Google’s defeat in its antitrust battle with Epic Games was a sweeping victory for the Fortnite maker and a major upheaval in the business model that underpins the mobile app ecosystem, where platforms host app stores and then take a cut of developers’ revenue. But what does the decision actually mean, at least in the short term, for app developers? That remains to be seen, as the case isn’t over until a judge rules on what Google’s sentence should be.
A San Francisco jury on Monday quickly returned a verdict in Epic’s favor within hours — not days or weeks — finding that Google “intentionally obtained or maintained monopoly power by anticompetitive conduct.” the court filing states. But while the jury determined liability in the case, it is up to the judge to decide what the remedy will be. That means the two sides will continue to plead their cases in court later in January in hopes of shaping exactly how Google will need to adjust its operations to compensate for its anti-competitive behavior.
Google likely won’t make any major changes to its Google Play Store until the judge makes that final decision on exactly what needs to be done. If he did so voluntarily before the decision was made, it would make things more complicated if the judge then decided that other actions needed to be taken.
In other words, in the coming weeks or months, as the case enters the remediation phase, the Play Store is not changing its rules. Developers will still have to pay their commissions, as before, often passing on the increased cost of doing business to consumers, as before. The Google side deal was forged Spotify and the settlement with Match will also remain intact.
We don’t yet know if U.S. District Judge James Donato, who heard the case, will force Google to withdraw any of its agreements, or if the court will determine what kind of competitive agreements Google can enter into in the future regarding the app. publishers or OEMs. Nor do we know how the judge will manage the details of alternative app stores or third-party payment systems — for example, dictating the discounts Google must offer. Epic will likely argue for more specific and detailed instructions from the court, while Google will push the court to understand that it still has a business to run and that too much restriction would ultimately harm competition.
“The court will try to strike a balance to restore competition in those markets where the jury has found that competition has been restricted,” explained Paul Swanson, a partner at the law firm Holland & Hart, where he advises clients on effects of antitrust laws. their corporate relationships and represents them in antitrust disputes. However, he believes that the court will try to do this in the least intrusive way possible, since it will not want to make Google itself a non-competitive entity. That means the court isn’t likely to engage in “over-tailoring” the remedy, he says, and will instead focus on expanding choices about downloading and purchasing Android apps.
Instead, what is Immediately changing as a result of this decision is the legitimacy surrounding the app store business model itself — and potentially others.
“What we know right now is that this is going to affect the walled garden business model that Google and Apple and other companies enjoyed for a while,” Swanson said.
He believes the decision may also affect other markets where a company has built its own platform and therefore has to dictate the rules of the road, such as sourcing 30% of app stores. While Apple successfully argued in its antitrust case with Epic that it has a single product that integrates the hardware with iOS and the App Store, the jury in the Google case came to a different conclusion. They found that buying and distributing apps are separate markets, which may lead other major companies that have similar models to Apple’s iOS and Google’s Android operating systems and the App Store and Play Store to rethink how they do business their.
“There they go, OK, there’s some real uncertainty in our fundamental model of how we do business,” Swanson noted. In fact, the legal risk from this business model may encourage other businesses to change, even without being dragged into court.
Additionally, Swanson said class action lawsuits could be filed that would allow other potential plaintiffs to argue their own cases without having to have the deep pockets that Epic does. There is a path laid out for others to follow, he added.
However, there have not yet been calls for other lawsuits from app makers, said Rick VanMeter, executive director of Coalition for App Fairness (CAF), if Epic establishment lobby group including other founding members and app developers in favor of increased competition in the app economy, including Spotify, Match, Tile, Deezer, Basecamp and others. The group, which started with just over a dozen members, now has more than 70. While it primarily focuses on promoting legislation such as Open App Markets Act introduced in the last US Congress, VanMeter believes this decision is significant because this case involved consumers – members of a jury – who reviewed the facts and determined that Google’s conduct was anti-competitive.
“I think when consumers learn about these issues and when they have a chance to see what’s really going on behind the scenes … I think they understand that and they want change,” VanMeter said.
But he and CAF remain tight-lipped about how Google will implement the judge’s ruling when it is issued, pointing to other ways Apple and Google have managed to circumvent the spirit of the law or a court ruling. For example, Google opened a pilot program for alternative payments, but it is 4% discount on commissions often means the developer ends up paying more when they have to pay their own payment processing fees. And when Apple was ordered to allow dating apps in the Netherlands to use alternative payment systems, it simply paid the fine for weeks afterward for not implementing the change.
“I don’t think any company, including Google, can be trusted to comply with the intent of the ruling,” VanMeter told TechCrunch. “I think, for our members, our preference would be to have more specificity and clear rules of the road that prevent them from circumventing the decision.”
He also believes the ruling could prompt the Supreme Court to take up Epic’s other lawsuit against Apple.
“We’re hoping the Supreme Court will look at it and want to reconsider and side with Epic,” VanMeter said. But he admits he’s not sure how the court would interpret a ruling in another case. “To the extent that it encourages them to look at the case and open it up and do a full review and rule on it, I think that would be great,” he said.
Swanson also agreed that the Google-Epic decision may not directly affect Apple’s ongoing case with Epic, although it does demonstrate the obvious consumer interest that resulted in the jury’s quick decision. But how the two platforms achieved market power was not the same. Apple didn’t regularly engage in side deals (although considered one with Netflix) nor did it pay developers to release on its app store instead of theirs, since Apple only offers one route for app distribution: the App Store. It also does not have agreements with OEMs, as it makes its own hardware. So while there are parallels with Google, there are also stark differences.
While Epic itself hailed the verdict as “a victory for all app developers and consumers around the world,” in its statement, the reality is that the decision is just one of many dominoes that must fall before it falls. really the app store business model. Equally important, or perhaps even more so, is upcoming legislation in other markets, such as Europe’s Digital Market Act due to come into force next year, the UK’s Digital Markets, Competition and Consumer Billand regulations being considered in other markets, including Brazil, Japan, Australia, Canada and USA
For CAF, the hope is that the Google-Epic decision will at least prompt Apple to rethink its business model.
“Just because it’s your business model doesn’t mean it’s legal or it’s right,” VanMeter pointed out.
