- The escalating battle between Apple and Epic Games has already resulted in Fortnite being unavailable to download on phones around the world.
- But if Apple disables Epic's developer account, then the company won't be able to maintain the Unreal Engine for iPhones and other Apple computers, which Epic sees as an "existential threat."
- Investors believe that the potential of the Unreal Engine and its ubiquity is a large part of Epic Games' $17.3 billion valuation.
But if the war between the two companies continues, it could affect hundreds of other games, Epic said in a legal filing on Monday. It described Apple's actions as an "existential threat."
If Apple disables Epic's developer account, then the company won't be able to maintain the Unreal Engine for iPhones and other Apple computers. Unreal is a long-standing set of technologies for displaying 3D graphics. Other game-makers license it from Epic so they don't have to re-build the same functions from scratch, and it's used in many popular games, although it's more popular on consoles and PCs than for mobile games.
The dispute started last Friday when Epic updated Fortnite so users could buy digital character outfits and other items directly with a credit card. That violates Apple's App Store policies, so Apple removed Fortnite within hours. But Epic Games was prepared, and immediately filed a lawsuit accusing Apple of anti-competitive behavior. Apple is already undergoing scrutiny from Congress over its control of the App Store, which is the only easy way for users to install software on the iPhone and iPad. Epic also kicked off a marketing campaign with a 30-second spot encouraging Fortnite gamers to "fight back" against Apple.
On Monday, Epic said that Apple threatened not only to remove Fortnite, but to disable the company's developer accounts entirely. This would essentially make the Unreal Engine a dead-end technology on the iPhone and Mac, according to Epic.
"When Apple terminates Epic's Apple Developer Program accounts, the consequences will be devastating," Epic CEO Tim Sweeney wrote in a filing on Monday. "Without access to these SDKs, APIs, and other tools, Epic would be unable to develop future updates to the Unreal Engine for use on iOS and macOS, and would thus be forced to discontinue Unreal Engine for iOS and macOS."
Dragging another major Epic product into the dispute is a major escalation on Apple's part, and could affect companies that have nothing to do with Fortnite but use Epic's tools to make their games and apps.
The Unreal Engine extends back about 20 years, and is based on back-end technology that Epic built for a hit 1998 game called Unreal. When someone wants to make a new game, they can painstakingly create their own code to model 3D graphics, or they can use software like Unreal Engine, which also makes it possible to run the same game on multiple platforms — like on both Sony Playstation and Windows, for example. Even Nintendo now uses Unreal Engine to make Switch games.
Unreal Engine is now on its fourth major version and works across nearly every major computing platform.
Even if you're not a Fortnite player, you're using Epic technology if you play PlayersUnknown's Battlegrounds, or Rocket League, or Microsoft's Minecraft Dungeons, among many other titles. Epic says that its use extends well beyond gaming: Software makers in the medical world use it to build training apps, and Hollywood studios use it to create realistic backgrounds and environments, for instance.
Game makers who use the technology pay Epic 5% of revenues once their game makes over $1 million, or can negotiate a deal directly. Epic is a privately held company, and does not reveal how much money it makes from Unreal Engine versus its own properties. But the company is now valued at $17.3 billion after raising money from investors including Sony, Baillie Gifford, Fidelity, and Lightspeed last month. Investors believe that the ubiquity and future potential of the Unreal Engine is a large part of the company's lofty valuation.
Epic says it will be forced to stop updating the Unreal Engine for iOS and Mac computers if it loses its developer account. This means it would be much harder for companies to build iPhone and Mac games using Unreal Engine.
"By spring 2021, it is likely that Apple will refuse to accept any new apps and updates to existing apps that use the Unreal Engine due to Epic's inability to access those tools," Epic Games said in its Monday filing.
This could lead to an exodus of developers looking for a different cross-platform tool that supports Apple devices, Epic said.
In fact, while the Unreal Engine is popular on consoles and PCs, many mobile games use a competing engine, Unity, which has not been affected.
"Unreal is used in some mobile games, but only a small minority. Unity is far more pervasive, so hard to quantify the impact on the ban," Michael Pachter, analyst at Wedbush said.
In a late Monday statement, Apple said it wants to keep Epic and its apps in its store, but won't make an exception for the company.
"The problem Epic has created for itself is one that can easily be remedied if they submit an update of their app that reverts it to comply with the guidelines they agreed to and which apply to all developers," Apple said. "We won't make an exception for Epic because we don't think it's right to put their business interests ahead of the guidelines that protect our customers."
— CNBC's Josh Lipton contributed to this report.