Apple Approves Epic Games Store in Europe After Outcry

Apple has approved Epic Games’ games marketplace app in Europe after an outcry from the maker of the popular Fortnite game. The two companies have often been at loggerheads over Apple’s App Store policies.

The app which would be available on iPhones and iPads in Europe would let users buy games like Fortnite. However, the approval did not come without drama and Epic Games said that Apple rejected its documents twice.

Apple Approves Epic Games Store

“Apple has rejected our Epic Games Store notarization submission twice now, claiming the design and position of Epic’s ‘Install’ button is too similar to Apple’s ‘Get’ button and that our ‘In-app purchases’ label is too similar to the App Store’s ‘In-App Purchases’ label,” said Epic Games.

It added, “Apple’s rejection is arbitrary, obstructive, and in violation of the DMA (Digital Markets Act), and we’ve shared our concerns with the European Commission.”

Notably, the EU’s DMA “establishes a set of clearly defined objective criteria to qualify a large online platform as a “gatekeeper” and ensures that they behave in a fair way online and leave room for contestability.”

Among others, the Act mandates that “gatekeepers” should allow third parties to inter-operate with their services in certain specific situations.

Both Apple and Alphabet charge hefty fees on their respective stores and may lose out on revenues if customers pivot to third-party app stores.

Notably, the DMA mandates that gatekeepers should not “treat services and products offered by the gatekeeper itself more favourably in ranking than similar services or products offered by third parties on the gatekeeper’s platform.”

Epic Games CEO on The Issue

In a now-deleted email, Epic Games CEO Tim Sweeney claimed that the approval was “temporary.”

According to a tweet from Epic Games newsroom, “Apple has told some press channels that, though they have approved our current EGS iOS App for notarization, they are still demanding Epic change the user interface in a future version. Epic is disputing this.”

Notably, Epic Games has been at loggerheads with both Apple and Alphabet and both booted it from their stores in 2020 after the company tried to bypass the app store fees.

Europe Is Cracking Down on the Alleged Tech Monopoly

Incidentally, while tech giants are facing regulatory heat pretty much across the world, Europe has especially been at the forefront. Under pressure from the European Commission, last year Meta Platform said that it would offer paid versions of Facebook and Instagram in the region, which won’t serve ads to users.

Last month, in its preliminary findings, the Commission found that Apple was in violation of DMA and that the company does not fully follow “steering.”

The Commission noted, “Steering is key to ensure that app developers are less dependent on gatekeepers’ app stores and for consumers to be aware of better offers.’

It added, “We have also opened proceedings against Apple in relation to its so-called core technology fee and various rules for allowing third party app stores and sideloading.”

Apple Won’t Offer AI Features in Europe

At the Worldwide Developer Conference (WWDC) last month, Apple announced a flurry of AI-enabled features that it would add to the next iPhone. However, the company might not offer these features in Europe

In its note, Apple said, “Specifically, we are concerned that the interoperability requirements of the DMA could force us to compromise the integrity of our products in ways that risk user privacy and data security. We are committed to collaborating with the European Commission in an attempt to find a solution that would enable us to deliver these features to our EU customers without compromising their safety.”

Many analysts expect AI-enabled iPhones to fuel the demand for Apple. The company’s sales have otherwise sagged and fell YoY in all four quarters in the last fiscal year.

Apple Reported a YoY Fall in Fiscal Q2 Earnings

Apple reported a YoY fall in its fiscal Q2 2024 earnings also. The company reported iPhone revenues of $45.96 billion which trailed analysts’ estimate of $46 billion. iPad revenues came in at $5.6 billion which too fell short of the $5.91 billion that analysts were expecting. Other Product revenues of $7.9 billion were also lower than the consensus estimate of $8.08 billion.

However, Services was a bright spot and revenues rose 14.1% YoY to $23.86 billion. The metric easily surpassed analysts’ estimate of $23.27 billion and was a new quarterly record. Mac revenues were also much better than expected at $7.5 billion which was over $600 million higher than consensus estimates.

While Apple’s gross margin of 46.6% was in line with estimates, its EPS of $1.53 was slightly ahead of the $1.50 that analysts were expecting.

Apple stock hit its record highs on Friday and its market cap is now slightly below that of Microsoft. The stock has been on an uptrend since it released its fiscal Q2 earnings and the rally gained traction following the WWDC.