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Google suffers major blow in battle with Fortnite maker Epic Games
By Malathi Nayak
Google’s mobile app store maintains a monopoly in the market for distribution of programs and payments on its Android software, a federal jury in California decided, dealing a blow to the technology giant in a high-stakes antitrust battle with Fortnite maker Epic Games.
The internet giant’s Play store willfully wields monopoly power through the Alphabet unit’s anticompetitive conduct, jurors found on Monday after deliberating less than four hours following a nearly month-long trial in San Francisco.
Epic’s game Fortnite has made developer Tim Sweeney a billionaire, and he’s ready to take on the tech giants. Credit: Epic Games
The ruling could potentially jeopardise billions of dollars of revenue generated by Google’s app store. Epic largely lost a similar challenge to Apple’s app store two years ago.
US District Judge James Donato, who oversaw the trial, will decide whether Google must open the door for payment and app distribution methods outside its own app store following the verdict that Google Play policies are unlawful.
Google, whose shares slipped 0.4 per cent in extended trading on Wall Street, said it plans to challenge the verdict.
“Android and Google Play provide more choice and openness than any other major mobile platform,” said Wilson White, Google’s vice president of Government Affairs & Public Policy. “The trial made clear that we compete fiercely with Apple and its App Store, as well as app stores on Android devices and gaming consoles.”
Tim Sweeney, chief executive officer of Epic, flashed a slight smile as he sat in the front row of the public seating area of the courtroom after the verdict was read out. He quickly hailed the ruling in a post on social network X.
Stanford University law professor Mark Lemley 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 has kept the internet market so concentrated. This verdict just knocked a big hole in the garden wall.”
Lawyer Paul Swanson, a partner at Holland & Hart who specialises in technology and antitrust law, said that “a sweeping verdict like this is going to be hard for Google to undo in post-trial proceedings or on appeal”.
Epic sued Google three years ago, claiming the tech company monopolised the Android app distribution market for more than a decade by striking side deals with rivals and using its resources to thwart competition.
In its defence, Google contended that its partnerships help phones that run on the Android operating system better compete against smartphone market rival 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.”
Epic was the only stakeholder to challenge Alphabet at trial after the Mountain View, California-based company recently reached settlements with consumers, state attorneys general and Match Group, all of whom had targeted Google Play policies in complaints.
‘A sweeping verdict like this is going to be hard for Google to undo in post-trial proceedings or on appeal.’
Antitrust lawyer Paul Swanson
The trial featured testimony from both Sweeney and Alphabet CEO Sundar Pichai, along with a handful of high-ranking executives from Google and several antitrust law experts.
Nine jurors, three women and six men, were shown numerous documents as evidence, including confidential internal Google email communications and presentations, which revealed the inner workings of its efforts to build out Google Play and its Android mobile operating system business.
Jurors found that Google unreasonably restrained trade by sharing Google Play revenue with mobile device manufacturers so its own store was the default store on Android smartphone home screens. Google also made million-dollar deals with game makers including Activision Blizzard before it was acquired by Microsoft — which Epic argued dissuaded the game companies from launching their own stores.
The panel also concluded that Google limited trade through its developer agreements that Epic contended make it challenging for users to directly download apps from the web to mobile devices. The accords also stopped developers from telling Android phone users that their products and services may be available at a lower price on their websites.
Alphabet had counter-sued Epic, alleging the game maker breached its contract and acted in bad faith when it tried to set up its own app store in 2020 as an end-run around the Google Play billing system.
But after testimony by Epic executives at trial admitting that they tried to sidestep the Play store, Donato decided that jurors would skip ruling on Google’s counterclaims.
The legal fight is also brewing in this jurisdiction after Epic sued Apple over app payments in Australia in 2020, and added Google in 2021. However, after a series of stops and starts, last year a Federal Court judge ordered both cases be heard together and pushed to 2024.
The jury decision in the US could have major impacts on the Australian case, especially if the judge orders Google to open up Android to more app store and payment competition.
The case is In Re Google Play Store Antitrust Litigation, 21-md-02981, US District Court, Northern District of California (San Francisco).
Bloomberg, with Tim Biggs
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