A new Google antitrust battle reaches the court in the Epic Games case
For two months, Google has been suing the Justice Department in court in Washington over claims that the company abused its dominant position in online search and advertising to crush rivals, a high-stakes antitrust case that will threaten the most popular search engine in the world. could reshape the world. Now it faces a new legal challenge closer to home.
On Monday, Epic Games, the company behind the popular game Fortnite, will appear in federal court in San Francisco to begin a month-long trial in its own antitrust case against Google. Epic is expected to argue that Google is violating both state and federal antitrust laws – as well as the founding principle of “Don’t be evil” – by exercising monopolistic power over app developers in the Google Play Store on Android mobile phones.
“Google has relegated its motto to almost an afterthought and used its size to harm competitors, innovators, customers and users across a range of markets it has come to monopolize,” Epic wrote in its complaint, which was first filed in 2020. The video game developer had tried to avoid Play Store fees by making Fortnite players pay Epic directly for in-app items, prompting Google to ban the game from its store.
If Epic wins, Google could be forced to change its restrictive Play Store rules, allowing other companies to offer competing app stores and making it easier for developers to avoid the discounts they receive on in-app purchases. Google generally charges a 15 percent fee on customer payments for app subscriptions and a 30 percent fee on purchases made in apps downloaded from the store. (The company says 99 percent of developers qualify for a 15 percent or lower reimbursement for in-app purchases. Larger app makers like Epic must pay 30 percent.)
The concurrent antitrust cases underscore how Google is defending itself on multiple fronts as regulators and competitors try to chip away at its influence over the internet.
Part of a broader effort by tech regulators in recent years to curb the ever-growing power of Big Tech, the lawsuits are a potentially damaging distraction for Google as it tries to focus on competing with Microsoft, OpenAI and others in the emerging field of generative technology. artificial intelligence.
“It’s hard to imagine Google emerging from the gauntlet unscathed in the coming year,” said Paul Swanson, an antitrust lawyer at the firm Holland & Hart. “At some point, when there are so many cases, someone will break on you.”
Still, Epic faces an uphill battle. It made similar claims against Apple in a 2021 lawsuit bickering over a cartoon Fortnite banana and Tim Cook’s first lawsuit as Apple CEO, but a federal judge rejected most of Epic’s arguments.
This trial has key differences that make Epic think it has a chance. First, the case will be decided by a jury instead of a judge. Epic will also point to what it says is damning evidence, arguing that Google forced phone makers like Samsung to pre-install and promote its apps on their devices. It will be argued that a Google program called Project Hug paid some developers so that they would continue using Google’s payment system. Epic is also being sued by Google, which is seeking damages.
Mr. Swanson said a jury trial could be beneficial to Epic.
“Google is at a much greater risk when they are pitted against a bunch of normal people judging their behavior versus judges judging the behavior through the lens of a century of antitrust case law,” he said.
Over time, the antitrust claims against the Play Store have been reduced to a one-on-one showdown between Google and Epic. In 2021, dozens of attorneys general sued Google on similar grounds. Google reached a preliminary settlement with the group in September. On Tuesday, Google also announced a settlement with Match Group, the dating app company, which had joined Epic’s case.
“Epic wants all the benefits of Android and Google Play without having to pay for them,” Wilson White, Google’s vice president of public policy, said during a briefing with reporters. “The lawsuit would upend a business model that has lowered prices and expanded choices.”
In 2020, Epic bucked Google and Apple by encouraging its customers to bypass the tech giants and pay Epic directly for purchases in Fortnite, the animated battle royale game. That was a violation of both companies’ rules, so they kicked Fortnite out of their app stores.
Epic responded with lawsuits and a public relations blitz focused on Apple. Fortnite was still available on Android phones because Google allows a practice called sideloading: downloading apps from the Internet outside of a phone’s app store.
Epic is expected to argue that Google has made life difficult for both Android phone users and app developers in several ways. Sideloading, Epic will argue, is an arduous process that most phone users struggle with, meaning Google can maintain de facto control over which apps are on its phones via Play Store restrictions. Samsung also offers an app store on its Android devices.
Google’s CEO Sundar Pichai and Epic’s CEO Tim Sweeney are expected to testify.
This week, Mr. Pichai testified in the Justice Department’s most important antitrust case against Google’s search engine. The department and attorneys general from dozens of states accuse Google of crushing competition by paying Apple, Samsung and other partners billions of dollars annually to keep the search engine the default in their Web browsers.
Google says it gained the default positions because it has a superior product, and its rivals have failed to invest in search.
In addition to Mr. Pichai’s actions, the case also included testimony from Google employees and executives of some of its competitors, including Microsoft CEO Satya Nadella. A ruling is likely to follow in 2024.
A federal judge in Virginia is considering a separate lawsuit against the Justice Department accusing Google of illegally abusing its monopoly power over the technology that serves online ads. A trial in that case could start as early as next year.
David McCabe contributed reporting from Washington.