The European Union is examining Apple’s recent decision to close Epic Games’ developer account. The bloc has stated three separate regulations that may apply to the situation.
Yesterday, the makers of Fortnite announced that Apple had terminated their account, reversing a previous decision to approve it only a month ago. Epic had planned to launch its own app store, the Epic Games Store, on iOS in Europe, as well as putting Fortnite back on the platform. It accused Apple of violating the Digital Markets Act (DMA) by shutting down the developer account.
Responding to this development, a spokesperson for the European Commission told TechCrunch that they have asked Apple for more information under the DMA. This pan-European regulation comes into effect at midnight in Brussels today.
The spokesperson also added that the EU is assessing whether Apple’s actions raise doubts about compliance with two other regulations – the Digital Services Act (DSA) and the Platform-to-Business Regulation (P2B). They noted the “links between the developer program membership and the App store as designated VLOP” (or very large online platform).
The DMA, which designates Apple as a “gatekeeper” and its App Store as a “core platform service”, requires the company to allow third-party app stores. Failure to comply could result in penalties of up to 10% of global annual turnover (or 20% for repeat offenders).
While some of the rules in the DSA, which also apply to Apple’s App Store as a designated VLOP, have been in effect for larger platforms since August 2023, the remaining provisions have been applied to all platforms and digital services since last month. Penalties for violating the DSA may reach up to 6% of global annual turnover.
The EU’s P2B regulation has been in effect since 2020 and aims to improve transparency and curb unfair practices by online platforms. It prohibits sudden and unexpected account suspensions and requires platforms to provide clear reasons for terminations. However, unlike the DMA and DSA, the enforcement of P2B is not the responsibility of the European Commission, but rather, Member State level authorities.
Nevertheless, it is possible that the Commission may consider a platform’s compliance with P2B rules when assessing its compliance with the DMA. It’s important to note that there is some overlap in scope between these regulations.
Epic has claimed that Apple terminated its developer account in retaliation for its criticism of the iPhone maker’s DMA proposal. The proposal would require developers to agree to new terms and conditions, including a new “core technology,” in order to gain access to DMA benefits. Epic has referred to this as “Malicious Compliance.”
In response, Apple issued a statement yesterday, hitting back at Epic’s accusations and citing a US court ruling to justify the termination of their account. They also claimed that Epic’s application to the Apple Developer Program License Agreement was not reviewed by any executive and was done through a click-through agreement.
Apple wrote, “Epic’s egregious breach of its contractual obligations to Apple led courts to determine that Apple has the right to terminate ‘any or all of Epic Games’ wholly-owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion.’ In light of Epic’s past and ongoing behavior, Apple chose to exercise that right,” referencing a September 2021 US court ruling related to Epic’s lawsuits against Apple.
Epic sued Apple in the US, claiming that the company was abusing its market power by forcing developers to use its own payment systems. The US court ruled in September 2021 that Apple did not hold a monopoly in digital mobile gaming transactions. However, it also ordered that Apple cannot prohibit developers from adding links to their apps that direct users to alternative payment systems outside of the App Store for purchasing digital goods.
At the time, Apple claimed this as a victory, stating that the court found the App Store does not violate antitrust laws. The court also did not require Apple to allow third-party app stores or sideloading. However, under the EU’s DMA, Apple is required to allow third-party app stores and third-party software downloads and must not block business users from offering their goods through their own channels.
The US court ruling that Apple is citing to justify the termination of Epic’s developer account is unlikely to have any weight in the EU. However, it is possible that Apple is trying to pit one legal jurisdiction against another, especially since the EU has already passed laws that regulate how Apple can operate its App Store.
When contacted for a response to the Commission’s request for further explanations under the DMA and the bloc’s doubts about their compliance with other regulations that apply to the App Store, Apple stated they have nothing further to add to their comments from yesterday. They stated that the US court injunction allowing them to terminate Epic’s account applies globally since their Developer Program License Agreements are global. They also claimed that Epic’s breach of the agreement, which occurred through their “hotfix” patch aimed at circumventing Apple’s rules by secretly deploying code that allowed users to purchase in-game currency, was also implemented globally, including in Europe.
Finally, they mentioned that Epic continues to pursue actions against them in the US and Australia.