Epic Games – Social Blog

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As defined by MIT’s Center for Information Systems Research (CISR), a “mono-home” is a digital platform strategy that aims to keep users within its ecosystem (Woerner & Weill, 2025). The most famous company to have built and relied on that method has been Apple. This blog post aims to exhibit the unique case where Epic Games broke Apple’s tightly regulated platform flow breaching outside its ecosystem. Thereby, I will be focusing specifically on Apple’s value loss, the company’s response strategy and which steps it could have taken to prevent the status quo.

Apple’s Unmatched Mono-Home Ecosystem
Through a dense ecosystem and a close product tie, Apple has been able to achieve unmatched customer loyalty and an extraordinary value stream. New research now shows how this effect has been amplified with each additional Apple purchase by the consumer. With a growing product tie come increased transition costs in case users wish to exit Apple’s platforms and increased sunk costs, as previous Apple purchases lose their value (Chang, 2025).

One of Apple’s largest platform-integrated services has always been its app store. To leverage network effects and stay competitive to platforms such as Google’s play store or the Microsoft Store, Apple allows external app developers to publicly provide their applications (Lindenmayr & Foerderer, 2022). Nevertheless, the tech giant has established guidelines and arguably anti-competitive practices to keep not only users, but also developers from operating on competing platforms.

Keeping this so-called “walled garden” – meaning the practice of tightly controlling a closed platform ecosystem – ensures that Apple has control over everything which could constitute a leak in its platform flow. Such practices have included limiting developers to their Swift coding language or a limited pool of pre-approved third-party coding frameworks, and prohibiting the sideloading of apps (the process of installing apps from outside of Apple’s official app store) (Yun, 2021).

Epic Games’ Breach on Platform Flow & Apple’s Counter Strategy
In 2022, Epic Games first used a process called “steering” by leading users outside of the app store and allow them to make purchases, which excluded Apple’s 30% commission and thereby effectively circumvented Apple’s In-App Purchasing (IAP) system. The impact was significant. Other apps like Spotify followed suit shortly after and Bloomberg has estimated that the loss over the platform flow could result in Apple losing around $4,1 billion in revenue to app developers (D’Anastasio, 2025).

Apple, realizing the thread to one of their core income cash flows, went ahead and removed Epic’s most popular app Fortnite from their app store. Epic Games then subsequently suit Apple over anti-competitive practices. According to Epic, Apple ended up spending a total of $100 million on the lawsuit proceedings (Owen, 2025) to set the tone for other (smaller) developer through a landmark legal case.

This strategy follows the playbook for digital leaders as outlined in “How platform leaders win”. Through the lawsuit, Apple aims to act as an enforcing orchestrator that set the “rules of the game” (Hidding et al., 2011), not only for Epic Games, but for similar developers thereafter.

In addition, Apple adjusted to the threat by changing the way transactions outside of the app store work. After the settlement concluded that Apple had to allow apps to offer payment outside the store’s ecosystem, they implemented a mandatory 27% commission on all of such purchases on the web and banned any kind of marketing within apps to encourage users to exit the app before paying. Notwithstanding the new disclosure screen that must be shown before leaving the app, warning the user about potentially unsafe websites.

All in all, Apple succeeded in mitigating the threat by leaving developers the freedom to “steer”, whilst enforcing its legacy monetarization system practically rendering the method useless. However, its practices left a mark on all app store providers in the industry and have gotten the beloved brand under unprecedented scrutiny.

Conclusion and Revision of Apple’s Strategy
In hindsight of this and the respective lawsuits fought against Apple’s competitor platforms; it can be said that Apple risked nearly being labelled a “monopoly” in the US case and decreased overall value in the market as developers have been uniquely exposed to the predatory practices that have been quietly utilized by platforms for a long time. This outrage therefore directly pressured Apple into the creation of the small business program for instance, where apps with revenue under $1 million must only pay 15% commission (Apple Inc, n.d.).

Thus, Apple would have been wise to value feedback and transparency early on and negotiate a lowered commission rate with Epic Games instead of going so far as to ban its apps outright. This would have avoided a public lawsuit and the risk of hurting its overall customer loyalty. Lastly, the platform could have implemented security measures such as the disclosure screen and out-of-app commissions on its own terms, ensuring to future-proof its “walled garden”.

