Google violated California and federal antitrust laws through deals that stifled competition for its Play mobile app store, a jury in San Francisco unanimously found today. The verdict delivers the first significant US courtroom loss for big tech in the years-long campaign by rivals, regulators, and prosecutors to tame the power of internet gatekeepers.
The lawsuit next moves to a remedies phase, meaning a judge as soon as the coming weeks will hear arguments about and decide whether to order changes to Google’s business practices. Users of devices powered by Google’s Android operating system could find more app options to choose from, at lower prices, if Google is forced to allow downloads of rival app stores from Play or share a greater portion of sales with developers selling digital items inside their apps. But an appeal by Google could forestall any changes.
“We plan to challenge the verdict,” says Wilson White, a Google vice president of 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.”
The ruling came in a case first filed in 2020 by Epic Games, known for its blockbuster game Fortnite and tools for developers, and argued before a jury since early November. The jury of nine—a 10th juror dropped out early in the trial—deliberated for three hours before reaching its verdict. They faced 11 questions such as defining product and geographic markets and whether Google engaged in anticompetitive conduct in those areas.
Epic had accused Google of restricting smartphone makers, wireless carriers, and app developers from providing any competition to the Play store, which accounts for over 95 percent of all downloads onto Android phones in the US.
Google had denied any wrongdoing, saying that its sole aim was to provide a safe and attractive experience to users, especially as it faced competition from Apple, its iPhone, and its App Store.
Epic says in an unsigned blog post that the “verdict is a win for all app developers and consumers around the world. It proves that Google’s app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation.” It called on regulators and legislators to take action to “address Apple and Google strangleholds over smartphones.”
More bad news for Google could come in mid-2024 when US district judge Amit Mehta in Washington, DC, is expected to issue his ruling on whether Google has unlawfully maintained its monopoly over web search. Testimony in that case, which was brought by the US Department of Justice and attorneys general for nearly every US state and territory, concluded last month.
A similar case two years ago had not gone too well for Epic. In Epic v. Apple, a federal judge in Oakland, California, ordered that Apple make just one change to its App Store practices. The judge found that most of the other Apple practices that Epic viewed as anticompetitive were justified, because the iPhone maker needed to recoup its investment in developing the app marketplace. Apple still has not had to comply as it awaits the Supreme Court’s decision early next year about whether to review the case.
Google hasn’t said much about why it chose to have a jury rather than a judge decide its fate in the trial that concluded today, though it tried unsuccessfully to reverse course on the eve of jury selection.
Judge Donato also tried to prevent the case even going to trial, ordering several times for Epic and Google to attempt to settle instead. In a last-second push, Google CEO Sundar Pichai and Epic CEO Tim Sweeney met for an hour on December 7 but failed to reach a deal, according to a court filing.
Google previously agreed to settle with as many as 48,000 app developers but without making major changes to its business practices. It also settled with a group of consumers and attorneys general for all 50 US states. Details of the latter settlement had not been published, pending the verdict in the Epic trial.
‘Shut Rivals Off’
In closing arguments today, Gary Bornstein, an attorney for Epic, told jurors that Google’s Android operating system was the only choice for smartphone makers, because Apple keeps iOS to itself and there aren’t any viable alternatives. Google used that power with device makers and wireless carriers who sell phones to ensure they promoted the Play store, he said, often more than they encouraged the lesser-known alternatives.
Google binds app developers who sell digital items in the Play store to use its billing system and pockets up to 30 percent of sales. The search giant also paid developers millions of dollars not to pursue alternatives to Play, Epic alleged.
While Google does not bar Android users from downloading apps from outside Play, Epic argued that the available workarounds were too cumbersome and that Play’s dominance bore that out. “To be anticompetitive, conduct doesn’t have to completely shut rivals off,” Bornstein said. “The competition just has to be impaired or limited in some way.”
Jonathan Kravis, an attorney for Google, focused his closing arguments on its competition with Apple for the hearts and minds of users and developers. Had the jury found Apple and Google meaningfully competed in the market for mobile app distribution, it would have been difficult to view Google’s dealings with device makers and app developers as problematic.
Epic’s Bornstein said that while Google executives testified that the company competed with Apple, their internal communications over the past decade mostly focused on concern about threats within the Android ecosystem. For instance, it took a year and a half for Google to match Apple on cuts in commissions paid by developers, he said.
In addition, Judge Donato allowed Bornstein to point out that Google failed to preserve some internal chat logs and the jury could infer the missing evidence was unfavorable to Google. “You can and should conclude that while the documents we have are damning, the documents they have deleted would be even more damning,” Bornstein said in his closing.
The jury decided its verdict based on that standard of the preponderance of the evidence, meaning claims are “more probably true than not true,” according to instructions it was given.
An hour after receiving the verdict, Epic CEO Tim Sweeney, who had been on hand for much of the trial, and attorneys for the company posed for photos outside the courtroom before hopping into a large black van, beaming.
Updated 12-11-2023, 8:50 pm EST: This article was updated with additional reporting on the trial and comments from Google and Epic.
