alphabet inc must remove restrictions that prevent developers from setting up rival marketplaces and billing systems that compete with Google’s play storeA judge issued the ruling, ending the search giant’s dominance in the lucrative Android app market and potentially denting its revenues.
A federal judge in San Francisco scored a big victory on Monday epic games Inc. has dealt another antitrust blow in a long-running challenge to the technology giant’s App Store. Google Following its recent major defeat in one US Justice Department case and while it is still fighting another.
The verdict comes after the maker of the popular video game Fortnite convinced a jury that Google abused its power in the Android app market. Google Play Store Policies. The changes the company must make now will almost certainly hit its sales, with one analyst estimating a “worst case” loss in gross profit of more than $1 billion from sales, which would total $14.66 billion in 2020. Was.
Alphabet shares fell as much as 2.5% to $162.98 in New York. They had increased by 20% this year as of the end of last week.
“Epic’s decision clearly missed: Apple And Android clearly competes,” Google said in a blog post. “We will appeal and ask the courts to stop implementing the measures to maintain a consistent and safe experience for users and developers while the legal process progresses.”
app store control
In a case initiated in 2020, Epic argued that Google Play rules and fees stifled competition and blocked app marketplaces launched by developers. The judge’s decision is likely to accelerate the weakening of app store controls by tech giants Google and Apple Inc, which have been in the crosshairs of regulators and lawmakers around the world.
U.S. District Judge James Donato issued an injunction that goes into effect November 1, barring Google for three years from paying developers exclusively to use its App Store or selling them apps directly to customers. Prevents you from telling how to download. Google cannot force developers to use its billing features during that time.
The company should also allow rival app stores access to its catalog for the next three years to help them grow.
The increased use of third-party billing systems by media and gaming companies in light of Donato’s injunction poses a greater threat to Google than rival app stores, Mandeep Singh, an analyst at Bloomberg Intelligence, said in a note.
“In a worst-case scenario, it could be a 20-30% drag on the roughly $50 billion of gross App Store sales, mostly comprised of subscriptions, which would impact the company’s gross profit by $1-$1.5 billion, based on our estimates,” Singh said. There may be pressure.” Said.
Evelyn Mitchell-Wolf, an analyst at eMarketer, agreed that Google would see an impact on revenue, though she said it would take a while to “fully materialize” as the company’s Play Store will remain the default option on Android devices. .
“Even though the Google Play Store is no longer pre-installed as a result of payments to device manufacturers, it has tremendous brand recognition among consumers,” she said.
Epic Chief Executive Officer Tim Sweeney, who has been fighting both Google and Apple for four years to open its stores, called Monday’s decision a victory in a post on X.
Donato warned that he would be tough on Google after jurors found in December that the company had engaged in anti-competitive conduct and harmed Epic.
“The question is not whether Google violated antitrust laws by failing to aid competitors, but rather what remedies are necessary to restore fair competition in the face of the obstacles found by the jury,” he wrote.
Donato said, “Allowing Google to distribute other apps through the Play Store for a limited period of time is a modest step to remedy the consequences of illegally preventing rival stores from accessing users and developers.” “
‘appropriate solution’
In its defense, Google argued that its partnership helps phones running Android better compete with Apple’s iPhone.
The judge said Google could take “reasonable measures” to ensure the security of its platform, and ordered the parties to recommend three people to a committee to review the technical aspects of those requirements. Developers who feel Google’s security measures are too strict can challenge them, leaving the tech giant responsible for proving that they are necessary.
Donato said he limited the injunction to three years because “the provisions are designed to provide a level playing field for competitors’ entry and growth, without overly burdening Google.”
Google had told the judge that it would take 12 to 16 months to add third-party apps to the Play Store, but Donato set a deadline of eight months.
Stanford University law professor Mark Lemley described the judge’s decision as “significant”, saying it was particularly significant that Donato ordered Google to make its list of apps available to competing stores.
“This is not something that antitrust law generally requires,” he said. “But the judge correctly noted that once you’ve violated antitrust laws, courts can order you to do positive things to mitigate the harm you caused, even if you had a violation in the first place. There was no obligation to do those things.”
epic-apple battle
Epic had mixed success with a similar antitrust challenge on Apple’s App Store. A judge in Oakland, California concluded in 2021 that the App Store did not violate federal antitrust laws. But the judge sided with Epic on an unfair competition claim under California law and directed the iPhone maker to allow developers to direct customers to its website for online transactions.
The Fortnite maker claimed in its lawsuit against Google that the tech company maintained a monopoly on the Android app distribution market for more than a decade by making side deals with rivals and using its resources to thwart competition.
During the trial, Epic presented evidence that Google partnered with phone manufacturers, including Samsung Electronics Co., to ensure that Google Play was pre-installed on mobile devices. Donato’s decision would bar Google from using payments, revenue share or access to Google’s services as terms of agreements with device makers or wireless carriers in exchange for prominently displaying its Google Play store on devices.
A Google public policy executive said in a company blog post that Monday’s decision would have “unintended consequences.”
“As we’ve said before, these changes will jeopardize consumers’ privacy and security, make it harder for developers to promote their apps, and reduce competition on devices,” said Lee, the company’s vice president of regulatory affairs. Anne Mulholland said. wrote. “Ultimately, while these changes likely satisfy Epic, they will lead to a number of unintended consequences that will harm American consumers, developers, and device makers.”
A federal antitrust investigation is also underway. In August, Google lost a lawsuit against the US Justice Department over claims that the company illegally monopolized the online search and advertising markets.
The department is expected to detail its proposal Tuesday to mitigate the harm caused by that misconduct — even though the agency is still facing another investigation into the company’s alleged dominance of technology used to buy and sell online ads. Is disputing the matter with Google. Final arguments in that fight will take place in November and a decision is expected by the end of the year.
