When the European Union passed legislation in 2022 to loosen Apple’s grip on the app economy, Epic Games, the maker of Fortnite, began planning to launch a competing app store for developers.
But before that law took effect this week, Apple blocked Epic’s European subsidiary from using iPhone software tools, making it impossible for the game developer to create the Epic Games Store.
In the letter from Apple to Epic Games, the tech giant said that Epic has shown in the past that it does not want to follow Apple’s rules to protect the App Store and that it cannot return to the Developer Program that supports it. Apple also disputed Epic’s criticism of Apple’s plans to comply with Europe’s tech competition law.
Apple’s move is the latest salvo in a long-running battle with Epic. In 2020, Epic broke App Store rules by encouraging customers to pay it directly for features in Fortnite. Apple dumped Epic from the App Store, and Epic sued Apple for violating antitrust laws by requiring developers to use its payment system.
In denying Epic access to developer tools in Europe, Apple is testing the boundaries of Europe’s tech competition law. The Digital Markets Act, which takes effect Thursday, requires Apple to give app makers alternatives for selling software to iPhone and iPad users, including the ability to use alternative payment systems and competitors app store.
An Apple spokesperson said in a statement that “Apple reserves the right to terminate” any of Epic’s games and did so due to “Epic’s material breach of its contractual obligations.”
Tim Sweeney, Epic’s chief executive, said his company invested billions of dollars to create the Epic Games Store and filed a complaint with European regulators about Apple’s actions.
“We see Apple’s decision to block us from competing as a blatant effort to creep out its top competitor,” Mr. Sweeney, adding, “It’s not just about Epic versus Apple. DMA is about ensuring consumers the benefit of competition, of better prices.”
In 2018, Epic Games launched a digital store to distribute games on PCs and other devices. The store currently takes a 12 percent commission for each game it sells, which is less than the 30 percent Apple typically collects.
Epic was one of the first app makers to complain that Apple was blocking competing app stores. But other developers criticized Apple’s plans to comply with the Digital Markets Act and called on European Union regulators to investigate the tech giant.
If the European Commission, the executive arm of the European Union, opens a formal investigation into complaints from Epic or other developers, it could set up a lengthy legal battle that could force Apple to change or risk fines of up to 10 percent of its global annual revenue, which was nearly $400 billion last year.
The investigation will deepen the challenges Apple faces with its App Store policies. On Monday, European Union regulators fined Apple 1.8 billion euros ($1.95 billion) for hindering competition between music streaming rivals. Last year, South Korea’s telecommunications regulator said so Apple could be fined $15.4 million for “unfair practices.”
Apple’s dispute over Epic’s plans to create a competing app store in Europe began last month. Epic has written to Apple saying it plans to use its Swedish subsidiary to bring the Epic Games Store and Fortnite to iPhones and iPads in Europe. Initially, Apple gave the subsidiary, Epic Games Sweden AB, a developer account, but it later terminated the account.
In an email to Mr. Sweeney, posted by Epic Games on its website, Phil Schiller, who heads the App Store, questioned Epic’s willingness to follow Apple’s rules. He said Epic deliberately broke Apple’s rules before filing its lawsuit in the United States and called Mr. Sweeney Apple plans to comply with Europe’s tech law “hot garbage” and a “horror show.”
“Your colorful criticism of our DMA compliance plan, coupled with Epic’s past practices of willfully violating contractual provisions it does not agree to, strongly suggests that Epic Sweden does not plan to comply with policy,” Mr. Schiller wrote.
Mr. answered Sweeney that Epic will “act in good faith and abide by all terms of current and future agreements with Apple.”
A lawyer representing Apple has written to Epic Games to tell it that its Swedish subsidiary’s account has been terminated. Mr. Sweeney said the letter was the sum total of Epic’s exchange with Apple.
