Why shouldn't Epic try to beat Bluehole at their own game, so to speak?
Because they are business partners?
This is probably a good case study on why graphics engine creators and licensors shouldn't make games. And explains why so many gaming companies keep their inhouse graphics engines close to their chest and don't license them out.
I mean, Bluehole didn't invent the concept of Battle Royale, Battle Royale (the movie) did that. Not to mention corresponding H1Z1 game mode existed long before PUBG. I don't see anything illegal here (morally questionable - yeah, sure) unless Fortnite straight out copied "the wall" and its mechanics from PUBG or something.
I mean its one thing to rip off gaming mechanics. Its another to license out an engine to a dev and then use that very same engine to rip off the gaming mechanics of that game for themselves. And to blatantly spin off that said game into a F2P mode out of nowhere lol. Its shitty but I'm sure Epic wouldn't lose a lawsuit of any kind. They probably have plenty of small print to protect themselves in these situations. I mean they'd be stupid not to.