Epic takes fight with Apple over online payments to South Korea

Apple Inc updates

Sign up to myFT Daily Digest to be the first to know about Apple Inc news.

Epic Games has taken its battle with Apple to South Korea, where the company has sought to have its hit game Fortnite restored to the App Store under a world-first law in the country that loosens app payment restrictions.

The US developer of Fortnite, the popular battle royale online game, asked Apple to allow it back on to iPhones in South Korea to comply with the law that will allow users in the country to bypass Google and Apple’s app stores and pay developers directly.

In a tweet, the company asked Apple to restore its developer account, citing Seoul’s recent moves and stating that it would offer “both Epic payment and Apple payment side-by-side”.

Apple immediately rebuffed Epic’s request but the tweet marked the latest volley from the North Carolina-based game developer, which has led the charge against App Store fees that app makers have complained amounted to an “Apple tax”.

Apple ousted Fortnite from its App Store globally and revoked Epic’s developer licence in August 2020 after the video game maker circumvented a 15-30 per cent commission by offering a cheaper payment on its own website.

Within hours of the game’s expulsion last year, Epic launched a lawsuit alleging that Apple operated an illegal monopoly by forcing app developers to use its payments system. The federal trial in California concluded in May and a verdict is expected soon.

Epic has separately filed an antitrust complaint against Apple at the European Commission in February, arguing that the App Store rules violated EU law.

Apple was also quick to respond to Fortnite’s latest entreaty, signalling that it has no intention of restoring the game in South Korea.

“As we’ve said all along, we would welcome Epic’s return to the App Store if they agree to play by the same rules as everyone else,” Apple said in a statement. “Epic has admitted to breach of contract and as of now, there’s no legitimate basis for the reinstatement of their developer account.”

South Korea’s president Moon Jae-in is expected to sign the bill into law next week. The legislation would ban app platform operators from requiring users to make payments exclusively through in-app purchasing systems.

However, even when Seoul’s new legislation becomes law, Apple does not believe it would be obliged to approve developers’ account applications, including requests for reinstatement of accounts.

Apple has made some recent concessions over app payments, allowing certain groups, such as Netflix and Spotify, to include links to their own websites to bypass App Store fees and permitting smaller developers to offer lower prices on other channels.

However, experts said that in South Korea, developers were likely to remain reticent in joining Epic in a public clash with Apple or Google.

“More foreign app developers, especially Chinese companies, are likely to try to use their own settlement systems in South Korea thanks to the revised law. But local companies are likely to ‘wait and see’, being afraid of [the US groups’] huge influence in the market,” said Wi Jong-hyun, a professor of business strategy at Chung-Ang University in Seoul.

“Domestic developers need the app stores of Apple and Google anyway for their overseas business,” Wi added. “Especially for small app developers, Apple and Google have offered an effective tool for their overseas expansion through which they can save huge marketing costs.”