Expert Alert

Expect Epic Games and Apple to cooperate after lawsuit ends

Gurneeta Vasudeva

Next week, the trial begins in the lawsuit filed by Epic Games — the maker of the popular game Fortnite — against Apple over how it operates its iOS App Store.

Despite the upcoming trial, University of Minnesota Associate Professor Gurneeta Vasudeva expects these two companies to cooperate again. Prof. Vasudeva is available to speak about her research into why and how technology companies cooperate, as well as the role conflict plays in those relationships.

Gurneeta Vasudeva, Ph.D.
On why cooperation should be expected:
“When two companies complement each other, it is more likely they will form a partnership. In the Epic Games example, there’s a strong argument that all companies involved need each other. As one of the most popular games on the market, Apple wants Fortnite in their app stores. On the other hand, Epic Games needs the Apple App Store to help their game reach the masses.

“Billions of dollars are at stake for these companies. I believe there is a good chance that the parties will find a cooperative arrangement that allows Fortnite back into the application market and even expands the innovation opportunities for Epic Games on mobile platforms.”

On the benefits of cooperation:
“Innovation thrives on cooperation. It is so difficult for a company like Epic Games to go at it alone. At the same time, conflict — such as this lawsuit — signals that the value of the underlying innovation, in this case Fortnite, has increased. Each party wants to access more of its value in the form of private benefits.

“Cooperation can prevent Epic Games from migrating to alternative platforms, which would likely reduce commissions for Apple via their app store. From Epic’s standpoint, cooperation combines the scale of Apple’s platform with Fortnite’s popularity, creating a win for everyone involved. However, Apple’s central position in the mobile app ecosystem gives them outside options which can make cooperation more difficult. As a counterbalance, Epic Games’ dual cooperative strategy of forming alliances with other popular app companies — such as Spotify Technology and Tinder-owner Match Group, as well as partnership with Sony Corp., which is another important player in the mobile phones and video games ecosystems — can put pressure on Apple to continue cooperation with Epic Games.”

Gurneeta Vasudeva is an associate professor of strategic management and entrepreneurship at the University of Minnesota’s Carlson School of Management. Her primary scholarly interests include cooperative strategies, technological innovation, knowledge-building, and new industry emergence. Her latest study, The Evolution of Cooperation in the Face of Conflict: Evidence from the Innovation Ecosystem for Mobile Telecom Standards Development, is published in the Strategic Management Journal.

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About the Carlson School of Management
Located on the University of Minnesota Twin Cities campus, the Carlson School of Management exemplifies a commitment to excellence through a focus on experiential learning and international education, and by maintaining strong ties with the Minneapolis/Saint Paul business community. Through its undergraduate and graduate programs, the Carlson School offers access to world-renowned faculty members and an alumni network of 55,000 people. To learn more about the Carlson School of Management go to carlsonschool.umn.edu.

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Expect Epic Games and Apple to cooperate after lawsuit ends
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