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A federal jury on Monday found against Google in a lawsuit brought by Epic, the company behind popular video game Fortnite, which accused the search giant of suppressing competition in the Android app market to secure billions of dollars in profits from its Play Store.
The verdict was returned just hours after closing arguments in the weeks-long trial in San Francisco.
The central issue in the case was whether Google stopped rivals to its Play Store and payment services from gaining traction on Android devices.
Epic’s lawsuit alleged Google abused its power to charge excessive fees, and made an operating profit of $12bn on its Play Store in 2021 alone. Epic had sought to use an alternative billing mechanism on the Play Store that avoids Google’s fees.
Chief executive Sundar Pichai testified at the trial last month, where he defended Google’s actions.
It now falls to the judge in the case to determine what remedies Google should face. In a statement, Wilson White, Google’s vice-president for government affairs and public policy, said the company would appeal against the verdict. “Android and Google Play provide more choice and openness than any other major mobile platform,” he wrote.
“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,” White added. “We will continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem.”
Epic said in a blog post that the win underlined the need for legislation and regulation to address Google and Apple’s hold on the smartphone app ecosystem.
“This is the first time in this millennium that the full weight of US antitrust law has been brought down on a tech company for abuses of antitrust law in the tech industry,” Epic Games chief executive Tim Sweeney told the Financial Times after the verdict.
Sweeney said the verdict called into question the widespread use of the 30 per cent commission fee across the gaming industry.
“To me that’s the antitrust elephant in the room — that they all charge the same rate because they all have no competition,” he said. “I think 30 per cent’s days are numbered.”
Epic lost a related case against Apple in 2021, when a California judge concluded that the tech giant did not break the law by imposing rules that block rival stores and payment methods on its devices. The ruling was upheld by an appeals court earlier this year. Epic is now seeking a US Supreme Court review.
What distinguishes Google from Apple, which makes the iPhone, is that Google does not control the hardware that uses its operating system. Instead, it licenses it to other companies through contracts that were the focus of Epic’s case.
Epic said Google struck deals with mobile device manufacturers such as Samsung and LG under which they accepted a bundle of Google apps including the Play Store and agreed to give its store prime placement on home screens. In return, Epic says these manufacturers were given a cut of Google’s profits.
Epic argued Google also reached deals with network operators such as AT&T and T-Mobile, and game developers like Activision Blizzard, essentially paying them off to prevent them from launching Play Store rivals.
As a result, Google was able to funnel digital purchases through its Play Store and its proprietary billing mechanism, charging an excessive commission fee of as much as 30 per cent, Epic claimed.
In August 2020, Epic deliberately circumvented Apple and Google’s payment rules, resulting in Fortnite being removed from their respective stores.
US district judge James Donato, who is overseeing the Google trial, had strongly criticised the company for its failure to preserve evidence in the case. At one point he summoned Google’s chief legal officer Kent Walker to be questioned about its internal policies for email communications and deleting chats.
The Department of Justice’s antitrust division is also suing Google, arguing it struck illegal deals to make its search the default on devices and browsers. Closing arguments in that trial are set for May 2024.
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