverse

Date

13/10/2021

Written by

Airnow

The ongoing legal battle between Epic Games and Apple has been at the centre of our news agenda in recent months. Apple has long been the king of the app stores, a crown that is only contested by Google’s Play Store. Together they represent a kind of duopoly in the app space. But this reign could well be coming to an end, at least if Judge Yvonne Gonzalez Rogers' findings from the lawsuit come to pass.

It all started back in August 2020 when Epic Games, the creators of the extremely popular online battle royale game Fortnite, slipped in a small but significant change in an update. The game’s menu now offered two options for purchasing its in-game currency, V-Bucks: buying through the Apple App Store at the regular price of $9.99, or via a new “Epic direct payment” at a discount, for $7.99. In doing so, Epic was deliberately breaching the regulations set up by Apple, which had been enjoying a thirty per cent flat fee on all in-app purchases made on the Apple App Store.

The same move was mirrored on the Google Play Store, and both Google and Apple were quick to act, removing Fortnite from their app stores citing the infringement of their regulations. This was, however, all part of the plan, as Epic then sued both Google and Apple for antitrust and anti-competitive behaviour.

The court case has been rumbling on ever since and has had its fair share of drama and propaganda thrown from each party. Our personal favourite is the Nineteen Eighty-Fortnite - #FreeFortnite parody:

We weren’t joking when we said revolutionary. Last month, after the lawsuit concluded, Epic’s plan actually came off (kind of). The judge, Yvonne Gonzalez Rogers, made the decision that Apple would no longer be able to ban developers from using their own payment systems through iPhone apps. In other words, within three months of this decision, when the ruling is applied, Apple will no longer be able to prevent Epic from selling V-bucks independently from the Apple App Store. This applies to all games on the App Store as well, not just Fortnite. That’s right. The millions upon millions that are spent on in-app purchases from CandyCrush to Genshin Impact to Tinder and everything in between will now be going directly to the app creators themselves.

Suddenly, Apple’s tight grip over its ecosystem looks a little weaker. This can only spell good things for the app space as a whole as the move will evoke more competition, and competition breeds innovation. While this initial court case took place in the U.S., similar App Store cases are being fought in Japan, India, and the European Union. You may have heard of another concession earlier this year, when Apple decided to reduce its app store fees to 15% for companies whose profits are less than 1 million. A move that was welcomed, but in the eyes of many, still not enough, as it represented only a minority of the overall App Store revenues.

Could this Lawsuit Help the Development of the Metaverse?

More and more, tech companies are acting like mini App Store-style marketplaces as they race to create “the metaverse”, a virtual realm that has its own independent ecosystem. We believe that this lawsuit could have a key impact in facilitating the eruption of the metaverse. A phenomenon that we anticipate will have a revolutionary effect on apps and gaming in the not-too-distant future. Let us explain how.

If you think about it, the Apple App Store and the Google Play Store are the closest things we have to a metaverse right now. A virtual space in which users can interact, buy and play with virtual assets and games across multiple devices. However, a key difference is that the Apple App Store is centralised, meaning that the profits are orientated towards the owners i.e. Apple. This is in direct contrast to the key principle of the metaverse where the creator and user have a more symbiotic relationship in which assets and profits are freely shared and co-owned across a multitude of platforms.

The ruling in Epic Games vs. Apple provides a legal framework for a future in which the tariffs which are currently enjoyed by Apple are undermined, allowing for companies to create their own mini-ecosystems within their apps. This could usher in an era where companies start to provide not just their own products, but entire ecosystems in which other businesses could be integrated into as well. Take, for example, OpenSea, the NFT marketplace, which allows the buying and selling of Non-Fungible Tokens between users, using their own virtual currency, in this case cryptocurrencies such as Ether from the Ethereum Network. One day, the digital assets (which are created by users themselves) that are bought on OpenSea could be transferred across platforms, used, bought and sold by users completely independently. The possibilities for the metaverse are truly endless. Last month we took a deep dive into its potentially revolutionary impact in the gaming space. You can read our piece about NFTs in gaming for more information.

The Drawbacks and Rounding Off

For all this excitement, we still have a little way to go before we really see the metaverse in full swing. While the judge’s decision prevented Apple from putting tariffs on all payments, they were found to be justified in charging a fee for using their platform. Otherwise, it was argued that Apple would suffer from “the uncompensated use of its intellectual property”. A decision that Epic is now appealing.

The ruling is bound to have some immediate effect on the end-user when it comes into effect. Apps are bound to offer alternative methods of payment that will circumvent app store fees, which may result in more competitive pricing. Netflix, for example, may integrate a subscription button into its app, rather than making you sign-up in a web browser.

In the long-term, the ruling also means that as we enter the age of the metaverse, big companies like Google and Apple will find it increasingly difficult to monopolise the space. An outcome that will inevitably be a much-needed boost to creativity and innovation in the space.