Epic’s Fortnite standoff is putting Apple’s cash cow at risk


Apple and Epic Games have gone to war, with the two companies clashing over Apple’s App Store policies. Epic, in protest of Apple’s 30 percent fee for any digital transactions on its iOS platform, attempted to circumvent things with a direct payment option in Fortnite, leading Apple to ban the game entirely. But Apple’s Fortnite fight isn’t just over a particular policy for the App Store; it’s a battle that could decide the future of one of the key parts of Apple’s present and future business.

The 30 percent “Apple tax” is the beating heart for Apple’s services business, which it has emphasized as growth as the iPhone business starts to slow. That line of revenue has become a critical part of Apple’s business, the bright star executives have been able to point to on earnings reports in recent quarters. Labeling the revenue line as “services” lets Apple obscure where the money is really coming from — and onstage, Apple executives tend to talk about the prestige products like Apple Music, Apple TV Plus, Apple News Plus, or Apple Arcade. But the money from those services is dwarfed by Apple’s cut of the money flowing through its App Store and its power to force major players like Adobe, Spotify, and even Epic to pay the toll. So when Apple squares off over Fortnite, it’s not just fighting over one app or one policy. It’s protecting one of the key sources of revenue in the years to come — a source it could lose permanently if Epic comes out on top.

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