How Google’s ‘Epic’ Loss could be a warning sign for Apple

In a significant legal development, Epic Games, the maker of the popular game Fortnite, scored a victory in its antitrust case against Google, with a jury finding that the tech giant operates an illegal monopoly in the Android app market.

This ruling could potentially reshape the app store landscape and impact the monopolies of both Google, with its Android, and Apple, with its iOS.

The Epic Lawsuit and the Verdict

Epic Games filed a lawsuit against Google in 2020, alleging that the company’s app store policies were anti-competitive and harming developers and consumers.

The jury found that Google engaged in anti-competitive conduct by suppressing other app stores and illegally tying its Play app store and Google Play billing service.

Google said that it would appeal the decision, claiming that “Android and Google Play provide more choice and openness than any other major mobile platform”.

However, the verdict is significant for several reasons:

1. It establishes that Google’s app store practices are indeed anti-competitive and abusive of its monopoly power.
2. It could potentially lead to more competition in the app store market, benefiting developers and consumers.
3. The ruling could set a precedent for other lawsuits against both Google and Apple, not just in the US but abroad too, as it highlights the need for more competition in the app store market.

This victory comes in the background of increasing unhappiness with both Google and Apple, who essentially control the rails for the $100B+ in-app digital purchase market and have seen a variety of actions against them – from EU’s Digital Markets Act forcing their hand to allow external app stores, to several countries like South Korea and India explicitly forcing them to allow multiple payment gateways that don’t de facto take 30%.

The Impact on Google and Apple

The outcome of this case could have far-reaching implications for both Google and Apple, as it could lead to changes in their app store policies and potentially impact their monopolies in the app store market

For Google, the verdict could prompt the company to reevaluate its app store policies and consider making concessions to avoid similar legal challenges in the future.

Google’s app store, known as the Play Store, made roughly $12 billion in operating profits in 2021, with margins of more than 70%.

For Apple, the outcome of the case could embolden the company to maintain its app store policies, as it has already faced legal challenges in a separate case filed by Epic Games and largely won.

However, Apple and Epic Games both moved the Supreme Court, against the verdict, with the Fortnite maker hoping to overturn its loss while the iPhone-maker is challenging the court order asking it to give people more ways to pay for things in its app store, not just through Apple’s own payment processor, which can take a fee of up to 30% of the transaction.

Apple’s app store policies are considered even more closed-off than Google’s.

Both Apple and Google argue that the fees they charge for in-app purchases and subscriptions, ranging between 15% and 30%, are essential for maintaining the security and safety of their respective platforms.

They claim that this fee structure is comparable to other digital stores, such as Sony’s PlayStation and Microsoft’s Xbox.

These commissions generate substantial revenue for Apple and Google, contributing to their overall revenue streams. However, for these multinational corporations, losing or reducing money from the fees would not be existential.

The Broader Implications

The ruling in favor of Epic Games could potentially lead to a more competitive app store market, benefiting developers and consumers. It could also prompt regulators and policymakers to take a closer look at the app store practices of both Google and Apple, ensuring that they adhere to fair competition guidelines.

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