Apple vs. Epic Games: the underside of an informational clash

The clash between the giant Apple and the Epic games store begins on Thursday, August 13, 2020 when the video game Fortnite, owned by Epic, is ejected from the Apple App Store and then from the Google Play Store after attempting to bypass the 30% tax imposed by Apple and Google on developers.

Indeed, this game in its mobile version has been downloaded more than 250 million times on the App store and offered to buy services within the game by removing from the purchase price the 30% tax imposed by Apple for any purchase through its store.

The different aspects of the balance of power

Some points of understanding:

• The 30% tax is not based on any law, it is a standard adopted by most companies with an online video game store.
• This tax is included in the store regulations as for the Apple App store.
• This tax originates from the Steam online store owned by the American company Valve, which was the first to introduce it and which made it possible to democratize this “standard”.
• Epic Games owns the Unreal Engine which is a graphics engine used by many companies that develop games.

What could have passed for a daring but poorly planned move on Epic’s part by circumventing this tax, is in reality a global communication strategy, well structured, which leads to an information war between these two companies, for which Apple seems very ill-prepared. The balance of power between the two companies revolves around this tax that Epic purely and simply wants to remove. Moreover, this balance of power takes a new turn by moving towards the judicial field, with the day after the deletion of the game from the App Store a complaint filed by Epic against Apple before the American courts.

Long before this action by Epic against Apple, the company that owned Fortnite had established itself as an anti-30% tax company by opposing in particular vigorously to Steam. Epic’s communication strategy is to provide himself with the white clothes of the just defender of consumers and even developers.

Analysis of the communication strategies of the protagonists in this information war

The firm Epic Games, which is 40% owned by the Chinese group Tencent (i), is suing Apple after the removal of its game from the App Store by Apple. The lawsuit was filed in California court (ii).

Epic’s strategy: the weak versus the powerful

The Californian group has adopted “anti-competitive” behavior by preventing the integration of a new payment system into the game. Epic will also file a complaint against Google for the same reasons, and play on its image as a small company defending the consumers by opposing the virtual monopoly of the big companies.

Epic managed to make people forget that it is supported by the Chinese group Tencent, which in 2019 generated a net profit of 93.3 billion yuan (12 billion euros), in particular via various campaigns on social networks, with its competitive offers on his store and obviously his desire to do away with this 30% tax.

First, the removal of Epic’s game from the App store will allow Epic to pass for the victim. This argument was reinforced when on August 18, 2020 Apple announced that it would withdraw access to its development tools for iOS and MacOS from Epic from August 28. This sanction is heavy because it also affects the Unreal Engine used by developers from other companies who want to publish games on the App Store and which are not related to Epic.

Epic could not have dreamed of better as an argument of communication and will plead the fact that Apple persists in its case to the point of being able to harm it financially.

Epic will then conduct an offensive communication campaign via communication channels different from those usually used by traditional companies and which will overtake Apple which will be in a defensive position on this subject:

• Intensive campaign on social networks including Twitter with a #FreeFortnite.
• A special event within the game to mobilize its player base.
• A video posted on Youtube on August 13 (iii) which shows that Epic had prepared its communication strategy upstream.

Epic with this offensive communication strategy will push Apple to the defensive and therefore take the ascendancy in this informational balance of power.

Apple’s strategy: its store, its regulations, its law

Apple’s strategy for its part is limited to remaining in a classic communication in which it is content to explain that Epic has not respected the regulations of the App store ratified by Epic. Apple will therefore very quickly be overtaken by Epic in this informational balance of power. However, Apple in this confrontation falls into the trap set by Epic by reacting disproportionately. When Apple tries to ban the use of the Unreal Engine at Epic, it will be challenged by the California court which will come to protect Epic via an order. Apple then suffered its first defeat. This associated with an almost absent communication on his part, will give Epic the opportunity to rally to it, thanks to its communication from other companies such as (iv): Microsoft or Spotify and even Valve (holder of steam).

