Google has suffered a major blow to its Play apps store model if this new ruling survives appeal. A Federal jury returned what the Washington Post deemed to be a verdict against Google on all counts, after mere hours of deliberation. A link to the verdict form 1.
Readers may recall, at a 50,000 foot level, that Epic defied both the Google and Apple app store tolling by providing a direct way to pay for, download and install at a discount to the Google and Apple store prices….because Google and Apple charge a 30% fee, giving Epic plenty of pricing room on a direct sales basis. Epic argued that this direct payment model did not reduce safety, since Apple allowed many developers, such as Amazon and Grab, to provide direct payments.2
From the Financial Times’ overview:
Epic’s lawsuit alleged Google abused its power to charge excessive fees, and made an operating profit of $12bn on its Play Store in 2021 alone. Epic had sought to use an alternative billing mechanism on the Play Store that avoids Google’s fees.
Matt Stoller pointed out that the Epic cases against Google and Apple were business customers revolting against the app stores’ chokehold:
Three years ago, Epic’s CEO Tim Sweeney launched a dramatic legal assault against Apple and Google for monopolizing the on-ramp to the phone. This case didn’t come from the left or right, but from the commercial world. It was part of what I called a civil war in American business, as smaller companies across the economy began marshaling against dominant big tech goliaths.
Again, without belaboring details, Epic lost on most counts in it suit against Apple. Arguably the fact set is different since Apple controls hardware and software. But Epic is appealing to the Supreme Court. This conflicting Google ruling should increase the odds the Apple ruling will be reviewed (interestingly Apple also wants the Supreme Court to opine).
In November, The Verge explained why this case matters to Google:
The future of Google’s app store could depend on this trial — both Epic and Google agree on that. Epic wants to break up Google’s alleged monopoly on Android app stores and payment methods, so developers aren’t stuck paying the “Google Tax” or passing that fee along to you.
But if Epic wins — according to Google, anyhow — it could make Android phones less safe by dismantling basic protections against sideloaded apps, and damage Android’s ability to compete with the iPhone because it (arguably) can’t run a competitive app store by giving it away for free.
Google did attempt to make that argument in court. Per Reuters:
Google has denied wrongdoing, arguing that it competes “intensely on price, quality, and security” against Apple’s App Store.
A lawyer for Google, Jonathan Kravis, told jurors that “Google does not want to lose 60 million Android users to Apple every year.” Google lowered its fee structure to compete with Apple, Kravis said.
“This is not the behavior of a monopolist,” he said.
If I were a juror, I would find that claim an insult to intelligence. Android and Apple users are two different markets. The idea that non-trivial numbers of Android users would run out to buy markedly more expensive iPhones….because Apple Store would become somehow better….is lunacy.
It didn’t help that Google apparently destroyed evidence. Again from Reuters:
Among the more sensational allegations were that Google had a system for deleting texts and internal messages for the purpose of concealing its anticompetitive behavior. An attorney for Epic instructed jurors on Monday that they could assume the content of the deleted messages was pertinent to the case and “would have been unfavorable to Google.”
The findings in the case, summarized by The Verge:
… the jury unanimously answered yes to every question put before them — that Google has monopoly power in the Android app distribution markets and in-app billing services markets, that Google did anticompetitive things in those markets, and that Epic was injured by that behavior. They decided Google has an illegal tie between its Google Play app store and its Google Play Billing payment services, too, and that its distribution agreement, Project Hug deals with game developers and deals with OEMs were all anticompetitive.
Epic has asked for structural remedies, and not monetary damages, when the case goes into the sentencing phase in January. And Epic wants very serious changes. Again from Stoller:
Specifically, [Epic CEO Tim] Sweeney asked for the right for firms to have their own app stores, and the ability to use their own billing systems.
Ouch.
Since I have not been close to the case, I could be missing something, but the Google positioning seems tone deaf. Again from the Financial Times:
It now falls to the judge in the case to determine what remedies Google should face. In a statement, Wilson White, Google’s vice-president for government affairs and public policy, said the company would appeal against the verdict. “Android and Google Play provide more choice and openness than any other major mobile platform,” he wrote.
Eerm, even from my remove, a 30% nick for extremely popular games with millions of users and a refusal to negotiate on that sure sounds like a monopoly to me. And Epic banged on about that point. Again from the pink paper:
Sweeney said the verdict called into question the widespread use of the 30 per cent commission fee across the gaming industry.
“To me that’s the antitrust elephant in the room — that they all charge the same rate because they all have no competition,” he said. “I think 30 per cent’s days are numbered.”
Stoller pointed out that Google had managed to buy off the other original plaintiffs in the Epic case:
It’s a long and winding road for Epic. The firm lost the Apple case, which is on appeal, but got the Google case to a jury, along with several other plaintiffs. Nearly every other firm challenging Google gradually dropped out of the case, getting special deals from the search giant in return for abandoning their claims. But Sweeney was righteous, and believed that Google helped ruined the internet. He didn’t ask for money or a special deal, instead seeking to have Judge James Donato force Google to make good on its “broken promise,” which he characterized as “an open, competitive Android ecosystem for all users and industry participants.”
So this is a very welcome development. Let’s hope Epic continues on its winning ways.
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1 What is wrong with these people? Why is a 6 page pdf 2.2 MB, as in too big to embed, and also resistant to file size reduction via the Mac’s Preview? Tell me how grossly oversized files of simple text documents are in the public interest.
2 Epic had tried bypassing Google from its very launch of what came to be a blockbuster game, Fortnite. As Verge had described that part of the saga:
Of course, the battle between Epic and mobile app stores isn’t new. In 2018, the developer ignored Google Play completely when launching Fortnite on Android, before eventually giving in earlier this year [2020].
“After 18 months of operating Fortnite on Android outside of the Google Play Store, we’ve come to a basic realization,” Epic said in a statement back in April. “Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store.”