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Apple trial shows how platforms shape mobile games

Apple App Store On Trial
Posted at 5:01 PM, Jul 07, 2021

"Candy Crush," "Clash of Clans," "Roblox" — these games might not look like much, but they're a huge part of the $90 billion video game industry. The rise of mobile gaming has reshaped the economics of the broader gaming world, while creating a flourishing market of its own. 

But that mobile games market is heavily shaped by tech giants like Apple, which control the digital storefronts that these mobile games rely on. 

A recent court challenge to Apple's influence over that market reveals just how important gaming is to mobile platforms — and how those games are still often at the mercy of Big Tech.

Mobile gaming is ubiquitous these days — smartphones are the most common gaming platform in U.S. households. The largest games have raked in billions of dollars in revenue using a free-to-play economic model: let players enjoy the base game for free, and then sell them small gameplay boosts later on.

Free-to-play mechanics can be frustrating for players to engage with, but they've proven lucrative enough to spread to other gaming platforms — like Epic Games' massively successful multiplayer shooter Fortnite, which made $9 billion in its first two years. It's also made gaming into a financial powerhouse on the App Store: about 62% of App Store revenue in 2018 came from gaming apps.

Craig Chapple is a games analyst for Sensor Tower, a business that tracks the ups and downs of the mobile app market.

He told Newsy: "I think games have always just been monetized, arguably better, and maybe there's just more of a case for more games to monetize through in-app purchases. So games have always been kind of the biggest driver of revenue on the App Store. I believe last year, App Store and Google Play combined generated $79.7 billion worldwide."

And that money means big bucks for the storefronts as well: in exchange for hooking developers up with paying customers, Apple and Google take 30% of all digital transactions that are made using their stores. That's been an industry-standard rate for over a decade but has faced more and more scrutiny as the digital economy has grown.

"They do, to some extent, provide an audience," Chapple said. "Whether that 30% cut is sustainable, looks like, you know, the courts are going to decide, or the U.S. Congress or the European Commission will be taking a look at that."

Epic — the Fortnite company — runs its own digital game store with a 12% fee. The company took Apple to court by claiming the App Store is a monopoly, icing out competitors and forcing developers to use Apple's storefront and pay its 30% cut.

The ensuing legal battle focused largely on how Apple runs its app store. And the trial made one thing clear: Apple treats games differently from other apps, particularly when it comes to how they're distributed.

Popular subscription services like Netflix and Spotify allow users to access a bunch of different media for a monthly fee. Apple has a similar service for games called Apple Arcade — but it hasn't let other game streaming services onto the App Store.

This has kept mobile publishers from experimenting with new services like Microsoft GamePass or Google's Stadia. These one-stop subscriptions can help subsidize smaller games that don't monetize as aggressively — but apart from its own Arcade selections, Apple doesn't seem to want those services on its store.

There's clearly something about games that single them out from other media in this regard — it hit the point where popular mobile game platform Roblox shifted to calling itself an "experience" rather than a game during the trial, seemingly to avoid being lumped in with disallowed services like Stadia.

Limiting other sources of games turns the App Store into a bit of a bottleneck for games hoping to get on iOS devices. This lets Apple weed out any content the company deems controversial, tilting the platform's game selection away from serious subjects and towards more casual games.

Apple argues it's free to make its own decisions about how its App Store works — and most of its decisions are about improving customer experiences. If Apple gives up that control, it could open users up to the risk of security threats from invasive apps. 

In an interview with Brut, Apple CEO Tim Cook said losing that control "would destroy the security of the iPhone, and a lot of the privacy initiatives that we built into the App Store."

Still, the antitrust pressure has already had some effect: Apple and Google have both slashed their storefront rate from 30 to 15% for developers making under $1 million. If more scrutiny leads to more changes, we could see a broader swath of games flooding the mobile market — and a rare defeat for the tech giants that control those platforms.

This story was originally published by Matt Picht at Newsy.