Before he died, Apple (NASDAQ:AAPL) co-founder and CEO Steve Jobs famously said he would go to "thermonuclear war" against Android, kicking off a series of legal battles across the mobile sector that successor Tim Cook eventually defused. Well, the company is again going "thermonuclear," except it's not targeting the competing platform anymore.

Instead, Apple now finds itself embroiled in an escalating dispute with Epic Games -- maker of Fortnite and Unreal Engine -- and third-party developers are about to get caught in the crossfire.

Various armed "Fortnite" characters

Image source: Epic Games.

Apple goes for the jugular

Last week, Epic kicked off a strategically timed assault on Apple, including a social media campaign and lawsuit, targeting the iOS App Store's policies and commission rates. Epic's big move came after the Cupertino tech giant booted Fortnite off the App Store because Epic implemented a direct payment system that violated Apple's guidelines. Just a few days ago, Apple took things a step further and said it would be terminating Epic's developer account completely later this month. That action has massive implications, not just for Epic but for countless third-party developers, as well as Apple's own content ecosystem.

Put Fortnite aside for a moment. Unreal Engine is one of the most popular game engines in the world, enabling smaller game studios to rapidly create new games for many platforms, including iOS. If Apple terminates Epic's developer account, Epic will lose access to critical development tools that will cripple its ability to develop the engine for mutual customers that use Macs.

"[Apple] told Epic that by August 28, Apple will cut off Epic's access to all development tools necessary to create software for Apple's platforms -- including for the Unreal Engine Epic offers to third-party developers, which Apple has never claimed violated any Apple policy," Epic wrote in a legal motion seeking a restraining order to block the effort. "Not content simply to remove Fortnite from the App Store, Apple is attacking Epic's entire business in unrelated areas."

Unreal Engine logo

Image source: Epic Games.

Epic argues that this is pure retaliation and that the damage to its business and reputation would be "unquantifiable and irreparable" if Apple is allowed to proceed. The retaliation "represents an existential threat" to Unreal Engine, according to Epic.

"We do not retaliate or bully people"

This charge comes less than a month after Cook testified virtually to Congress alongside other major tech CEOs amid ongoing antitrust scrutiny, denying that Apple would ever retaliate against a developer for publicly voicing grievances. "We do not retaliate or bully people," Cook told lawmakers. "It's strongly against our company culture."

Epic founder and CEO Tim Sweeney confirmed last month that Apple had previously never retaliated against his company. In fairness, Epic's recent actions go far beyond just expressing criticism.

Apple is defending the move by trying to put the onus on Epic for implementing the direct payment system in the first place, which would very obviously run afoul of the iRules.

"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 in a statement. "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."

Thermonuclear fallout

The irony here is that going thermonuclear on Epic will create unfathomable fallout for Apple's own developer base. Many of the top iOS games in the App Store utilize Unreal Engine, and forcing those third-party developers, who have no direct involvement in the Fortnite spat, to switch engines is no small thing. Many of the titles in Apple's own Arcade subscription gaming service even use the graphics technology.

A pair of hand holds an iPhone displaying some gameplay

Image source: Apple.

"Developers that intend to sell their apps for use on iOS or macOS devices will have to forgo the Unreal Engine in favor of other engines," Epic wrote. "The effects will reverberate well beyond video games; it will affect developers who use the Unreal Engine on Apple products in many fields."

The implications are vast. Creative professionals that use Macs and Unreal Engine to create all sorts of content beyond iOS and macOS apps could be adversely impacted. Unreal Engine is increasingly being used across other media formats, including movies and TV (for example, Disney uses Unreal Engine in its hit Disney+ show The Mandalorian). Other applications include biomedical research, academic curriculums, and virtual reality, among many others.

"Finally, the public interest supports an injunction; without it, millions of players will lose their ability to stay connected on Epic games, and an entire ecosystem based on the Unreal Engine will collapse," Epic warns.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.