However, Apple perseveres by claiming damages and interest from Epic, which fits perfectly into the logic of Epic’s communication wanting to pass Apple as a monopoly company wanting to crush all competition (v).

However, the sole analysis of Epic’s communication strategy vis-à-vis Apple to win this informational balance of power is not enough. We have to analyze this balance of power from a much broader perspective.

The trade war between the United States and China in the background

Tensions between China and the United States continue to grow as these two countries are in the middle of a trade war. The latter can sometimes have repercussions on unexpected grounds, as in this case between Apple and Epic (vi). Epic is owned by Tencent. China will therefore use the confrontation between Epic and Apple to counterattack against one of the most powerful American companies to destabilize it and gain an advantage in the trade war between it and the United States. China has already started to look for and analyze legal vagueness from which Apple will benefit to operate in the country without worrying about the standards and laws usually applied by the Chinese authorities. Apple’s situation on Chinese territory would therefore be compromised, especially with regard to the App Store. Indeed, the Chinese App Store has already suffered the counter-offensive of the Chinese authorities, seeing 47,000 of its applications being deleted. Officially China seeks to eradicate an illegal practice put in place by Apple until then tolerated. Apple had indeed authorized paid games or offering purchases within these applications in its store while the latter did not yet have the authorization of Chinese regulators.

The situation of domination of GAFA called into question

This conflict between Apple and Epic raises another fundamental problem: that of the absolute domination of GAFA (Google, Amazon, Facebook and Apple). These companies are in a virtual monopoly situation, which generates mistrust against them both on the part of the consumer and of the States which are increasingly sensitive to the unique situation of these four companies. Epic is far from the first company to complain about anti-competitive practices by Apple and Google. The European Union, via a strong act to challenge the GAFA monopoly, imposed a $ 5 billion fine on Google in 2018 for monopoly situation. New proof of the growing mistrust of States against the GAFA, on Wednesday July 29, 2020 the bosses of the GAFA had to testify before American parliamentarians and respond to the monopoly accusations brought against their companies. Before this committee of American parliamentarians, the boss of Apple responds in particular to the European Commission which is investigating his company on the grounds “that it would play the referees, deciding who are the winners and the losers, stifling innovation and distorting the prices of competition ”(vii). Epic’s communication strategy therefore plays on this growing distrust away from GAFA to win the balance of power that opposes it to Apple. The Californian courts hearing the case between Epic Games and Apple will rule on May 3, 2021 (viii) and this decision may create a case law restricting the power of GAFA. In addition to this, the judge seized of the case expressed himself by saying that public opinion (favorable to Epic in particular thanks to its communication campaign) was important in this case (ix).

Hary Biddulph

Notes :

i: Purchase of 40% of the shares of Epic Tensent part:

https://www.pcgamer.com/every-game-company-that-tencent-has-invested-in/

ii: Complaint filed by Epic in the Northern District of California court:

https://cdn2.unrealengine.com/apple-complaint-734589783.pdf

iii: FreeFortnite video on youtube:

iv: Statement of support for Epic from Microsoft:

https://cdn.voxcdn.com/uploads/chorus_asset/file/21810025/statement_support_microsoft.pdf

v: Damage and interest claimed by Apple from Epic:

https://www.cnetfrance.fr/news/fortnite-apple-reclame-des-dommages-et-interets-a-epic-games-39909291.htm

vi: Epic against Apple: repercussion of the trade war between the USA and China.

China takes revenge on Apple and the App Store to bend the United States

vii: Line of defense of GAFA bosses in front of American parliamentarians:

https://www.cnetfrance.fr/news/google-amazon-facebook-apple-leurs-lignes-de-defense-face-aux-accusations-de-monopole-39907403.htm

viii : Jugement Epic vs Apple 2021 :

https://www.rtbf.be/tendance/techno/detail_le-proces-d-epic-games-contre-apple-debutera-le-3-mai-2021?id=10603703

ix: Public opinion matters in the Apple v Epic case.

Judge suggests the public’s opinion matters in Epic vs. Apple, trial expected in July 2021