This illustration shows a person waiting for an update to Epic Games’ “Fortress Heroes” on a smartphone in Los Angeles on August 14, 2020. Image source: AFP
Story so far: On October 7, U.S. District Judge James Donato issued an injunction against Alphabet-owned Google, ordering the tech giant to open its Play Store to third-party apps. The ruling bars Google from entering into exclusive agreements with app developers and phone manufacturers to require them to pre-install the Play Store on their devices. Additionally, Google is now required to allow app developers to offer alternative payment options within their apps.
Google’s response?
Google has appealed the decision and expressed concerns in a company blog post that the ruling could harm consumer privacy and security, make it harder for developers to promote their apps, and reduce the number of users on mobile devices. compete. But many see the court’s decision as a key turning point in the ongoing battle between developers and app store operators for control of the market.
What is the background to this ban?
Legal tensions between app developers and major app store operators such as Google and Apple have been escalating for years. A major flashpoint came in August 2020, when Tencent-backed Epic Games, the maker of Fortnite, introduced a direct payment option in its app, bypassing Google and Apple’s mandatory in-app policies. fee system. By doing so, Epic circumvents the high commissions both platforms charge developers for in-app purchases and subscriptions. For Epic Games, these commissions are typically 15-30%.
Editorial | Finale: On the ban against Google
Fortress Heroes operates on a free-to-play model, generating revenue through in-app purchases and other game-related items. Epic CEO Tim Sweeney has taken issue with Google’s practice of taking a cut of every transaction made through an Android device, calling it unfair and restrictive. In retaliation, both Google and Apple removed “Fortress Heroes” from their respective app stores, leading Epic to file two separate antitrust lawsuits – one against Google and another against Apple. The move is seen as a direct challenge to the dominance of technology giants in the app store economy and brings the issue of digital monopoly to the forefront.
The legal battle between Epic Games and Google has been going on for several years, with various pieces of evidence presented during the trial. One of Epic’s key arguments is that Google’s practices, such as signing exclusive agreements with developers and forcing the use of its own billing system, are inherently anti-competitive. Google has struck deals with companies like Activision Blizzard and Nintendo, offering incentives such as reduced commissions to get their apps and games into the Play Store while requiring them to use Google’s billing system.
The case went to a jury, and in December 2023, the jury unanimously found that Google had engaged in anticompetitive conduct that harmed Epic’s business and inhibited competition from other developers. The ruling ultimately resulted in an injunction from Judge Donato.
How are Epic’s lawsuits against Google and Apple different?
Although Epic filed similar antitrust lawsuits against both Google and Apple, the outcomes of the two cases were very different. Epic’s lawsuit against Apple was a court trial with mixed results. U.S. District Judge Yvonne Gonzalez Rogers found that while Apple was not a monopoly in the app market, it still engaged in some anticompetitive policies. A court ordered Apple to allow developers to offer payment options for in-app purchases, but Epic was ordered to pay damages for violating Apple’s developer agreement.
However, the ban against Google presents a stark contrast. Since the Google case is heard in front of a jury, Epic has a greater chance of providing evidence of Google’s exclusive agreements with other developers, which could help convince the jury that Google violated antitrust laws. The difference in how the case is handled (bench trial vs. jury trial) has a significant impact on the outcome.
How will it impact the app economy?
The impact of these rulings, particularly the ban on Google, could have far-reaching consequences for the app economy, which is worth more than $250 billion and is largely controlled by the Google Play Store and Apple’s App Store. First, Google and Apple need to revise their app store policies to accommodate more developer-friendly terms, such as allowing alternative payment methods and perhaps reducing the commissions they charge on in-app transactions.
Additionally, a ban against Google could open the door to alternative app stores, which would reduce the near-total control Google and Apple have over app distribution. For consumers, this could mean lower prices for apps, subscriptions and in-app purchases, as developers will no longer be forced to pay hefty commissions to app store operators. The knock-on effects could be significant, allowing smaller developers to pass cost savings on to consumers and potentially lowering barriers to entry for new app makers.
However, one potential drawback is application discoverability. Today, developers only need to build and promote their apps on two major platforms – Google’s Play Store and Apple’s App Store. But in a world with multiple app stores, smaller developers may find it harder to gain traction and attract customers in these fragmented marketplaces. Taken together, these legal decisions mark a major shift in how the app economy will operate in the future. They reflect growing scrutiny of big tech companies and their influence on digital markets, which could pave the way for more open competition and fairer terms for developers.
Published – October 20, 2024 03:45 AM (IST)