It’s one of the biggest battles to erupt in the tech space: Epic Games, the company that brought you Fortnite, has stepped into the ring to take on tech giant and household name Apple. Epic Games was founded by Tim Sweeney in his parents’ basement, back in 1991.1 Since then, it has grown into a massive €4.4bn company, and according to analytics provider Sensor Tower, iPhone users have downloaded Fortnite a whopping 133 million times.1 These are arguably two of the largest tech companies in the world, and now they’ve come to blows. So, what is this battle all about, and how could it impact the tech world, as well as Apple stock trading?
Epic Games begins epic battle
The dispute started when Epic Games went against Apple’s App Store policies, by allowing players to make purchases directly with their credit card, instead of through Apple’s in-app purchase mechanism. Apple acted swiftly to remove Fortnite from the App Store for violating their policies.2 Soon after this, Epic Games filed a lawsuit against Apple, claiming that the tech giant was exhibiting anti-competitive behaviour, and then rallied Fortnite players to join in the fight against Apple, using a marketing campaign. However, Epic Games’ legal action was to no avail, and the judge ruled that Apple does not need to reinstate Fortnite on its devices. In a Twitter rant, Sweeney said, “The maker of a smartphone does not have the right to dictate the terms of our lives and our businesses.”1
Should Apple decide to disable the company’s developer account Unreal Engine, this would be a significant blow to Epic Games, and the ripple effect could impact many other companies as well. Other developers rely on Unreal Engine to display 3D graphics for their games, and could be hugely effected by the backlash, causing hundreds of other games to be impacted.1 Epic Games has stated that should this be the case, they would be forced to stop updating the Unreal Engine for iOS and Mac computers, and this would make it difficult for companies to make games for Mac and iPhones. At this point, the battle is getting ugly and the situation has escalated to the point where the effects of this could roll out through the gaming industry.2
How could this impact Apple stock trading?
The Goliath of the tech world is not easily shaken, but their in-app purchase mechanism is one of their biggest revenue streams as it earns them 30% commission on sales.3 Epic Games is now challenging this commission, and should they win, Apple would be forced to reduce its commission fees or change the terms of the App Store, which would deliver the company a hefty blow.3 Apple’s total commission revenues were estimated at about $20 billion for the 2019 financial year, out of a total of $46 billion in services revenue.3 If the tech company had to reduce their commission to 20%, this would result in an approximate reduction of $7 billion in total commissions, which would undoubtedly affect company profits.3
As tech companies continue to grow from strength to strength in the markets, Apple’s share price closed at $500.04 at the end of August.4 However, due to the current tech war, some analysts think that this could leave room for uncertainty amongst investors and things like Apple stock trading could see an impact.4 What size the impact of this war could have is yet to be seen. For now, the tech giant seems to be retaining its position in the markets.