Google faces potential business model changes to app store after Epic wins US antitrust fight

Google faces potential business model changes to app store after Epic wins US antitrust fight

Google faces the threat of significant changes to its app store business in the wake of a jury deciding this week, for the first time this century, that a large tech company violated US antitrust laws.

With specialist journalists in court for the trial's duration, MLex® has provided blow-by-blow reporting, digging into the potential ramifications of the litigation in real time.

Keep scrolling for key insights on the verdict, or start your 14-day free trial now for full access to our forensic archive on a memorable month for antitrust.

12 December 2023
By Xu Yuan, Jenn Brice, Amy Miller and Mike Swift

Google faces the threat of significant changes to its app store business in the wake of a jury today deciding, for the first time this century, that a large tech company violated US antitrust laws.

The nine-member jury’s lightning-quick decision in favor of Epic Games just three hours after the conclusion of closing arguments means it's now up to US District Judge James Donato to order a remedy sometime early next year.

Epic sought no damages but wants to force changes in the Play store, such as allowing the use of non-Google in-app payment processing tools and allowing Epic to launch its own app store on Play.

The jury disagreed with one of Google’s main defenses — that the Google Play app store engages in fierce competition with Apple’s app business — in answering all 11 questions on the verdict form in favor of Epic. As a remedy, Donato could order changes in how Google allows apps to be installed from other app stores, or in how it shares billions of dollars of in-app revenues with developers.

“Today’s verdict is a win for all app developers and consumers around the world,” Epic said in a statement from a spokeswoman. “It proves that Google’s app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation.”

It wasn’t a close call for the jurors, some of whom were posing for selfies and group pictures with Epic CEO Tim Sweeney in the courtroom hallways after the verdict was read out in court. They also asked for selfies with Lauren Moskowitz, the Epic attorney who one juror said “kept us awake” throughout the proceedings — likely referring to her cutting cross-examinations.

Google said it will challenge the verdict. "Android and Google Play provide more choice and openness than any other major mobile platform. 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. We will continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem,” said Wilson White, Google’s vice president for government affairs and policy.

Jurors defined the relevant markets in this case as those for Android app distribution and for Android in-app billing for digital goods and services worldwide, excluding China. They found Google was an illegal monopolist, engaged in unlawful restraint of trade, and illegally tied Google Play store to the use of Google Play billing.

Donato will determine the appropriate remedies. Epic has said it seeks Android openness for all app developers, specifically the ability to choose their own billing system, pay competitive rates for Google Play billing, and distribute their own app stores.

Donato has warned Epic that “no federal judge is going to micromanage Google.” The judge said he won’t dictate what Google’s service fee should be or grant Epic’s request for an “anti-circumvention order,” which would preempt any creative solutions by Google to curb court remedies.

Donato told counsel there would be “no reason to fast-track post-trial filings” before the December holidays.  The judge will hear Epic's motion for remedies in January.

Sweeney celebrated with a “Victory over Google!” post on X.

“After 4 weeks of detailed court testimony, the California jury found against the Google Play monopoly on all counts,” Sweeney wrote. “Thanks for everyone’s support and faith! Free Fortnite!”

The jury’s verdict was praised by Google critics, such as the American Economic Liberties Project, which urged Donato to craft a “strong remedy to ensure that app markets are open, accessible and competitive for honest businesses across the tech industry.”

“Epic’s decision to forego monetary damages and instead pursue injunctive relief all but ensure that this decision will fundamentally reshape Google’s monopoly, which it has leveraged to exploit app developers and stifle innovation,” Senior Legal Counsel Katherine Van Dyck said in a statement.

It’s a historic victory for Epic, which largely lost a similar legal battle against Apple two years ago when Judge Yvonne Gonzalez Rogers in Oakland, California, found that Apple isn't an illegal monopolist, after a bench trial.

Gonzalez Rogers issued an injunction requiring Apple to remove rules that prevent developers from steering their customers outside its App Store, which Apple has asked the US Supreme Court to review. Apple argues that the nationwide injunction is overbroad and defies established limits on the scope of injunctions that can be imposed by courts.

Epic is also asking the Supreme Court to review Gonzalez Rogers' findings.

Before the trial started, Google made a last-minute attempt to get a bench trial but failed. Donato was insistent that antitrust cases should be decided by juries and praised this particular jury for their focus throughout the trial.

Today’s verdict was the first of what could be three dominos to fall that could force significant changes across Google’s business.

The Google Play trial was one of three direct challenges within a six-month period to three legs of the Internet giant’s business: search, Android and its targeted advertising business. A 42-day antitrust trial over Google’s search business ended last month in Washington DC, with US District Judge Amit P. Mehta expected to rule sometime next year. Google faces a third trial, over its collection of personal data through the private modes of Chrome and other browsers, next month in Oakland, California, in what will also be a jury trial.

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A memorable month for antitrust

Google's failure to preserve internal chats 'concerning,' juror from Epic Games trial in US says

12 December: Google’s failure to preserve internal chats related to the US litigation filed by Epic Games was “concerning” and cast doubts on the company's integrity, a juror told MLex today.

