Google has been defeated in a legal case regarding its Android app store, with a jury ruling that the company’s payments system was anti-competitive and caused harm to both consumers and software developers.

This is a setback for a significant aspect of Google’s technology dominance. However, it is a victory for Epic Games, the creator of the widely successful video game Fortnite, which initiated the lawsuit. Analysts believe it is also a triumph for the larger game development community.

The following contains inquiries and responses regarding the implications of the decision.

Three years ago, Epic, located in Cary, North Carolina, took legal action against Google, claiming that the company has been unfairly using its dominance to protect its Play Store from competitors and safeguard its lucrative source of income, which brings in billions of dollars each year. Similar to Apple’s App Store, Google charges a fee of 15%-30% on in-app digital purchases.

After hearing two hours of closing arguments from both sides of the case, the jury came to a decision after only three hours of deliberation.

They sided with Epic, whose lawyer depicted Google as a ruthless bully that deploys a “bribe and block” strategy to discourage competition against its Play Store for Android apps. Google, Epic lawyer Gary Bornstein said, makes it too cumbersome or worrisome for consumers to download Android apps from other distribution outlets than the Play Store.

Bornstein stated that Google presents a difficulty in getting a competitor on the phone, specifically those powered by Android. He compared this situation to a race where Google has the advantage of running on a smooth track while others have to struggle through quicksand.

Epic’s initial legal claim stated that Google “restricts app distributors from offering Android users easy access to alternative app stores.”

According to Epic’s complaint, if Google did not engage in “anticompetitive” actions, Android users would have the ability to download apps directly from developers’ websites, similar to how they can on a personal computer.

In theory, it is feasible to obtain apps from sources other than Google’s Play Store. However, Epic contended that this is overly complicated for the average user, as it often involves completing up to 16 tasks just to download Fortnite. Additionally, Google issues “serious warnings” that dissuade most consumers from attempting the time-consuming procedure.

The attorney representing Google criticized Epic for being a game company solely focused on its own interests, using the legal system to cut costs and harm the thriving ecosystem of Android smartphones that rival Apple’s iPhone.

Epic’s underdog strategy appeared to sway the jury in their favor. Google CEO Sundar Pichai, a crucial witness, often appeared as a professor elucidating intricate concepts while standing at a lectern due to a health concern. On the other hand, Epic CEO Timothy Sweeney presented himself as a passionate gamer with a mission to topple a voracious technology giant.

Google attempted to evade a jury trial, but U.S. District Judge James Donato denied their request. Donato will now decide the necessary actions for Google to rectify their unlawful actions in the Play Store. The judge has stated that hearings on the matter will take place in the second week of January.

Google announced its intention to challenge the ruling, however, Wedbush analyst Michael Pachter believes that the search engine giant will have a difficult time. While the specific actions Google must take have not yet been determined, Pachter predicts that their competitors will focus on the fees charged to developers within their app store. In the similar case with Apple, the judge prohibited the implementation of “anti-steering provisions,” which prevented developers from promoting third-party payment options outside of Apple’s own app store. While Apple’s fees within their own store have not faced much opposition, Pachter notes that the ban on anti-steering has resulted in a gradual shift towards direct-to-consumer transactions. Apple is also appealing the decision.

In a research report, Pachter stated that he predicts Apple will eventually be unsuccessful in their appeal. However, the loss by Google opens up the possibility for direct competition within the Android platform, potentially leading to lower platform fees in the coming years.

The judge’s implementation of the jury’s decision could result in Google losing billions of dollars in yearly profit from its commissions on the Play Store. However, the company’s primary source of income, which is digital advertising linked mainly to its search engine, Gmail, and other services, will not be directly impacted by the outcome of the trial.

The stock of Alphabet Inc., the parent company of Google headquartered in Mountain View, California, experienced a slight decrease of less than 1% on Tuesday. However, overall, the stock has seen a significant increase of 50% since the beginning of the year.

Apple was successful in a previous lawsuit filed by Epic against the iPhone app store. However, the trial took place in 2021 and the decision is currently being appealed at the U.S. Supreme Court.

The jury consisting of nine individuals in the Play Store lawsuit seemingly viewed the situation from a different perspective, despite the fact that Google officially permits the downloading of Android apps from various stores – a privilege that is not allowed by Apple for the iPhone.

Source: wral.com