by In a significant blow to Google, the tech giant lost a legal battle against Epic Games Inc., the maker of Fortnite. The verdict, delivered by a San Francisco jury, raises concerns for Google’s app store duopoly with Apple, which generates nearly $200 billion annually and shapes the mobile device experience for billions of users.
The case highlights the controversial business model that Google and Apple adopt for their app stores, wherein they charge commissions as high as 30% to software developers, who often have limited alternatives. Epic Games has been vocal about opposing this practice, and the federal jury ruled in its favor, stating that Google, a subsidiary of Alphabet Inc., acted as an unfair monopoly.
This verdict is expected to accelerate the calls for reforming app store rules, which have already faced criticism from regulators and lawmakers worldwide. Tim Sweeney, CEO of Epic Games, expressed confidence that this judgment marked the beginning of the end for the 30% commission.
While Apple had also faced a similar case from Epic Games earlier in 2021, the ruling was delivered by a single judge. In this instance, a jury consisting of actual consumers unanimously sided with Epic Games, allowing them to have a say in the world of smartphone apps. In less than four hours, the jury concluded that Google had engaged in anti-competitive conduct, harmed Epic Games, and unlawfully imposed its own billing system on developers.
The legal battle began in 2020 when Fortnite was removed from both Apple and Google Play app stores after Epic Games introduced its own payment system to bypass the platforms’ revenue share. In response, Epic Games sued both companies. Google also faced criticism for striking preferential deals with prominent developers like Spotify Technology SA, offering them lower commissions. The jury’s decision emphasizes that Google should not compel Android app developers to use its billing system or offer custom agreements to select developers.
Paul Swanson, a technology and antitrust law expert, believes that this verdict will compel major tech companies to make accommodations to avoid legal exposure. He suggests that big tech firms may grant more access, better terms, and additional options for developers.
This case reflects the growing sentiment among consumers that major tech companies hold excessive power. Google is currently facing scrutiny for its dominance in search, with a trial from the Justice Department yet to reach a conclusion.
Sweeney of Epic Games predicts that as Google makes changes to its operations and public pressure mounts, Apple will also be compelled to follow suit. He believes that such actions will ultimately benefit consumers, either through lower prices, improved quality, or increased selection.
During the trial, Epic Games highlighted Google’s agreements with top game developers, such as Activision Blizzard Inc. and Nintendo Co., where the company offered lower fees. Sweeney suggests that every developer should now demand similar deals.
The stakes are high for both Apple and Google, as in-app spending is projected to reach $182 billion in the next year and $207 billion by 2025. The Digital Markets Act in the European Union, which will allow third-party app stores and billing systems, will bring about changes to the app store landscape. Prior to its implementation, both Apple and Google have already made adjustments, such as allowing reader apps to link to external websites for payments, bypassing the platforms’ revenue cuts.
While Apple emerged victorious in its case against Epic Games, except for one issue that remains undecided, the recent Google verdict may impact the outcome. There is a growing sentiment that the monopoly finding applicable to Google would also hold true for Apple, and the focus now lies on whether Apple abused its position.
Google, which intends to appeal the verdict, stated its commitment to defending the Android business model and its users, partners, and the broader Android ecosystem. Apple has not responded to requests for comments regarding the case.
Jason Kint, CEO of Digital Content Next, a trade association for digital content companies, believes that the finding against Google could also be applied to Apple. The debate now centers on whether Apple abused its monopoly position, which remains to be seen.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
Money Singh is a seasoned content writer with over four years of experience in the market research sector. Her expertise spans various industries, including food and beverages, biotechnology, chemical and materials, defense and aerospace, consumer goods, etc.
