Google Loses Antitrust Trial Over App Store --- Jury decides for Epic Games in a blow to search giant's power over developers

"Google lost an antitrust case over the market power of its app store on Monday, a blow to the search giant as it faces other legal challenges to its search dominance and ad-tech business.

Videogame maker Epic Games had sued Google in 2020, alleging it used its dominant position to squeeze excess profits from app developers. A San Francisco jury reached a unanimous verdict for Epic after deliberating for less than four hours.

The loss comes as Google faces more antitrust challenges, including a landmark trial focusing on its dominant search engine. Epic's suit formed part of a campaign against the fees Google and Apple charge mobile-app developers.

"Today's verdict is a win for all app developers and consumers around the world," Epic, the maker of the popular game "Fortnite," wrote in a blog post after the verdict. "It proves that Google's app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation."

Alphabet-owned Google said it would appeal the decision.

"Android and Google Play provide more choice and openness than any other major mobile platform," said Wilson White, a Google vice president for government affairs and public policy. "We will continue to defend the Android business model and remain deeply committed to our users, partners and the broader Android ecosystem."

U.S. District Judge James Donato is to decide next year what remedies Epic will be awarded. The parties are scheduled to reconvene in January.

In the original lawsuit, Epic said it wasn't seeking monetary damages or favorable treatment from Google. Instead, it wanted Google to have to make its Android ecosystem more open and competitive, though it didn't provide specifics. It is unclear what that will look like.

"It's a big deal that a jury is saying, 'Yes, Google has a monopoly and it has illegally maintained a monopoly,'" said Lee Hepner, a lawyer for the American Economic Liberties Project, an anti-monopoly group. "A jury was readily able to call a spade a spade."

Though the Play Store brings in a relatively small chunk of revenue at Alphabet, the marketplace anchors a package of services the company licenses to Android-device manufacturers that play a key role promoting its cash-cow search engine.

Google's app store, called the Play Store, made $12 billion in operating profits in 2021, with margins of over 70%, according to evidence Epic presented at trial. Google CEO Sundar Pichai said during his testimony that the figures didn't account for Android's research and development costs.

Google and the Justice Department last month wrapped up witness questioning in the case focusing on its search engine. Closing arguments in that case are scheduled for May. Google also faces a Justice Department lawsuit targeting its ad-tech business that is expected to go to trial next year.

Epic's case centered on Google's dominant position in the market for apps on mobile devices running the company's Android software -- and the fees it charges for developers on its Play Store.

The game developer in 2020 began encouraging "Fortnite" players to pay Epic directly for purchases of in-game items, rather than using systems developed by Google and Apple. Both tech giants kicked Fortnite out of their app stores. Epic then filed lawsuits against them.

"If you are a smartphone maker, if you want an operating system, your only choice is Google," Gary Bornstein, a lawyer for Epic, said in closing statements Monday. "This gives Google tremendous power."

According to testimony during the trial, Google had deleted some employee chat logs that might have included information relevant to the case. The judge told the jury to assume that the deleted information wouldn't have been favorable to Google.

In the lawsuit against Apple, Epic lost on several claims, though the game developer convinced a judge that the phone maker should loosen restrictions on payments through its app store.

Google previously settled with Match Group, owner of the Tinder dating app, and a group of states that sued the tech giant alongside Epic.

The Epic trial provided a rare look into Google's maneuverings in the Android-software ecosystem, the most widely used on mobile devices worldwide.

Epic tried to show that Google used agreements with companies such as Samsung to prevent competing app stores from gaining traction on Android phones, allowing it to squeeze developers.

Google argued the agreements helped it compete with Apple and that its payment policies were in line with the rest of the market. "The law does not require the Play Store to give away its services for free," Jonathan Kravis, a Google lawyer, said in closing statements." [1]

1.  Google Loses Antitrust Trial Over App Store --- Jury decides for Epic Games in a blow to search giant's power over developers. Bobrowsky, Meghan; Kruppa, Miles.  Wall Street Journal, Eastern edition; New York, N.Y.. 12 Dec 2023: A.1.