A U.S. judge has issued a permanent injunction requiring Google to provide alternatives to its Google Play store for downloading apps on Android phones. This ruling, delivered by Judge James Donato in California, prohibits Google from paying fees or sharing revenue with companies in exchange for not competing with Google’s app store. Following the announcement, Alphabet’s stock saw a decline of more than 2%.
The injunction is a significant development in Epic Games’ antitrust lawsuit against Google, initiated in 2020. Epic Games, the maker of Fortnite, accused Google of engaging in anti-competitive practices, such as compensating hardware companies and Android phone manufacturers to prevent the development of competing app stores.
The court’s decision is expected to allow developers to capture a larger market share, as typically, Google and Apple’s app stores take a commission of 15% to 30% on high-grossing apps. The restrictions on Google Play may enable developers to retain more revenue by circumventing Google’s fees or regulations. In 2023, consumers spent $124 billion on apps, as reported by Sensor Tower.
According to the court filing, starting in November and continuing for three years, Google will be prohibited from:
– Paying companies to release apps exclusively or initially on Google Play.
– Compensating companies to avoid competition with Google Play.
– Paying companies to preinstall Google Play on new devices.
– Requiring app developers to use Google Play Billing or preventing them from informing users about cheaper options on their website. Google typically takes a 15% to 30% fee from large app makers for in-app purchases.
– Blocking access for competing Android app stores to Google Play’s app catalog.
– Carrying third-party Android app stores on its own Google Play app store.
Epic Games and Google will also establish a three-person committee to review technical issues related to Google’s compliance with these changes.
Epic Games emerged victorious against Google in the trial, distinguished from its largely unsuccessful similar lawsuit against Apple concerning its App Store control. The Google case was decided by a jury, whereas the Apple trial was adjudicated by a judge.
Known for titles like “Fortnite,” Epic Games challenged Google and Apple’s contracts governing mobile app distribution after offering less expensive options for Fortnite’s in-game currency, violating app store rules, and initiating the legal actions. During Google’s trial, Epic Games scrutinized whether Google monopolized the app store market through agreements with device manufacturers and discouraged users from using Android’s sideloading feature via security alerts.
Epic Games CEO Tim Sweeney suggested that Google’s corporate culture, which documented business practices in emails and communications, played a role in Epic’s success. Representatives from Google and Epic Games did not immediately provide comments in response to CNBC’s requests.
