Why App Store Fees Are Drawing Fire Worldwide

Apple Inc. and Alphabet Inc.’s Google are two of the world’s most profitable companies, and their app marketplaces are among their most profitable endeavors: according to analysts, Apple’s App Store takes in more than $20 billion a year with a profit margin above 75%. Now such practices are coming under increasing scrutiny. U.S. senators and European regulators have griped about the “gatekeeper control” that Apple and Google have with their mobile operating systems. South Korea has moved to become the first country to impose curbs on the companies’ app marketplaces. And a U.S. judge has ordered Apple to make sweeping changes as a result of a challenge from one of the world’s biggest gamemakers.

Epic Games Inc., the maker of Fortnite, sued Apple over the cut it takes from App Store transactions and what Epic claims are antitrust violations. Epic believes it shouldn’t be forced to use Apple’s payment system. The iPhone and iPad only come with one digital marketplace for downloading apps and the App Store’s payment system charges developers commission of as much as 30%. Epic wants to use its own payment system for its hit video game Fortnite or for Apple to allow alternative App Stores. In August 2020, Epic circumvented Apple’s rules and added its own payment system to Fortnite. Apple quickly removed the game from the App Store and Epic filed its lawsuit hours later. Apple countersued for breach of contract.