Apple’s decision to kill Epic Games

The European Union has confirmed it’s looking into Apple’s decision to close Epic Games’ developer account — citing three separate regulations which may apply.

Yesterday the Fortnite maker revealed Apple had terminated the account, apparently reversing a decision to approve the developer account last month.

Epic had planned to launch its own app store, the Epic Games Stores, on iOS in Europe, as well as relaunching Fortnight on Apple’s platform. And it accused Apple of breaching the bloc’s Digital Markets Act (DMA) by killing its developer account.

Responding to the development, a European Commission spokesperson told TechCrunch it has “requested further explanations on this from Apple under the DMA”.

The pan-EU regulation applies on Apple from midnight Brussels’ time today.

The spokesperson also said the EU is evaluating whether Apple’s actions raise compliance “doubts” regarding two other regulations — the Digital Services Act (DSA) and the Platform-to-Business Regulation (P2B) — given what they described as “the links between the developer program membership and the App store as designated VLOP” (aka very large online platform).

Apple’s decision to kill Epic Games

Rules the EU’s DMA apply to Apple, as a designated “gatekeeper” and its App Store, as a so-called “core platform service”, require the company to permit third party app stores. Failure to comply with the DMA risks major penalties — of up to 10% of global annual turnover (or 20% for repeat offenders).

While a subset of rules in the DSA, which also apply to Apple’s App Store as a designated VLOP, have been in force for larger platforms since August 2023 — with the rest of the regulation’s provisions applying on platforms and many more digital services since last month. Penalties for breaches of the DSA can reach up to 6% of global annual turnover.

The EU’s P2B regulation, meanwhile, contains measures intended to boost platform transparency and curb unfair practices. It has been in force for longer (since 2020).

Under the P2B law sudden and unexpected account suspended are banned, with platforms having to provide obvious reasons for terminations. However, unlike the DMA and the DSA’s regime for VLOPs, P2B enforcement is not the responsibility of the Commission. It’s devolved to Member State level authorities, which also determine any penalties for breaches. Although it’s possible Commission enforcers may factor in whether platforms play nice with P2B rules as part of their assessment of VLOPs’ DSA compliance, given there is some overlap in scope.

Epic has claimed Apple terminated its developer account in retaliation for its criticism of the iPhone maker’s DMA proposal, which requires developers to sign up to new T&Cs that include a new “core technology” in order to tap into DMA entitlements, as “Malicious Compliance”.

Yesterday, Apple issued an aggressive statement in response — hitting back at Epic’s accusations, and citing a US court ruling as justification for terminating its account. It also claimed no executive had reviewed Epic’s application to the Apple Developer Program License Agreement, suggesting it was done via a click-through agreement.

“Epic’s egregious breach of its contractual obligations to Apple led courts to determine that Apple has the right to terminate ‘any or all of Epic Games’ wholly owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion.’ In light of Epic’s past and ongoing behavior, Apple chose to exercise that right,” Apple wrote yesterday, citing a September 2021 US court ruling pertaining to Epic’s litigation against Apple. The game maker sued Apple in the US, alleging it was abusing its market power by forcing companies to use its own payment systems.

In September 2021, the US court ruled Apple does not to hold a monopoly in digital mobile gaming transactions. Although it did order it not to prohibit developers from adding links to their apps to direct users to alternative payment systems outside the App Store for the purchase of digital goods.

At the time, Apple trumpeted the judgement as a win — saying the court had found the App Store does not violate antitrust law. The US court also did not require Apple to allow third-party app stores or side loading. However, under the EU’s DMA, Apple is required to permit third party app stores and third party software downloads; and must not to block business users from offering wares through their own channels.

The US court ruling Apple is citing to justify terminating Epic’s developer account is unlikely to have standing in the EU. However Apple may be seeking to play one legal jurisdiction off against another — which has decided its market power is a problem and already passed laws regulating how it can operate its App Store.

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Apple was contacted for a response to the Commission’s request for further explanations of its actions under the DMA and to the doubts the bloc is raising about its compliance with other measures applied to the App Store by the DSA and P2B. It said it has nothing further to add to the remarks it made yesterday — which argue the US court ruling affirms its contractual right to terminate Epic’s account.

In those remarks, Apple noted the termination of Epic’s account is not limited to the EU. It said its Developer Program License Agreements (DPLA) are global agreements; claimed Epic’s breach of the DPLA agreement (via its “hotfix” patch which sought to circumvent Apple’s rules by covertly deploying code that let users purchase in-game currency) was also implemented around the world, including in Europe; and suggested the court injunction allowing termination is globally applicable.

The company also noted Epic continues to litigate against it in the U.S. and Australia.