Epic Games Wins Antitrust Lawsuit Against Google Transcript

A jury in federal court has ruled that Google’s Android app store has benefited from anti-competitive barriers that has ultimately damaged consumers and developers. The ruling stems from a lawsuit that accused Google of using tactics to protect its Play store from competition, trial centered around the app store’s payment system. Google, like Apple collects up to 30% commission on digital transactions completed in the app. Gerrit De Vynck joins me now. He’s a tech reporter at The Washington Post. Okay, so Gerrit, let’s step back here for a minute. How did this start? What is the story here of this case?

Yeah. So a lot of people, especially if they have kids, might know about the game Fortnite, which is a really, really popular internet video game. People all over the world play it. It’s made by Epic Games. And when Epic Games sold that game through Google’s app store and any transactions within the game, people had to pay, Epic Games had to pay a big transaction fee to Google. And so what they did is they sort of revolted against this. They essentially built a way to download the app without going through Google. And this went against Google’s rules for Android phones. And so they kicked Android off of the app store. And of course, this was a big news story. This was back in 2020. And when that happened, Epic sued Google. They did the same with Apple where they had the exact same experience. And so these court cases have sort of been winding their way through the court system.

(01:30)
A judge actually ruled in favor of Apple. So Epic lost a similar court case against Apple. But now we have this quite, to be honest, surprising ruling where we have the opposite of what happened in the Apple case. And this time a jury actually ruled in favor of Epic Games.

So Epic Games is essentially saying you have created a gate between us, Epic Games and the user, and the fee you’re charging at that gate is really high because you’re the only game in town. You’re the only way to get to people, and so you can charge as much as you want. And that’s the anti-competitive piece of it. Why do you find it surprising?

I think for years now, the power of the big tech companies, Google, Microsoft, Apple, Amazon, and Facebook as well has been really criticized, right? We’ve got politicians talking about creating new antitrust laws. We’ve got the Department of Justice suing several of these companies, going through investigations and court cases of their own. And we’ve got these sort of private lawsuits from other companies accusing big tech companies of breaking antitrust rules. And although a lot of these court cases are still very much up in the air, for the most part, the companies haven’t really had to change their business practices so much. They haven’t really lost really landmark court cases like this. The government here in the US at least hasn’t been able to pass strict laws changing the way that these companies do business.

(02:54)
And so for a lot of industry observers, this is a case where that trend has been bucked and Google will actually have to probably change the way it runs its app store, and that could have impacts for how much money Google makes. It could have potential impacts for competition. So it’s going to be quite interesting when in the new year the judge decides how Google will need to change its business in response to this finding from this jury.

And the reason these companies have been protected or not, had rulings go against them, as is the case here, is because it’s been hard to prove that the consumer gets hurt. So the jury here in this case seems to have decided that the consumer gets hurt. Google’s obviously going to appeal this, right? And before the judge decides if they have to change the app store.

Yeah, I’m not sure exactly how the time is going to work, but Google has immediately they said, look, we’re appealing this. We disagree with it. We think that the app store is actually relatively open when you compare it to other companies and other internet marketplaces. And so they will appeal this. We will probably, this is not the final say here, but it is a pretty big blow to Google. And the idea that Google has a right to sort of set the terms on its platform going forward.

And Gerrit, do you think it will have reverberations? You mentioned that a judge kind of found the opposite way when it was with respect to Apple, they’ve got all these other cases, the FTC, the Justice Department, they’re all trying to decide what the rules of the road are for these enormous companies. Do you think this jury decision could change those other cases? Or is this kind of different because it’s basically a jury and not the judges that are ruling in some of those other cases?

Yeah, I think it gives a lot of energy to critics of the big tech companies and to other companies. Right. So if you’re a company that’s maybe deciding whether or not you should go through the effort of trying to sue a big tech company, if you look at the court cases from the last several years, you’re going to be pretty demoralized. You’re going to say, well, look, Epic Games lost against Apple. Maybe we shouldn’t do this. Match Group, which is the maker of a lot of really popular dating apps, including Tinder, they were actually supposed to join Epic Games in this lawsuit against Google, but at the last minute, they settled with Google and pulled out of the lawsuit.

(05:16)
But if you’re a company that’s now seeing that and say, hey, here’s one where the smaller company, although Epic Games is still very much a big company, but much smaller compared to Google, the smaller company actually won here. So maybe I am going to do that lawsuit. So I do think that it changes the perception of what’s possible, and it does maybe say some of these companies will opt for jury trials, although I’m not sure exactly that’s the deciding thing here. I think there was a lot of evidence presented and the jury looked at it all and they made the decision that they believed was the right one.

Gerrit De Vynck with The Washington Post. Thank you for helping us puzzle through all this. We appreciate it.