Epic Games' CEO says fighting Apple cost his company more than $1 billion. He says it was worth it.

Business Insider

06-05-2025

There aren't a lot of people who can say they've beaten Apple. Tim Sweeney may have just earned a spot in that club.
Sweeney is the CEO of Epic Games — best known as the company behind Fortnite — and he won what may be a very meaningful court victory last week, by forcing a significant change in the way Apple runs its App Store.
Apple is going to appeal that ruling (and Sweeney is in a parallel fight with Google over its app store rules). But if the ruling stays put, it means the five years and the enormous amount of money Sweeney says he spent and sacrificed by challenging Apple and its CEO, Tim Cook, will have paid off.
Explaining why Apple's App Store rules are so important — to both Apple and the developers who complain about them — can be a drag, though I keep trying. I wanted to hear Sweeney's take on it directly because he's made the fight a core part of his job for half a decade.
And I also wanted to know when I'll be able to play Fortnite on my iPhone — something I haven't been able to do since 2020, when Sweeney first started fighting with Apple. (I've asked Apple for comment, but they haven't expanded on the statement they made last week expressing their disappointment and plans to appeal.)
You can hear our entire discussion over on my Channels podcast. The following is an edited excerpt of our conversation.
Peter Kafka: Why was last week's ruling important to you and Epic? And why should a normal person care about it?
Tim Sweeney: This is really one of the issues at the heart of our digital freedoms for the future. We live our lives on our smartphones. We're connected constantly to people. We work on them. We play on them. And our futures are going to be ever more connected there. So the freedom for consumers and developers to do business together is of paramount importance. If you have one monopoly gatekeeper who dictates what people are allowed to play, see, hear — and takes exorbitant fees from every transaction that everybody does online — we're going to have a much less free world than the one that we grew up in.
I started programming back on an Apple II when I was 13: You turn the computer on, you get a BASIC programming prompt. Anybody can write code, anybody can save it to a floppy disk, you can share it with a friend, you can sell it. Those digital freedoms are essential to the future.
I subscribe to Netflix. I subscribe to Spotify. Neither of those is done through Apple because in both cases, neither of those companies wanted to pay Apple's fees. But I use Spotify and Netflix on my phone.
I could maybe argue that it's a bit of a hassle for me to have to deal with Netflix on a website instead of directly through its iOS app. But it doesn't really seem like it's a sort of life and death situation for me or any of the companies involved.
Apple has two tiers of rules. They have one tier of rules for what they call reader apps, which are basically apps operated by multi-hundred-billion-dollar companies — Amazon Video, Netflix, Spotify, and a number of others. Apple lets those apps do business outside of the app. And they've previously obstructed those developers from telling users about the better deals [you could get by going to those sites directly].
But even with that restriction, which is now being taken away, it seemed like life was OK for me, life was OK for Netflix, life was OK for Apple. Everyone was getting what they wanted.
It was not OK for game developers. Because that reader app exception only applied to streaming video, streaming audio, and ebook sites. Apple forced all games, all social media apps, and everything else, to only do business through their app. So Apple imposed a rule on all game developers, saying if you sell anything for your game anywhere in the world on any platform, then you must sell it on iOS, and you must use our payment method, and you must pay us 30% if your revenue is greater than a million dollars. So the game developers did not have a choice, and everything there was just marked up 30%.
It means now all users are free to learn about better deals from all developers, and all developers are free to not just accept payments outside of the app on the web, but to tell users about those alternative ways to pay and to give consumers better deals. That's a key economic gain here.
Now developers will be able to send users to the web to give them a better price, and then to make a little bit more money for themselves, too.
But that's just the first-order effect. The second-order effect is that you can expect if Apple continues to offer such a horrible deal, that everybody's going to move away and steer their customers towards iOS payments on the web. So I would hope that Apple would step up and compete, give developers a much better deal than 30%, and actually engage in competition. But whether Apple chooses to compete or not, the court has enabled developers to make the choice for themselves.
