Federal Court Rules Against Google in Epic Games Antitrust Case, Threatening App Store Monopoly

In a pivotal court battle that could redefine the mobile app landscape, Google faced a significant blow as a federal court jury sided with Fortnite maker Epic Games Inc. in an antitrust case, potentially disrupting the mobile app economy and posing a substantial financial challenge for the tech giant.

The jury’s decision, reached after a nearly month long trial in San Francisco, concluded that Google Play had wielded monopoly power through anticompetitive practices. US District Judge James Donato will now determine whether Google must permit alternate payment and app distribution methods outside its exclusive app store.

Epic Games, having previously confronted Apple Inc. in a similar challenge (albeit with less success), sought not monetary damages but a transformation in app store policies.

Google, in response to the verdict, expressed intentions to contest the ruling.

Wilson White, Google’s vice president of Government Affairs & Public Policy, defended the company’s stance, stating, “Android and Google Play provide more choice and openness than any other major mobile platform.” He emphasized Google’s competition with Apple and other app stores on various platforms.

Tim Sweeney, CEO of Epic Games, reacted positively to the ruling, signaling the company’s intent to seek tangible alterations in Google’s app store policies. However, Sweeney refrained from divulging specific remedies, highlighting the need for substantial changes despite the court’s decision favoring Epic.

Legal experts and analysts anticipate significant ramifications following this verdict, anticipating potential alterations not just for Epic but for the broader internet ecosystem. Stanford University law professor Mark Lemley emphasized the case’s potential to disrupt the trend toward closed internet environments, potentially impacting market concentration.

He said the verdict “has the potential to be a very big deal — not just for Epic, which will get the ability to sell directly on Android phones — but for the entire internet.”

“The last two decades have seen a profound shift away from the open internet towards walled gardens,” he said. “That is one of the things that have kept the internet market so concentrated. This verdict just knocked a big hole in the garden wall.”

Paul Swanson, a technology and antitrust law specialist at Holland & Hart, suggested that Google might find it challenging to reverse such a sweeping verdict through post-trial procedures or appeals, indicating the substantial impact of the court’s decision.

This ruling arrives amid heightened scrutiny of Google’s business practices, coinciding with a separate antitrust case by the US Justice Department targeting the company’s search business.

Epic’s lawsuit, initiated three years ago, accused Google of monopolizing the Android app distribution market through restrictive agreements and anti-competitive maneuvers. Google defended its partnerships as measures to bolster Android phones against competitors like Apple’s iPhone.

“Epic wants you to give them a deal that they don’t have and they haven’t been able to get anywhere else,” Jonathan Kravis, a lawyer for Google, told the jury in his closing argument. “A deal that would effectively let them use the Play Store for free.”

The trial presented confidential internal communications and documents, offering insights into Google Play’s strategies and dealings with mobile device manufacturers and game developers. Jurors found Google guilty of restraining trade through revenue-sharing agreements and developer policies that hindered competition and limited alternate app distribution methods.

Alphabet had also countersued Epic, alleging contractual breaches and bad faith in Epic’s attempt to establish its own app store. However, the court opted to omit ruling on Google’s counterclaims following Epic’s executives’ admission of seeking alternatives to the Play Store.

The outcome of this trial, designated as ‘In Re Google Play Store Antitrust Litigation,’ has the potential to reshape the app market, pending Judge Donato’s forthcoming decision on remedial actions against Google.

Google has been running its Android app store and Google Play billing system as an “illegal monopoly,”a jury decided Monday in federal court in San Francisco. It’s a “historic victory” for Epic Games, owner of the popular game Fortnite, which filed a lawsuit accusing the tech giant of using “secret revenue sharing deals” to snuff out rival app stores, per The Verge. The implications of the verdict remain unclear, pending a decision on remedies by the judge in the case, and Google parent Alphabet is likely to appeal.

• Epic was not seeking monetary damages, but CEO Tim Sweeney testified that it could save “billions” in fees if users weren’t routed to Google’s billing service.

• The developer has been unsuccessful with a similar suit against Apple.