Google’s Play store violates US antitrust laws, jury finds in Epic lawsuit

12 December: Google violated US antitrust laws in running its Google Play app store, a federal jury found today in a lawsuit filed by Epic Games.

Epic Games, Google antitrust case goes to jury as US trial over Android app store ends

11 December: A nine-person jury in San Francisco started deliberations in the US antitrust lawsuit filed by Epic Games against Google over the Play Store, its Android app store.

Comment: Epic Games-Google antitrust trial nears end with US jury set to hear closing arguments soon

7 December: On Monday, a nine-person federal jury in San Francisco will hear closing arguments by lawyers for Epic Games and Google before starting deliberations in Epic Games's antitrust lawsuit against Google over Google's practices related to its Play app store on Android phones.

Google escapes US court-mandated negative instruction but will face further scrutiny over chat preservation in Epic trial

1 December: Google escaped a court-mandated negative direction over its failure to preserve internal communications that could be used as evidence in its antitrust fight with Epic Games, but will be subject to further scrutiny for the behavior, a federal judge said as both sides finished presenting evidence.

Google, Epic executives field tough questions as US app store antitrust trial nears end of testimony

1 December: A Google executive testified today at an app store antitrust trial that Apple was its primary app store competitor, as the search giant began its first full day presenting its side of the case to nine jurors in San Francisco who will soon decide Epic Games’ antitrust allegations against Google’s app business.

Activision, Riot signed partnership deals with Google, dropped app store ideas, US jury told

30 November: Google entered into commercial partnerships worth hundreds of millions of dollars with top gaming developers Activision Blizzard King and Riot Games, which abandoned ideas to launch independent app stores, a US federal jury in Epic Games’ antitrust lawsuit against Google heard today.

Google Play antitrust dispute still solvable, US judge says, ordering settlement talks

29 November: Google and Epic Games should still be exploring a deal to settle their Android app market antitrust dispute, US District Judge James Donato told the parties after a day of expert testimony.

Google has 'utter dominance' in Android app distribution, Epic’s economist tells jury in US antitrust trial

28 November: Google has overwhelming monopoly power in the market for app distribution on Android phones and engaged in anticompetitive practices to sustain it, an economist hired by Epic Games told the jury in the US trial over Google’s Play store.

Comment: Epic makes progress in evidence dispute in US antitrust suit against Google; trial passes halfway mark

22 November: In Epic Games’ antitrust challenge to Google’s app business, the owner of popular game Fortnite is close to a victory that would boost the strength of the case it hands to a jury next month, thanks to Google’s failure to preserve evidence.

Expert witnesses for Epic Games, Google take stand as US app store antitrust trial continues

22 November: Epic Games and Google presented a federal jury with two widely divergent views from expert witnesses from each company about Android's restrictions on "sideloading" apps from sources other than the Google Play app store, as the antitrust trial over app distribution on Android phones and Google's in-app payment processing rules continued today in San Francisco.

Epic CEO Tim Sweeney testifies Fortnite could make billions but for Google's app store policies

21 November: Fortnite, the popular game owned by Epic Games, could reach hundreds of millions of Android phone users and potentially make billions of dollars if Google stops enforcing app store policies that Epic alleges are anticompetitive, CEO Tim Sweeney told a US federal jury today.

Epic Games asked by judge to propose potential jury directions adverse to Google in US antitrust lawsuit

17 November: Epic Games was asked by a US federal judge to come up with potential, specific jury directions to draw conclusions adverse to Google in the antitrust lawsuit over Google’s Android app store.

Top app developers raised concerns over being forced to use Google in-app payment only, jury hears in US antitrust litigation

15 November: Top app developers, including Google’s own YouTube, raised concerns over the requirement to use only Google’s in-app payment system, citing high fees, negative impact on users and being put at a competitive disadvantage, a jury heard today in a US antitrust lawsuit over Android's app store.

Google cites Apple’s privacy campaign to justify Android alternative app-download process, at US antitrust trial

15 November: Apple’s campaign to drive home that its privacy protections are superior to Android's is being used by Google to fend off allegations in US litigation that Google makes it difficult for users to download apps from sources other than the Google Play app store in an anticompetitive way.

Google CEO Pichai testifies in US antitrust trial over Android app store

14 November: Google CEO Sundar Pichai today took the witness stand in US litigation over Google's app store to testify about issues including the company’s revenue-sharing arrangement with Apple and Samsung and its internal policy to preserve communications for litigation.

Apple's revenue-share change for developers sent Google into 'scramble,' jury hears in US antitrust litigation

14 November: Rumors in 2016 that Apple was considering giving subscription-based apps a bigger share of in-app revenue triggered concerns within Google and prompted it to match Apple’s terms, jurors heard today in US antitrust litigation over Google’s Play Store.

To access these stories in full, plus breaking news and predictive analysis from our Antitrust & Competition journalists across the globe, start your free trial today.

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