Google’s Monopoly Over Android App Distribution Challenged
U.S. court rules against Google for monopolizing the Android app market, forcing the tech giant to loosen its grip on app distribution and payments.
Source: Illustration by Cath Virginia / The Verge
Background
This case stems from a multi-district litigation (MDL) against Google, consolidated under the Epic Games, Inc. v. Google LLC et al. case. The case involves allegations that Google violated U.S. antitrust laws, including the Sherman Act (Sections 1 and 2), the Cartwright Act (California's antitrust law), and the California Unfair Competition Law (UCL), by maintaining a monopoly over the distribution of Android apps and payments through its Google Play Store.
The jury trial, which involved testimony from 45 witnesses over 15 days, resulted in a unanimous verdict against Google, finding that the company’s practices unlawfully restrained trade and harmed competition in the Android app distribution and in-app billing markets. This verdict led to the court issuing a permanent injunction to address the antitrust violations and restore competition.
Key Issues in the Case
Monopolization: The jury found Google had unlawfully monopolized the market for Android app distribution and in-app payments through the Google Play Store, in violation of Section 2 of the Sherman Act.
Unlawful Restraint of Trade: Google was also found to have unlawfully restrained trade by tying app distribution to the use of Google Play Billing, violating Section 1 of the Sherman Act and the Cartwright Act.
Unfair Competition: The court also addressed Epic’s claims under California's Unfair Competition Law (UCL), finding that Google’s practices violated both the unlawful and unfair prongs of the UCL. The court highlighted that Google’s conduct harmed competition and resulted in unfair restrictions on Epic and other developers.
Permanent Injunction Details:
Geographic Scope and Duration:
The injunction is limited to the United States to respect international comity and avoid interference with investigations by foreign authorities.
It takes effect on November 1, 2024, and remains in place for three years, ending in November 2027.
Prohibitions on Google:
Google is prohibited from sharing Play Store revenue with any person or entity involved in distributing Android apps or considering launching rival app stores.
Google cannot require developers to use Google Play Billing for in-app purchases or prohibit them from using alternative billing systems.
Developers must be allowed to inform users about other payment options and direct them to download apps from outside the Play Store.
Google cannot offer financial incentives to developers, device manufacturers, or carriers to exclusively use the Play Store or Google Play Billing.
Google is also barred from penalizing developers who launch their apps on rival stores or offer features not available in the Play Store version.
Remediation of Network Effects:
The court found that Google unfairly leveraged network effects in its Play Store, where the more developers it attracted, the more consumers it drew, and vice versa. These effects entrenched Google’s dominant position in app distribution.
To remedy this, the court ordered that for three years, Google must allow third-party app stores to access its Play Store catalog of apps. This provision ensures that rival app stores can offer Play Store apps to users on the same terms as Google. Google will still keep revenue from such downloads, but developers can opt out of catalog access.
This provision aims to level the playing field and allow rival app stores to gain traction despite the inherent disadvantage caused by Google’s dominant position.
Technical Oversight:
A Technical Committee will be formed, consisting of three experts (one selected by Epic, one by Google, and a third chosen by those two experts). This committee will handle disputes related to the implementation of the injunction.
The court retains jurisdiction to step in if disputes cannot be resolved by the committee.
Security and Technical Considerations:
Google is allowed to impose reasonable security and safety measures on third-party app stores distributed through the Play Store. However, if Google’s measures are challenged, the company must prove they are strictly necessary for security purposes and narrowly tailored.
Addressing Tying and Exclusivity:
The court prohibited Google from tying the use of Google Play Billing to app distribution on the Play Store. This breaks the illegal tying arrangement found by the jury and prevents Google from forcing developers to use its payment system.
The remedy also removes exclusive contracts that required developers to launch apps exclusively on the Play Store, enabling developers to distribute their apps across multiple platforms without restrictions.
Restoring Competition:
The court emphasized that the injunction is designed to restore competition in the Android app distribution and in-app billing markets, ensuring that developers and consumers are no longer locked into using Google’s systems.
The remedy is tailored to address the anticompetitive consequences of Google’s conduct, rather than micromanaging its business. It seeks to open the market to competition, allowing developers more freedom and consumers more choices.
Legal Basis for the Injunction
Under Section 16 of the Clayton Act, plaintiffs are entitled to injunctive relief to prevent further violations of the antitrust laws and to remedy ongoing harm. The court found that Google’s conduct presented a continuing threat to competition and issued an injunction to "unfetter the market" and eliminate the consequences of Google’s illegal monopoly.
For the UCL claim, the court found that the same conduct violated California law, justifying a state-law-based injunction as well. The court balanced the need to restore competition with the recognition that Google should still be able to compete legitimately by improving its products or pricing.
Outcome
The court’s ruling requires Google to significantly alter its practices in the Android ecosystem for a period of three years. The injunction prohibits key anticompetitive practices, opens the door for competition, and ensures oversight of the remedial measures through the Technical Committee.
Epic Games, having prevailed on its antitrust and UCL claims, will also be awarded attorney's fees and costs as part of the final judgment.
What Google Said and Plans to Do
Google has stated in a blog post that it plans to appeal the decision and request the court to pause the pending changes. Google argues that its Android ecosystem is competitive, but this ruling will force the company to adapt by allowing more competition in the app distribution market.
What Happened in Epic Games vs. Apple Case
The legal battle between Epic Games and Apple began in 2020 when Epic sued Apple, accusing the tech giant of operating an illegal monopoly by forcing developers to use its App Store and charging up to 30% commission on in-app purchases. Epic's central complaint was that Apple’s policies limited how software is distributed and paid for, thereby harming competition.
In 2021, U.S. District Judge Yvonne Gonzalez Rogers ruled against Epic’s antitrust claims, concluding that Apple’s App Store policies did not violate federal antitrust laws. However, the judge found that Apple did violate California’s unfair competition law by prohibiting developers from directing users to alternative payment methods outside the App Store. This ruling could have allowed developers to bypass Apple’s commission fees.
Epic appealed the decision to the U.S. Supreme Court, arguing that Apple’s practices were highly anti-competitive and that the ruling shielded monopolistic behavior from proper antitrust scrutiny. However, the Supreme Court declined to hear the appeal on January 16, 2024, thereby leaving in place the lower court's ruling that upheld Apple’s App Store policies. At the same time, Apple’s own appeal regarding certain App Store rule changes, including the injunction allowing developers to offer alternative payment links, was also turned down.
This decision marks a significant setback for Epic, as it limits its ability to challenge Apple’s control over app distribution and in-app purchases, effectively maintaining Apple’s current App Store model.
As a result, it can be concluded that Epic Games mostly lost against Apple and its control of the App Store.
What to Expect in the Future
Over the next three years, the Android ecosystem is (hopefully) expected to become more competitive as developers and third-party app stores will have more freedom to operate without Google’s restrictions.
This could lead to lower fees for developers, increased choices for consumers, and a significant shift in the mobile app distribution market.
Epic Games’ CEO noted that this period is crucial for creating a competitive ecosystem that Google will no longer be able to dominate.