Google CEO Sundar Pichai (L), and Epic Games CEO Tim Sweeney.
Reuters
A federal court jury decided late on Monday that Google‘s Android app store, Google Play, uses anticompetitive practices that hurt consumers and software developers.
The decision is a big win for Epic Games and its CEO Tim Sweeney, which have been fighting against mobile app stores and their fees since 2020 — including an unsuccessful challenge to Apple‘s App Store rules which is currently being appealed to the Supreme Court.
Sweeney attributed the win to revelations throughout the trial that Google had allegedly deleted or didn’t keep records resembling chats about its secretive deals with app makers. He also noted that it had been a jury trial, while the Apple case was decided by a judge.
“The brazenness of Google executives violating the law, after which deleting the entire records of violating the law,” Sweeney said. “That was really astonishing. This could be very much not a traditional court case, you do not expect a trillion-dollar corporation to operate the way in which Google operated.”
Epic Games originally sued Google in 2020, alleging that it uses its dominant position because the developer of Android to strike deals with handset makers and collect excess fees from consumers. Google collects between 15% and 30% for all digital purchases made through its storefront. Epic tried to bypass those fees by charging users directly for purchases in the favored game Fortnite; Google then booted the sport out of its store, spurring the lawsuit.
The choice could give app makers a much bigger revenue share of the digital app market, which is currently dominated by Google and Apple, and is price about $200 billion per 12 months. The loss for Google could also empower other antitrust-based challenges to the search giant’s business, including an analogous case brought by the Department of Justice.
Monday’s unanimous verdict got here after a four-week trial in federal court in California. The jury unanimously found that Google acquired and maintained monopoly power within the Android app distribution market, in addition to the in-app billing marketplace for digital goods and services transactions.
The result’s markedly different than Epic Games’ similar effort to vary Apple’s App Store, through which which it lost 9 of 10 counts in 2021. Its only win was a judgment to suspend a rule about having the ability to email app customers. That ruling is currently being appealed to the Supreme Court.
One major difference was that Epic had a harder time finding documentation from inside Apple. One other is that Google’s Android allows software to be installed from the web, a process called sideloading, while Apple bars it.
“The massive difference between Apple and Google is Apple didn’t write anything down. And since they are a big vertically integrated monopoly, they do not do deals with developers and carriers to shut down competition, they only simply block on the technical level,” Sweeney said.
Throughout the Google trial, Epic Games as an alternative focused on whether Google locked up the app store market through deals with handset makers, and whether it scared users away from using Android’s sideloading functionality through security warnings.
It specifically called out secretive revenue-sharing contract deals with Samsung and Chinese handset makers, which these partners allegedly signed in exchange for supporting the Google Play store on recent devices. It also revealed that Google had entered into talks with Epic Games over an investment within the Fortnite maker.
What could come next
U.S. District Judge James Donato will hold hearings in January to find out what changes Google can have to make.
Google may need to change its Google Play Store rules, including opening up an option for billing and distribution outside of the shop. Epic will push for lower fees, alternatives to Google Play, and fewer scary warnings about installing software from the web, Sweeney said. He added that Epic Games isn’t searching for monetary damages.
Sweeney isn’t optimistic that change can be immediate.
“If Google is obstructing a vertical treatment through appeals and is not offering an awesome deal,” Sweeney said, the corporate is not going to be on Google’s services.
Google said it can appeal the choice. Google previously reached settlements with consumers, state attorneys generals, and Match Group over Google’s app store policies.
“We plan to challenge the decision,” Wilson White, Google VP for Government Affairs & Public Policy, said in a press release. “Android and Google Play provide more alternative and openness than some other major mobile platform. The trial made clear that we compete fiercely with Apple and its App Store, in addition to app stores on Android devices and gaming consoles. We’ll proceed to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem.”
Sweeney does hope that a few of Google’s deals revealed throughout the trial could give its partners leverage in negotiations. On Tuesday, Wells Fargo analysts cited the danger of partners striking harder bargains in exchange for carrying Google’s app store or using its billing system.
Nonetheless, investors are not particularly nervous that the results of this trial will threaten Google’s app business, which could about total $38.5 billion in annual revenue this 12 months, based on an estimate from Wells Fargo. Google stock fell lower than 1% during trading on Tuesday.
