Victory for Epic Games in the fight against Google on antitrust issues

Although Google fought it tooth and nail, the victory for the underdog video game maker means that the Google Play Store will likely soon look very different for Android users. Google rose to the occasion in December when Epic Games, maker of the popular video game Fortnite, prevailed on all counts in its antitrust lawsuit against the tech titan. But the fight isn’t over yet: The court is currently determining what exactly the Google Play Store will look like in the future, and last week heard arguments on Epic’s proposed injunction. As Judge Donato of the Northern District of California put it during the hearing, despite Google’s argument that “a terrifying world of chaos and energy awaits just around the corner if there is competition in the app store market,” the judge “simply (don’t) buy it.” On the other hand, he mentioned an injunction proposed by Epic – which would prohibit Google from enforcing “contractual terms, guidelines or policies or otherwise imposing technical limitations, difficulties of use, financial conditions or material advantages that… limit, prohibit, hinder or discourage or prevent Android apps from being distributed through an Android app distribution channel other than the Google Play Store” – was “too open.” The proceedings will continue in August, and the parties will have the opportunity to make their closing arguments. In the meantime, we’re revisiting the implications and stakes of this case beyond Google and its Play Store.

Epic v. Google lawsuit

After Epic Games announced in 2020 that it would be offering Fortnite for download on its own platform, Google immediately removed Fortnite from its Play Store. Epic Games responded with an antitrust lawsuit, questioning Google’s “walled garden” application distribution platform – the Google Play Store. Epic argued that the Play Store constitutes an illegal monopoly and that removing Fortnite from Google’s virtual shelves amounts to unfair competition.

Last December, a jury agreed with Epic, finding that Google’s requirement that all third-party apps use Google’s in-app billing system, which brings huge profits to Google, violated antitrust laws. Mandating the use of Google’s in-app billing system allowed Google to keep a percentage of each purchase, depriving third-party app developers of significant revenue.

Epic sought an injunction, but not monetary damages, seeking a ruling that would force Google to tear down the walls surrounding its garden. Epic has since made a lengthy list of demands against Google in a 16-page injunction, to which Google responded: “Epic’s demands would harm the privacy, security, and overall experience of consumers, developers, and device manufacturers.”

Now Google is struggling with the domino effect of the defeat against Epic. Attorneys General of all 50 states, incl Epic v. Google initiated legal proceedings and filed a lawsuit against Google over its allegedly anti-competitive practices in the Play Store, and in December, Google ultimately reached a $700 million settlement with the states following Epic verdict.

Apple’s escape

Interestingly, Epic filed a separate antitrust lawsuit against Apple on the same day it filed its lawsuit against Google. Although Epic’s lawsuit against Apple was heard in the same court, a different judge presided over the hearing.

Apple removed Fortnite from its App Store at the same time as Google. As with Google, Epic accused Apple of anti-competitive and monopolistic practices. However, in AppleAfter a trial, Judge Yvonne Gonzalez Rogers dismissed all of Epic’s federal antitrust claims, granting Epic only a California competition claim and issuing an injunction that forced Apple to allow third-party app developers to link to their own storefronts in within their applications on Apple devices. The decision was upheld on appeal.

But why the different results? Several factors may help explain:

Payments between developers. Epic presented evidence that Google paid app developers to distribute their apps on the Play Store, rather than through independent developer platforms (where they could avoid Google’s high fees for its in-app billing system), in order to convince app developers to abandon independent distribution . No evidence of comparable payments was provided Apple.
Plunder. Google has struggled with theft issues, while Apple has not. Epic presented evidence that Google deleted internal communications and messages between its employees, which Epic intercepted at trial, which the judge called “egregious” and “disturbing.”
Market definition. IN Apple, the court adopted a market definition that was much broader than Google’s, encompassing not only the Apple App Store but also other comparable mobile app stores providing games. The relevant market at Google has been narrowly defined as the market for Android app distribution and Android app billing services for transactions involving digital goods and services.

Closing arguments are approaching Google and the appeal is pending Appleat least one thing is clear: the App Store wars are not over yet.