Epic Games' Tim Sweeney: Apple Small Business Program "Not Awesome" for Consumers

Digital Disrupters-Tim Sweeney-Getty-H 2018
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In an appearance at the Dealbook 2020 Online Summit, the CEO of the 'Fortnite' developer said that the cost of Apple's 30 percent App Store commission is still being passed on to consumers in most cases.

Epic Games CEO Tim Sweeney says Apple's plan to reduce the commission it takes on App Store purchases for small businesses may be good for those companies but is "not awesome for consumers."

Sweeney's company, which is behind popular online game Fortnite, has been locked in a heated legal battle with Apple over its in-app payment system, which it believes is restrictive for developers and customers. After flouting Apple's in-app purchase system earlier this year, Fortnite was banned from the App Store. Epic subsequently filed a lawsuit that has placed renewed scrutiny on Apple's policy of requiring all app purchases on its devices to run through its App Store, where it can take as much as a 30 percent cut of those transactions.

Apple announced Wednesday morning that it was implementing a new small business program that would allow any developer that makes less than $1 million annual sales to receive a 50 percent discount in the commission fee that it shares with Apple. Beginning in the new year, those developers will only pay 15 percent to Apple instead of the standard 30 percent

Sweeney released a statement criticizing the new program as a "calculated move" by Apple. He elaborated on his view a few hours later in an interview with Andrew Ross Sorkin at the New York Times' Dealbook 2020 Online Summit. He noted that although 98 percent of iOS developers make less than $1 million in sales per year, some 90 percent of consumer transactions are with major apps built by large companies like Epic. The 30 percent commission, he explained, is "still being passed on to consumers" when they transact with those larger companies. "It's a great progressive improvement for these smaller developers, but a cynical ploy to divide and conquer" iOS developers, he continued.

Epic Games, which in addition to developing Fortnite also operates the Unreal Engine used by many Hollywood studios, earned $4.2 billion in revenue last year. It is not eligible for the Apple small business discount.

Sweeney, who rarely makes public appearances and gives few interviews, engaged in a lengthy conversation with Sorkin. When asked about the time that kids have spent playing Fortnite during the pandemic and whether it constitutes an addiction, he responded that addiction isn't the right framework for discussing an affinity for gaming. His argument centered around the idea that games like Fortnite provide players of all ages with valuable social interactions that can help develop "a new generation of diplomats and business people and tech workers and artists and programmers."

"The skills they're learning are real," he noted.