Epic Games wins antitrust case against Google over Play app store

FILE PHOTO: Fortnite game installing on Android operating system is seen in this illustration taken, May 2, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Greg Bensinger and Mike Scarcella

(Reuters) -“Fortnite” maker Epic Games has prevailed in its high-profile antitrust trial over Alphabet’s Google, which alleged the Play app store operated as an illegal monopoly, in a ruling that if it holds could upend the entire app store economy.

Jurors found for Epic on all counts, a court filing showed, after more than a month of trial in Epic’s lawsuit, which accused Google of taking action to quash competitors and charge unduly high fees of up to 30% to app developers. The court in January will begin work on what remedies to implement.

Google app is seen on a smartphone in this illustration taken, July 13, 2021. REUTERS/Dado Ruvic/Illustration

The ruling marks a stunning defeat for Google, which alongside Apple operates one of the world’s largest app stores. If the ruling holds, it has the potential to give developers more sway over how their apps are distributed and how they profit off them.

Google said it would appeal. “We will continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem,” Wilson White, vice president of government affairs and public policy at Google, said in an emailed statement.

Epic CEO Tim Sweeney on Monday cheered the ruling on social media site X, calling out “the Google Play monopoly.”

Lawyers for the two companies made their final arguments on Monday morning and the federal judge handed the case to the jury less than four hours earlier, with instructions that a decision must be unanimous.

Among Epic’s allegations were that Google illegally ties together its Play store and billing service, meaning developers were required to use both to have their apps included in the store.

While the Play store represents a much smaller chunk of Google’s revenue compared to its massively profitable search business, it is symbolically important as the central gatekeeper to billions of mobile phones and tablets.

Google may be compelled to allow for more app stores on Android-powered devices and lose revenue from the cut it takes out of in-app purchases.

“(Today’s verdict) proves that Google’s app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation,” Epic said in a statement on its website.

GOOGLE ACCUSED OF DELETING MESSAGES

“The trial has shone a very bright light on what Google has done to impair the competition,” a lawyer for Epic, Gary Bornstein, told jurors earlier in the day, adding Google “systematically blocks” alternative app stores on the company’s Play store.

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.”

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.

Google settled related claims from dating app maker Match before the trial started. The tech giant also settled related antitrust claims by U.S. states and consumers under terms that have not been made public.

Epic lodged a similar antitrust case against Apple in 2020, but a U.S. judge largely ruled in favor of Apple in September 2021.

Epic has asked the U.S. Supreme Court to revive key claims in the Apple case, and Apple is fighting part of a ruling for Epic that would require changes to App Store rules.

Epic purposefully violated Play store rules by skirting its billing systems allowing for customers to make in-app purchases directly with Epic, an attorney for the gamemaker said on Monday. As a result, Google banned “Fortnite” and Epic filed its suit in response.

(Reporting by Mike Scarcella, Greg Bensinger and Peter Henderson; Editing by Nick Zieminski, Sayantani Ghosh and Jamie Freed)