Apple Revises App Store Rules, Which Could Help Epic Games

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Apple on Friday issued new App Store rules that are likely to impact game streaming services from Microsoft and Google. And one top video game industry analyst says the move could have a notable impact on the ongoing feud between Apple and Epic Games.

The new guidelines, which come ahead of the release of iOS 14, say game streaming services (such as Microsoft’s xCloud and Google’s Stadia) are allowed on iOS devices, but that all games included in that subscription “must be downloaded directly from the App Store”.

“Streaming game services may offer a catalog app on the App Store to help users sign up for the service and find the games on the App Store, provided that the app adheres to all guidelines, including offering users the option to pay for a subscription with in-app purchase and use Sign in with Apple,” The guidelines read. “All the games included in the catalog app must link to an individual App Store product page.”

That’s problematic on a couple of fronts. Primarily, the appeal of a game-streaming service is users don’t have to download games. They’re played from a cloud server, letting you jump in from any platform almost instantly. And many of the games on, say, xCloud, won’t have an App Store product page. (Apple’s unlikely to create an iOS version of Halo Infinite, for example.)

Beyond indicating a surprising lack of understanding about how game-streaming services work, Apple’s move could have wider implications, says Michael Pachter of Wedbush Securities.

“Apple is making a mistake,” he says. “Everything they do that’s anticompetitive is an arrow in Epic’s legal quiver — and this is anticompetitive.”

The key to the anticompetitive claim is Xbox Game Pass and its upcoming inclusion of xCloud. Stadia hasn’t really found any traction with gamers so far, but Game Pass has over 10 million members, the company announced in an earnings call earlier this year. While there’s a Game Pass app, it doesn’t offer streaming – and Microsoft hasn’t formally announced plans to bring xCloud to iOS devices. But it was widely expected to do so.

Apple, says Pachter, is basically demanding a cut of subscription prices with the new regulations, as it gets with some other streaming services. (For example, sign up for a Spotify premium account via your iPhone or iPad, and Apple gets a portion of the monthly payment, says Pachter. Sign up for premium on your PC, and it doesn’t.)

The only company with an exemption to that rule is Netflix, which doesn’t offer signups on Apple devices. Microsoft, given its size, was likely negotiating with Apple to be similarly exempted.

Microsoft backs Epic

In August, though, Microsoft made a very public stand in the legal fight between Epic and Apple, backing Epic with a statement of support, saying denial of access to Unreal Engine on Mac and iOS “will harm game creators and gamers.”

“I think this is retaliatory from Apple for that letter,” said Pachter.

Epic is accusing Apple of participating in anticompetitive practices by forcing the company to charge higher prices on App Store in-app purchases, such as for V-Bucks in Fortnite. The dispute between the two companies started in August after Epic attempted to bypass the 30% commission that Apple collects from in-app transactions in Fortnite by offering a feature that allows players to make purchases directly from the developer at a discount.

Apple, in recent weeks, has begun to fight back, filing a counterclaim against Epic alleging breach of contract and seeking unspecified reparations for money earned through the App Store. The company says Epic has earned over $600 million from the App Store to date.

By opening another front in its growing battle with game companies, though, Apple could be playing a losing round.

“Apple is consistently stepping on its own [foot],” he says. “They could have fought Epic and not booted Fortnite off the server. … Now they’re doing it to Microsoft. And Microsoft is big – as big as Apple.”

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