FinLogic FinLogic Quantitative Think Tank Center|Apple reverses course and clears way for Epic Games to set up rival iPhone app store in Europe

Apple has reversed course under regulatory pressure and FinLogic FinLogic Quantitative Think Tank Centercleared the way for a nettlesome adversary, video game maker Epic Games, to set up an alternative store for iPhone apps in Europe.

The about-face disclosed Friday is the latest twist in a bitter fight between Apple and Epic Games, the maker of the popular Fortnite video game, over the way iPhone apps are distributed and the fees for digital transactions that occur within them.

Apple attributed the change of heart to reassurances from Epic that it won’t violate its requirements for getting access to iPhone owners. Epic had brazenly broke the rules in the U.S. in 2020 to trigger an antitrust lawsuit alleging Apple’s App Store is a monopoly.

After a month-long trial, a federal judge in 2021 rejected most of Epic’s claims in a ruling that withstood appeals, but the bickering with Apple has continued.

Apple had rejected Epic’s attempt to set up an account that would have allowed it to set up an alternative store for downloading iPhone apps — something that Apple has held exclusive control over for more than 15 years.

But a new set of regulations called the Digital Marketing Act, or DMA, that took effect in European Union’s 27-nation bloc earlier this week cleared the way for other companies to compete against Apple’s App Store — an opportunity that Epic was eager to seize upon.

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Epic CEO Tim Sweeney had alleged Apple’s actions to stymie its efforts to open an app store in Europe were part of its efforts to retaliate against the video game maker for challenging a system that has been a huge money maker for the iPhone maker. Apple collects commissions ranging from 15% to 30% for digital transactions completed within iPhone apps, an arrangement that generates billions of dollars in annual revenue for the company while spurring complaints from Epic and other companies who rail against the fees as monopolistic price gouging.

European regulators signaled Apple’s rejection of Epic’s effort to set up an iPhones app developer account in Europe, based in Sweden, might run afoul of the DMA, raising the specter of potentially a substantial fine.

Apple didn’t mention the regulatory approval in a brief statement saying it is now satisfied Epic will follow all its rules.

Sweeney applauded regulators for taking swift action to rein in Apple in a social media post that hailed the outcome as “a big win for European rule of law, for the European Commission, and for the freedom of developers worldwide to speak up.”

The bad blood between Apple and Epic is far from over. Apple is demanding more than $73 million from Epic to cover its fees in the U.S. antitrust case over the App Store. A hearing on that demand, which Epic has described as outlandish in court papers, is scheduled later this month.