Despite deliberately destroying evidence, Google has lost their battle with Epic Games, a decision that could cause major problems for Apple.
The loss, handed down by a US Court late yesterday is a blow to both Companies with several Governments around the world set to use the decision to go after the US Companies who have a monopoly on app store business.
A Federal jury found that Google had acted unfairly as a monopoly with the case most likely to accelerate the weakening of app store rules in several Countries including Australia.
The decision confirms that the “Google Play” app store operates as an illegal monopoly that relies on anticompetitive tactics to stifle potential business rivals.All it took after weeks of hearing was just three hours before the jury delivered a unanimous verdict in Favor of “Fortnite” maker Epic Games, which waged a years-long legal battle after Google booted the game from its app store.
The decision could upend one of the most lucrative parts of Google’s business and jeopardize billions of dollars in annual revenue.
Yesterday in Australia the Google subsidiary Fitbit was fined $11M the Federal Court after it admitted making false, misleading, or deceptive representations to 58 consumers about their consumer guarantee rights to a refund or a replacement after they claimed their device was faulty.
In the US Case, Epic’s attorneys argued Google relies on a two-pronged “bribe and block” scheme to stop competitors from launching their own app stores or otherwise challenging its monopoly.
At the same time, Google pockets a cut of up to 30% on digital transactions made within its app store.
Epic CEO Tim Sweeney cracked a smile as the verdict was read in federal court and later celebrated the win by tweeting “Victory over Google!”
“The dominoes are going to start falling here,” Sweeney, said in an interview after the verdict. “The end of 30% is in sight.”
Though Apple won a similar case against Epic in 2021, that ruling was made by a single judge.
Bloomberg claims that the nature of the Google case — where a jury sided unanimously with Epic — let actual consumers weigh in on the world of smartphone apps.
They claim that there were other significant differences between the Apple and Google trials. During the current case, Epic highlighted agreements Google reached with top game developers, including Activision Blizzard. and Nintendo, for smaller fees.
“Revenue sharing deals among Google, smartphone makers and game developers came to light during the trial,” Justin Patterson and other analysts at KeyBanc Capital Markets wrote in a note to clients. “We believe this was a key difference between the cases that contributed to Apple’s victory and Google’s loss.”
“The immediate aftereffect is we will see a shift in the marketplace where big tech companies will have to make accommodations — whether it is more access, better terms, more options for developers — to stave off legal exposure,” said Paul Swanson, a partner at Holland & Hart who specializes in technology and antitrust law.
The case also underscores a sentiment among many consumers that major technology companies have gained too much power.
Google also faced scrutiny from a Justice Department judge this fall over its power in search, though the outcome of that trial won’t be clear for months.
Epic’s Sweeney predicted that — as Google starts making changes to its operations and public pressure mounts — its app store peer will be forced to act as well. “The same thing will start happening with Apple,” he said.
And that will ultimately help consumers, Sweeney said. “The economics is real,” he said. “When you remove a 30% tax from an ecosystem, consumer prices will get better. Or quality will get better, and selection will increase.”
There’s a fortune at stake for both Apple and Google. In-app spending is forecast to reach $182 billion next year and $207 billion in 2025, according to research firm Sensor Tower.
Google will get about $10.3 billion in revenue from app sales and in-app purchases from the Play Store in 2023, according to analysts at Wells Fargo. For every 5 points that the Play Store fee rate decreases, Google loses about $1.3 billion in operating income or 9 cents of earnings per share, the analysts wrote.
