Epic says there’s an App Store payment lockout — but Apple just sees friction
One of the Epic v. Apple trial’s big keywords is “cross-wallet play.”
In Epic’s Fortnite, “cross-wallet” means you can buy in-game currency (known as V-Bucks) with real money on one device, then spend it on a different device. The latter platform doesn’t get a cut of your initial, non-virtual financial transaction, which is why Nintendo and Sony don’t support cross-wallet access on the Switch and PlayStation.
Apple did support cross-wallet play before banning Fortnite last year — and on the trial’s second day, that fact became a serious pitfall for Epic. Apple continued a long cross-examination of Epic CEO Tim Sweeney, whose hours of testimony included a digression on whether Fortnite counts as a true metaverse or simply a big free-to-play game that has concerts. (Judge Yvonne Gonzalez Rogers suggested, and Sweeney concurred, that “the most readily acceptable analogy” might be Steven Spielberg’s Ready Player One.)
Sweeney was followed by two witnesses from outside Epic: the founder of an iOS yoga app, followed by the product manager for Nvidia’s cloud gaming service. All argued that Apple’s tightly managed App Store forced customers to use clunky workarounds. Meanwhile, Apple argued that the workarounds weren’t necessarily worse — just different.
Fortnite was kicked off the App Store for adding its own V-Bucks purchasing system right inside the app, violating Apple’s restrictions on in-app payment processing. But as Apple’s lawyers pointed out today, Epic had another option for selling V-Bucks on iOS. The company just needed to sell them directly through its website, which users could visit through the iPhone or iPad Safari browser without Apple getting any kind of commission. When they booted up Fortnite on iOS, their V-Bucks would be waiting.
Judge Yvonne Gonzalez Rogers found this argument compelling enough to follow up on. Why couldn’t iPhone users buy V-Bucks through Safari, she asked, before Fortnite’s ban in August? Epic CEO Tim Sweeney admitted that Epic could have added the feature — but “it wasn’t a very attractive option for our customers,” Sweeney told her. If somebody wants to buy V-Bucks, he said, there’s a good chance they’re already looking at an item in Fortnite. “To set Fortnite aside and pull out some device, browse to a website, log in, make a transaction there, it’s extremely inconvenient.” In short, “there’s a huge amount of payment processing and customer friction associated with selling a user of an app an item outside of that app.”
But after asking how old most Fortnite players were, Rogers suggested that a little friction might be a good thing. “Why is it so inconvenient that someone can’t make what I would call, as a parent, an impulse purchase?” she asked. “Isn’t that a responsible way to deal with a young client base?” If people can buy V-Bucks and then switch platforms, “what you’re really asking for is the ability to have impulse purchases.”
Sweeney said Fortnite had parental controls, but he didn’t dispute Rogers’ basic point. “Yes. Customer convenience is a huge factor in this. People are much more likely to make a purchase if it’s easy to make a purchase,” he said.
A similar question arose with a later witness. Benjamin Simon is the CEO of a company called Yoga Buddhi, which runs an iOS app called Down Dog. (Sadly, nobody in court thought to make an Updog joke.) Yoga Buddhi offers a hefty discount for signing up outside the iOS app. And unlike Epic, it’s fine sending people to a website. Simon claims, however, that Apple makes finding that website as hard as possible.
Simon says that Apple rejected several versions of Down Dog that reference getting a discount elsewhere. Right now, about half the iOS user base apparently pays a premium to sign up through the App Store. For comparison, only 10 percent of Android users pay a similar premium through the Play Store, because Google doesn’t have the same restrictions.
Simon acknowledged that Yoga Buddhi can reach customers via other methods like email and help them switch to the discounted version. The problem, again, is friction. “We’re restricted in our ability to communicate with our customers from within our product,” he complained.
From Apple’s perspective, both executives are making a big deal out of a small inconvenience. Customers might have to work a little harder to save money, but that doesn’t equate to a monopolistic lockdown. And while Sweeney describes Fortnite as a lofty metaverse, Rogers put it in the very different context of “freemium” gaming — an industry whose powerful, frictionless gaming loops are regularly criticized as addictive and predatory.
Arguably, though, that very criticism bolsters Epic’s claims. In the past several years, regulators and researchers have shown increasing concern over subtle design choices in apps — like infinite scrolling, confetti animation, and tweaks to the sorting algorithms on social networks. There’s a broad consensus that small nudges can substantially increase how much people invest in digital platforms. But Epic might have to work harder to convince a court this investment isn’t a bad thing.