References

Apple Inc. (n.d.). App Store Small Business Program. Apple Developer. Retrieved September 24, 2025, from https://developer.apple.com/app-store/small-business-program/

Chang, J.-H. (2025). Secret power of the product ecosystem: A network perspective from the case of Apple. Journal of Business Research, 200, 115641. https://doi.org/10.1016/j.jbusres.2025.115641

D’Anastasio, C. (2025, May 29). Mobile-Game Makers Poised for Windfall Following Win Over Apple. Bloomberg.Com. https://www.bloomberg.com/news/articles/2025-05-29/mobile-game-makers-poised-for-windfall-following-win-over-apple

Hidding, G. J., Williams, J., & Sviokla, J. J. (2011). How platform leaders win. Journal of Business Strategy, 32(2), 29–37. https://doi.org/10.1108/02756661111109752

Lindenmayr, M., & Foerderer, J. (2022). Qualitätssicherung in Digitalen Plattform-Ökosystemen: Implementierung von Kontrollsystemen am Beispiel von Apple iOS. HMD Praxis der Wirtschaftsinformatik, 59(5), 1312–1322. https://doi.org/10.1365/s40702-022-00904-6

Owen, M. (2025, July 5). Billion dollar battle: Picking an App Store fight with Apple cost Epic Games greatly. AppleInsider. https://appleinsider.com/articles/25/05/07/billion-dollar-battle-picking-an-app-store-fight-with-apple-cost-epic-games-greatly

Woerner, S., & Weill, P. (2025, May 12). Top-Performing Companies Reuse Four Digital Platform Designs | MIT CISR. https://cisr.mit.edu/publication/2025_0501_DigitalPlatformDesigns_WoernerWeill Yun, J. M. (2021). App Stores, Aftermarkets, & Antitrust. Arizona State Law Journal, 53(4), 1283–1328.

No ratings yet. A few weeks ago the dispute between Epic Games, the developer of the famous game Fortnite, and Apple surfaced. Put shore, Epic Games accused Apple to charge an excessive commission for developers and to hinder their users in their freedom to choose where and from whom to download apps, clearly protecting its own products and services on the platform while discriminating external developers. After Epic Games changed its payment processor within Fortnite, cutting Apple off to maintain the contractually agreed commission, Apple decided to delist all Epic Games apps from the Apple App-Store, leaving millions of users without access to the Epic Games applications on their iPhones (t3n, 2020).

While Apple declared the dispute with Epic Games as resolved, terminating the contract with Epic Games, and also suing Epic Games for a breach of contract, further app developers joined Epic Games’ protest, complaining about Apple’s App-Store regulations (t3n, 2020).

By now, nearly 3 months after the beginning of the dispute between Epic Games and Apple, Apple is facing the next round of its App-Store dispute. A coalition has formed, to force Apple and other operators to change their App-Store regulations (Coalition of App Fairness, 2020).

The coalition is called Coalition for App Fairness and is supported by several well-known companies. Next to Epic Games, there are Spotify, Deezer, Matchgroup, Tinder, OkCupid, and many more. Whilst it is clear that their claims are mostly targeting Apple and its App-Store regulations, the requests of the coalition are formulated in a general manner to make them applicable to all App-Store operators (Coalition of App Fairness, 2020).

In total, the Coalition states ten requests for how App-Stores should be regulated, with three of the requests being directly targeted at Apple (Coalition of App Fairness, 2020):

Apple’s App-Store is subject to anti-competitive guidelines
Apple claims to review all apps carefully before making them available through the app store. Using that process, Apple wants to ensure quality and security for their consumers. However, the Coalition argues, that the heavy regulation by Apple gives Apple the advantage to support its own applications and reduces fairness for external app developers.
Apple retains 30 percent of app sales
As already mentioned, Apple is accused to charge a high commission. The Coalition sees a competitive disadvantage if two apps with similar services, one from Apple and one from an external provider, are competing against each other in the Apple App-Store since Apple can offer better prices for their services as they don’t have to pay the 30% commission.
The App-Store is supposed to restrict consumer freedom
Other than with other App-Stores, the only way a user of an iOS device can access and download an app is through the Apple App-Store. Customers have no freedom of choice about where or from whom they can obtain their apps. The Coalitions claim it to be a huge disadvantage forcing customers to use the Apple App-Store to being able to download apps.

While I see the point of the Coalition asking for more fairness, it also seems a lot like an attempt to shift profits away from Apple back to the app developers. While we discussed the network effects that large communities/networks can have on a product or service, the Apple App-Store is a great example. The benefits that Apple offers to app developers through the Apple App-Store ecosystem are (1) access to millions of users, (2) security, and (3) ensured quality. At the same time, Apple users can benefit from (1) security and (2) quality. Since no one is forcing the app developers to offer their apps through Apple’s App-Store, it is clear that they want to benefit from the quality network and processes that Apple created with its customers, since they promise increased profitability.

With no doubt, these benefits are crucial for the app developers, since they provide the possibility for increased demand and sales. If Apple would respond to all requests stated by the Coalition, opening up its platform, waiving the app approval process, and giving people the chance to download their apps wherever Apple would pose its iOS as well as its customers to the risk of becoming a victim of fraudulent activities. With a lowered level of quality and security, there’s a possibility of long-term negative impacts on user numbers, quality, security, and in the end profits being made.

What’s your take on this? Should Apple give in and reduce its power within the App-Store?

Sources:
https://t3n.de/news/gegenwind-fuer-apple-koalition-1324447/
https://appfairness.org/our-vision/

Image Source:
https://medium.com/the-kickstarter/what-entrepreneurs-can-learn-from-epic-games-attack-on-apple-9efce281a962

Epic Games vs. Apple’s App Store – Round 2

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