Apple countersues Epic Games for breach of contract over Fortnite dispute


Apple is seeking damages from Epic over the company’s move to evade App Store guidelines by offering its own in-app payment system.

Image: Epic Games

Apple has fired the next salvo in its ongoing legal battle with Epic Games. On Tuesday, the iPhone maker launched a countersuit against Epic, charging the game maker with breach of contract after it tried selling V-Bucks for in-app purchases for Fortnite directly to customers. That move was designed to dodge the 30% fee that Apple normally collects from App Store purchases, a tactic that Apple considers a violation of App Store guidelines.

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In its suit, Apple is seeking an unspecified amount in damages as well as lost App Store fees, specifically any money that Epic collected through its in-app payment system. Apple is also asking the court to issue a permanent injunction against Epic’s in-app purchasing system.

“Epic’s lawsuit is nothing more than a basic disagreement over money,” Apple asserted in its suit. “Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store. Epic’s demands for special treatment and cries of ‘retaliation’ cannot be reconciled with its flagrant breach of contract and its own business practices, as it rakes in billions by taking commissions on game developers’ sales and charging consumers up to $99.99 for bundles of ‘V-Bucks.'”

The showdown began in August after both Apple and Google kicked Fortnite out of their respective app stores following Epic’s launch of its direct in-app purchasing system. Epic then quickly filed lawsuits against both companies, but the main fisticuffs since then have been between Epic and Apple.

As the fight ramped up, Apple had vowed to not only ban Fortnite but to suspend Epic’s developer program for its Unreal Engine, a gaming platform used by a large number of developers. Ruling on the matter in late August, US District Judge Yvonne Gonzalez Rogers found against Epic on the Fortnite ban, asserting that the ban was a problem of Epic’s own making and that any injury it suffers is of its own choosing.

But the judge found in favor of Epic on the Unreal Engine matter, determining that any ban of this platform would harm developers, gamers, and the gaming industry in general. These rulings, though, are temporary as both companies prepare their responses for a day in court.

In its suit, Apple said that Epic CEO Tim Sweeney had initially requested a “side letter” that would exempt the company from its current contractual obligations, including the App Store Review Guidelines. The suit also contends that Epic wanted a “complete end-run around Apple’s fees” that would allow consumers to pay Epic for in-app purchases instead of going through Apple.

“Unbeknownst to Apple, Epic had been busy enlisting a legion of lawyers, publicists, and technicians to orchestrate a sneak assault on the App Store,” Apple’s suit said. “Shortly after 2:00 a.m. on August 13, 2020, the morning on which Epic would activate its hidden commission-theft functionality, Mr. Sweeney again emailed Apple executives, declaring that ‘Epic will no longer adhere to Apple’s payment processing restrictions.'”

“According to Mr. Sweeney,” the suit asserts, “Epic would continue to use Apple’s App Store but would ‘offer customers the choice’ to pay Epic instead of Apple, effectively depriving Apple of any return on its innovation and investment in the App Store and placing Epic in open breach of years-long contractual obligations to which Epic and all other Apple developers have agreed.”

Epic has been rubbing Apple’s nose in the conflict by criticizing and even spoofing the company. On its website, the game maker created a page with the hashtag #FreeFortnite and an FAQ condemning Apple for its actions. Epic also devised a video called Nineteen-Eighty Fortnite, a parody of Apple’s famous 1984 commercial, but this time with the iPhone maker as the bad guy. And for its Tart Tycoon competition, Epic cooked up several anti-Apple prizes, including a Free Fortnite hat and a playable character skin that resembles Apple CEO Tim Cook.

The not-so-good-natured ribbing on Epic’s part has not escaped Apple’s notice. If anything, the campaign has served to rile up the company.

“Epic proceeded to launch a calculated and pre-packaged campaign against Apple ‘on a multitude of fronts – creative, technical, business, and legal,’ as Mr. Sweeney had previously threatened,” Apple said in its lawsuit. “Epic filed its pre-drafted 56-page Complaint in this case mere hours after the removal of Fortnite from the App Store. Epic then publicized its willful contractual breaches through an animated Fortnite short film that mimicked Apple’s seminal 1984 Macintosh campaign and villainized Apple for enforcing its contractual right to remove the non-compliant Fortnite from the App Store.”

In its suit, Apple is looking for a jury trial on all issues. Neither Apple nor Epic immediately responded to TechRepublic’s request for comment.

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