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Fortnite creator sues Apple, Google over app store bans

Fortnite creator Epic Games is suing Apple and Google after being banned from their app stores. This comes as Apple comes under heavy fire from the U.S. government for using their App Store ‘unfairly’. Yahoo Finance’s Alexis Keenan joins The Final Round to break down the details.

Video Transcript

AKIKO FUJITA: Fortnite developer, Epic Games, is taking the fight to Apple and Google, suing the tech giants after both removed the game from their app stores. Alexis Keenan is tracking the story for us. Alexis, you know, Apple and Google have made it pretty clear that this was a direct violation of the rules in the app store, and Epic Games isn't necessarily disputing that. But what specifically are they asking for in this lawsuit?

ALEXIS KEENAN: OK, so this is a lawsuit, and it's really based on anti-trust claims. And what they want is an injunction. So Epic here, Fortnite, not asking for compensatory damages, not saying, hey, we've lost a lot of money and we want it back. They're saying, we want back in the Google and app stores. So what they did is they actually made, Epic did, a way for players to make direct, in-game purchases. That's the big no-no there. And that is the-- those are fees that are charge while players are playing their games. And it's 30% in the Apple store. It's 30% with Google. But Epic is saying, no, it shouldn't be that high, and that is really an illegal monopoly that these companies are running.

So whether these claims, though, are really a slam dunk, not necessarily. Epic has a lot to prove here. For example, they'll have to show that these fees, that are called restraints in anti-trust law-- they'll have to show that they are harming consumers and not just harming Epic by itself. Also, they're going to have to show that there's a competition harm there and that they're not just getting hit on their own revenues.

Now, it's interesting to point out that Epic does own its own app store that it's created, and it charges its developers a 12% fee. So that starts to make the argument look like, well, what's the right amount, then? Is it 30% at Apple and Google? Is it 12%, which Epic is charging for its developers? Or is it something else, like a 5%?

So the courts are going to have a lot to think about here. And of course, these are subjects that are heavily being investigated not only within the United States, but also by the European Commission. So this is actually a really good timed lawsuit, I would say, because there is so much public sentiment around perhaps regulating these companies.

DAN ROBERTS: Alexis, Dan here. Just to play off what you just said, you know, there's a big difference, obviously, between the sentiment around the Apple App Store, which, of course, has been negative for a while now-- we had the executive from that email app HEY-- H-E-Y-- on the show a couple weeks ago-- and they were saying the same thing, it's a monopoly. It's not fair. But there's a difference between the sentiment and the optics and the legal element, right?

And the other sort of tickle here is that Epic Games, more than other companies-- especially more than HEY, the example I just mentioned-- can stand to be off the app store for a while and can kind of take the hit. And they have the cash to be able to withstand that. The problem is it's become the cost of doing business because so many other new apps, well, they've got to be on the app store. If they want to catch a foothold, they've got to be listed in the app store, so they have to do the 30% fees. So all that said, I'm just curious whether you think that there's really any possibility here that whether it's this lawsuit prompting it or something else, that lawmakers go after the app store, that Apple actually has to change these draconian fees that it charges?

ALEXIS KEENAN: Well, you know, it-- Apple has good arguments on its side too, right? It's going to say, we invested in the infrastructure to build this platform, that we were the-- you know, it doesn't necessarily mean that you're the first player to this market that you therefore get to control it forever and ever. But they're going to say, we provide a market for these developers. We provide them with tools for app development. So they do have, you know, arguments-- good arguments-- on their side.

But I will say, the attorneys that were hired for this litigation on behalf of Epic, these are seasoned anti-trust litigators. They know what they're doing. And certainly, this lawsuit was timed out. They had it ready to go as soon as they announced that they were going to make this direct purchase available and sidestep the app stores.

But one other thing to really note, I think, here is-- and I expect Apple and Google to raise this-- is that 40% of Epic is owned by the Chinese behemoth Tencent, which also owns WeChat, which is also in-- you know, in the crosshairs with the US government, in terms of the executive orders that President Trump has recently signed-- very, very-- still a lot of questions around how those will be interpreted. But I expect that that type of argument would be made, too.