In a major escalation of the long-running feud between Apple and Epic Games, the iPhone maker has terminated the developer account of the latter, which is needed to create apps for iOS devices.

The surprising move deals a significant blow to Epic’s plans to bring its popular Fortnite game and its own app marketplace to iPhones and iPads in Europe under new EU regulations.

Apple’s decision arrived less than three weeks after it initially approved Epic Games Sweden AB’s developer account last month. Epic intended to leverage this account to launch the Epic Games Store, a rival app marketplace, and re-release Fortnite on iOS as required under the EU’s landmark Digital Markets Act (DMA).

However, in a press release published on Wednesday, Epic condemned Apple’s reversal as “a serious violation of the DMA” that “shows Apple has no intention of allowing true competition on iOS devices.”

The game company argues that the law requires Apple (AAPL) to permit the installation of third-party app stores and software that interoperate with its mobile operating system.

“In terminating Epic’s developer account, Apple is taking out one of the largest potential competitors to the Apple App Store”, Epic stated. “They are undermining our ability to be a viable competitor and they are showing other developers what happens when you try to compete with Apple or are critical of their unfair practices.”

Apple Cites Untrustworthy Behavior and Relies on US Court Mandate to Justify its Actions

In a statement to the press, Apple claimed it has a contractual right to terminate Epic’s accounts stemming from a September 2021 U.S. court ruling in the companies’ high-profile antitrust case.

That judgment gave Apple the contractual right to terminate its Developer Program License Agreement with any Epic Games’ subsidiaries or affiliates, which would allegedly include this European entity created solely to operate in that particular region.

“Epic’s egregious breach of its contractual obligations to Apple led courts to determine that Apple has the right to terminate ‘any or all of Epic Games’ wholly owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion'”, a spokesperson for the Cupertino-based tech company said earlier today. “In light of Epic’s past and ongoing behavior, Apple chose to exercise that right.”

According to correspondence Epic included in its announcement, Apple cited CEO Tim Sweeney’s public criticisms of its plans for DMA compliance as a key factor behind the account termination. This includes Sweeney lambasting Apple’s proposal as “a new instance of malicious compliance” with “junk fees” in a tweet last month.

In an email to Sweeney, Apple executive Phil Schiller requested that Epic provide a written statement that the CEO and the company were “acting in good faith” and that they were willing to “honor all of its commitments”. These requirements were apparently not satisfied by Epic considering what happened next.

“Apple is retaliating against Epic for speaking out against Apple’s unfair and illegal practices, just as they’ve done to other developers time and time again”, Epic claims in its press release.

Long-Running Battle Over App Store Policies

The bitter conflict between the two tech giants stretches back to August 2020 when Apple removed Fortnite from the App Store. This came after Epic deployed an update that bypassed Apple’s in-app purchase system, violating guidelines that require the use of its proprietary payment platform and granting Apple a 15% to 30% cut of all digital sales.

Also read: Paper Trail Helped Epic Games Beat Google on Court, CEO Says

Epic immediately filed lawsuits accusing Apple of abusing its market power through the App Store’s strict rules and commissions. After a high-stakes trial in 2021, a California judge issued a mixed ruling – upholding Apple’s right to maintain its walled software garden but allowing developers to link out to alternative payment methods.

Unsatisfied, both sides appealed to higher courts. In January 2024, the US Supreme Court declined to review the case, leaving the original decision in place. Amid the legal battles, Apple has continued to keep Epic’s developer accounts on life support, suspending updates to Epic titles like Rocket League.

EU Cracking Down on Apple’s “Gatekeeper” Power

While its American legal campaign largely failed, Epic has continued pushing antitrust cases against Apple in other, friendlier jurisdictions like Australia and the EU, where regulators are proving more hostile to the iPhone maker’s tight control over software distribution.

The Digital Markets Act (DMA), which finally took full effect on March 6, designates Apple as a “gatekeeper” due to its profound influence in the distribution of software via its widely popular proprietary operating systems. Among its requirements, the law compels Apple to permit alternative app stores and sideloading on iOS to increase user choice and foster a competitive environment.

Ahead of the DMA deadline, Apple announced changes allowing software downloads from third-party sources and obliging developers to new technical requirements like app security screening and revised payment terms.

However, the concessions drew immediate criticism from Epic and others like Spotify (SPOT) who argued that Apple was still undermining competition through new fees and policies that heavily favored its own store.

By revoking Epic’s developer account so soon after ostensibly complying with the DMA’s third-party mandate, Apple has provided a prime example of its perceived stranglehold on the iOS ecosystem in critics’ eyes. Epic labeled the decision a “medieval” power move aimed at squashing a formidable competitor before it gains any traction.

“If Apple maintains its power to kick a third party marketplace off iOS at its sole discretion, no reasonable developer would be willing to utilize a third party app store, because they could be permanently separated from their audience at any time”, Epic warned. It’s essentially a threat to the bottom line of any developer who wants to launch a competitor.

European Commission Probing Apple’s Conduct

Apple may have gotten more than they bargained for with this stunt. The European Commission, which enforces the DMA, confirmed Thursday it has “requested further explanations” from Apple regarding the Epic account termination to evaluate potential violations of the new competition regulations.

If the decision in fact breached the recently enforced DMA, Apple could face penalties of up to 20% of its annual turnover (though that would be extraordinarily unlikely). Brussels previously fined Apple €1.8 billion last month for past antitrust infractions in music streaming.

“This is an open-ended invitation for Apple to tell us exactly what they want us to commit to, and how they want us to commit to it in order to not lock us as a competitor”, Epic’s CEO Sweeney said in a call with reporters Wednesday. “Based on my interactions with Apple, they want two things… some sort of essay expressing fealty to Apple, a creative writing project, and they want us to shut up.”

The Commission’s intervention signals the start of intensive scrutiny over whether Apple’s DMA compliance plans, already facing skepticism, truly open up iOS to competition as intended. If found lacking, the consequences could be dire.

As the global tech community watches Apple and Epic continue their bare-fisted fight, the stakes over the future of mobile software distribution in Europe and beyond have been dramatically raised. Any ruling in favor of Epic’s position could fundamentally reshape the App Store’s restrictive policies and the company’s business model itself.