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On Monday, Fortnite publisher Epic Games is set to take a tech giant to court, alleging that its mobile app store is an illegal monopoly. You might be experiencing a sense of déjà vu—didn’t Epic already go through a lawsuit with Apple, where Apple emerged mostly victorious? Didn’t Epic fail in their attempt to #FreeFortnite with their Llamacorn legal strategy? Didn’t all of this happen years ago? Well, the short answer is that while Epic’s antitrust claims against Apple went to court, a similar lawsuit against Google never did. Finally, on November 6th, 2023, Epic v. Google will go to trial—over 1,180 days after Epic first filed their lawsuit.
Hello, I’m Sean, and I’ll be your guide through this captivating mess.
Llamacorn? What’s going on?
Before we dive into Llamacorns, let’s provide a bit of background information. Epic Games is the studio behind Fortnite, an immensely popular free-to-play game. Fortnite generates revenue by selling in-game items using its virtual currency, V-Bucks. Players often purchase V-Bucks directly through the platform they play Fortnite on. However, until August 13th, 2020, if players were using an Android or iOS device and installed the game through an official app store, they were subjected to an in-app payment fee imposed by Google or Apple.
These fees, dubbed the “Google tax” or “Apple tax” by critics, did not sit well with Epic. Taking a stand against these fees, Epic declared August 13th, 2020, as a pivotal day for Apple, Google, Epic, and everyone at The Verge. Epic announced that it would bypass Apple and Google’s app store fees by releasing a hotfix update to Fortnite, allowing players to directly purchase V-Bucks through Epic’s own payment processing option at a discounted rate. Apple and Google promptly responded by removing Fortnite from their app stores for violating their respective policies. Epic was prepared and launched two lawsuits along with an attack ad depicting a Fortnite hero hurling a unicorn-llama hammer at a giant screen reminiscent of Apple’s iconic “1984” Macintosh ad.
This eye-catching publicity blitz was followed by lengthy court proceedings. The case against Apple went to court in 2021, resulting in a ruling mostly in favor of Apple. However, the Google lawsuit faced numerous delays. In September, a ruling was made for the Apple trial, but both parties are awaiting potential input from the Supreme Court. Meanwhile, Epic’s fight against Google continued, leading us to the eagerly anticipated second trial.
That sounds intriguing, but what does it have to do with me if I’m not interested in Fortnite or wealthy corporations suing each other?
The outcome of this trial could significantly impact Google’s app store. Both Epic and Google acknowledge this fact. Epic aims to dismantle Google’s alleged monopoly on Android app stores and payment systems, ensuring that developers no longer have to pay the “Google Tax” or pass on the costs to consumers.
However, if Epic were to win, Google argues that it could compromise the security of Android devices by eliminating essential safeguards against sideloaded apps. Additionally, it may harm Android’s ability to compete with the iPhone, as it might become impossible to maintain a competitive app store without charging for it.
What exactly is Epic accusing Google of?
Epic’s primary claim is that Google has made it excessively difficult for developers and users to bypass the Google Play Store and its associated fees. By doing so, Google has allegedly created an illegal monopoly that benefits the company at the expense of other app stores, leading to artificially inflated app prices. Epic also asserts that Google unlawfully ties its Google Play payment platform to the app store, preventing alternative payment methods from competing.
Does Google truly possess a monopoly?
Well, that’s the major question the court will have to answer. Epic contends that Google holds illegal monopolies in “Android app distribution” and “Android in-app payment processing.” They argue that anyone buying or developing for Android devices is forced to pay the Google tax.
On the other hand, Google claims that Apple is the real competitor, as consumers have the option to purchase an iPhone instead. Arguing that Google has a monopoly on app stores in general would be quite challenging.
All of this hinges on the concept of “market definition.” If the court determines that the relevant market encompasses phones and app stores in general—not just Android-specific ones—then Google will likely have the upper hand. However, if the court accepts that Android apps constitute their own distinct market, Epic’s case will be strengthened. Alternatively, the court could adopt a completely different market definition, similar to what the judge did in the Apple case.
In a less academic context, it’s worth mentioning that Google charges up to ten times more per transaction than PayPal or credit cards, which seems rather excessive. Although Epic cannot argue this point in court, it’s worth noting that Apple failed to convincingly justify its 30 percent fee to the judge in that specific case.
On the other hand, it does seem like Epic is expecting something for nothing. As far as I can tell, Epic has not provided a clear explanation of what would constitute a reasonable fee for Google to charge in exchange for placement in their app store. Epic’s CEO, Tim Sweeney, appears to suggest that Google shouldn’t charge any fee if a developer wants to utilize their own payment system.
How did Epic’s argument fare against Apple?
Well… both sides experienced losses, but Epic arguably came out worse. Despite Apple’s immense power over the iPhone, Judge Yvonne Gonzalez Rogers ruled that the company did not possess an unfair monopoly in this case. She determined the relevant market for Fortnite to be “digital mobile gaming transactions,” rather than just iPhone apps. Additionally, she concluded that Epic had violated its developer agreement with Apple and would be required to pay accordingly.
However, Judge Rogers also prohibited Apple from concealing alternative methods of payment for apps from iPhone users and potentially allowed developers to implement their own payment systems. Out of ethical considerations, I won’t delve further into the specifics of the Apple ruling, but my colleague Adi Robertson has provided a comprehensive breakdown.
Why does Epic believe it stands a chance against Google when Apple has already won?
Epic declined to provide an on-the-record response to this and other questions we asked. However, there are three factors to consider:
- This is a different case, and the previous one is far from over until the Supreme Court has issued its decision or declined to review it.
- Google is prohibited from informing jurors about Apple’s victory or other plaintiffs’ settlements, as mandated by the judge overseeing the case.
- Furthermore, it is important to note that this is a jury trial, and not a bench trial like the previous one against Apple.
Why does that matter?
In this instance, Epic and Google have to persuade the jury rather than the judge. This distinction sets it apart from the Apple case, which was decided by a judge alone. The jury’s opinion may be influenced by evidence of questionable dealings within Google, potentially causing them to rule against the company. On the flip side, Google may attempt to sway the jury by emphasizing the security risks associated with sideloaded apps. The outcome remains uncertain.
(To any Epic jurors reading this—stop! Judge Donato has explicitly stated that you’re in a “news-free bubble” until mid-December.)
Didn’t other parties sue Google as well?
Indeed, they did. However, all of those parties settled, and the same is true for all 50 state attorneys general and several consumers who had filed antitrust claims against Google. The specific terms of these settlements have not been disclosed. Match Group, the parent company of popular dating apps like Tinder, Match.com, and OkCupid, recently reached a last-minute surprise settlement as well, which seems to suggest that Match essentially conceded its claims.
Could we see a settlement between Google and Epic too?
Considering that Epic has shown no interest in settling as long as the “Google tax” persists, it seems unlikely. The company has consistently expressed that it is not motivated by money and has been willing to pursue these cases regardless of the associated costs, thus far. It remains unclear what proactive measures Google could take to satisfy Epic’s demands, especially since Epic’s CEO, Tim Sweeney, has publicly suggested that Google would find a way to circumvent any settlement offered to them.
However, if you’re curious about a settlement that Epic would accept, you need not look further than the letter they sent to state attorneys general, outlining terms that would effectively prohibit Google from engaging in the anticompetitive practices that Epic accuses it of. Tim Sweeney’s tweet provides another glimpse into the settlement vision that Epic would find acceptable: “Google…”