Apple says they're going to comply with the judge's ruling, but they're also going to appeal it. So it's possible the rules get changed again. Do you think a meaningful number of developers are willing to take advantage of this window, knowing that it can get shut down?
It's 30% of revenue, so all major developers will support alternative payments. Spotify was the first major app I saw that already has done it. Fortnite will do it later this week. And many, many apps are doing it.
You said Fortnite is going to come back to iOS. You guys were kicked off the platform in 2020 for violating Apple's rules. There's nothing in the judge's ruling that says Apple has to reinstate Fortnite on iOS. Have you talked to Apple? How do you imagine Fortnite will come back to iOS?
Epic has a valid [Apple] developer account in good standing. Our subsidiary Epic Games Sweden opened up an account in order to distribute Fortnite in the European Union.
Our dealings with Apple on that account have been managed by their developer relations team, who have been cordial.
I believe so. I would be very surprised — well, I wouldn't be terribly surprised if we had a bug that took a day or two more to fix — but I would be very surprised if Apple decided to brave the geopolitical storm of blocking a major app from iOS.
We've told Apple what we're doing.
We've had legal bills in the matter of Epic vs. Apple of over $100 million.
I assumed it was much more. You were hiring top-shelf lawyers and …
Well, yeah. Well over $100 million, just in legal fees.
But if you look at lost revenue, that's another story. We can't predict exactly how much we would have made on iOS, but in the two years that we were on the platform, Fortnite had made about $300 million on iOS. So you could have projected hundreds of millions of dollars of lost revenue as a result of the fight.
And that's just from people who were playing and couldn't play. I'm thinking of the future players you would have gotten, who didn't get exposed to the game because they don't have access to it via their phone. Roblox has tons of young players. The majority there are teenagers or below. They're all getting to it via their phone. Those are all people who could have played Fortnite for the last five years.
That's right. Metcalfe's Law is a real factor here. You're much more likely to play a game or use a social network if your friends are there. So Apple cutting off Epic from access to the entire iOS audience, that not only affects the players that are directly denied access to Fortnite, it also affects all of their friends who might have played Fortnite more or might have played Fortnite but didn't, because their friends weren't able to play.
So you could easily imagine that there's been a billion dollars or more of impact to Epic in this time.
I think freedom cannot be purchased at too dear a price. The world needs to change here. And if it doesn't change, then you're just going to have Apple and Google extracting all of the profit from all apps forever. And there will be no proper digital economy. It will just be monopolization.
I understand the logic and emotion behind that argument. On the other hand: You're running a for-profit company. You have a lot of investors. They put a lot of money into you. Did they come to you at any point in the last five years and say, "Tim, I know that freedom cannot be purchased at too dear a price. On the other hand, I've invested a lot of money in you because you're a games company, and your game is banned from mobile phones. Could you just settle this up and declare victory and move on?"
Other than one investor who exited Epic right quick, everybody has stood by us, because nobody invested in Epic because they want to make a 30% profit flipping the stock.
They have invested in [us], believe in our vision, believe in our potential, and believe that if we succeed in building the metaverse and growing Fortnite from a game into an ecosystem, into an open platform serving literally billions of players, that it will totally have been worth it. They all realize that if Apple controls the spigot, the revenue spigot at the top of the funnel, they will use that control to extract all of the profit that will ever be made from this space.
There's a game and a meta game here, right? The game is making awesome software, which is awesomely fun, creatively and technically. I love that. But there's a meta game of ensuring that we have the right to do that, and that we can profit from the fruits of our labor, and that all developers can. So much of our business is not just Epic profiting from our games. It's Epic helping other developers succeed and profiting from the success of thousands or hundreds of thousands of different developers themselves.
Epic is one of the few companies in the industry that's positioned in a way that really forces us to fight for everybody. And I don't feel bad about this. I put a lot of brain power into coding over the years. I put a lot of brain power into figuring out how to defeat the monopolies that are blocking us.
What good is coding if you don't have the right to release your product? You have to mix the love of the art together with your defense of your right to engage in the art.