Google suffers a major setback in the antitrust case, and its dominant position in the Android app market may be overturned

On Monday, Epic Games, the developer of "Fortnite," achieved a major victory in its antitrust challenge against the tech giant Google.

A judge in California issued a permanent injunction forcing Google to provide an alternative to the Google Play Store for downloading apps on Android phones. Google will also be prohibited from paying companies or sharing revenue in exchange for them not competing with Google's app store. This means that Google's dominant position in the lucrative Android app market will be overturned.

In response to the above news, Alphabet, Google's parent company, saw its stock price drop by over 2.4%, dragging down the overall U.S. stock market significantly after midday, as U.S. stocks gave back gains following strong nonfarm payroll data from last Friday.

The ruling by San Francisco judge James Donato is the most significant outcome of Epic Games' antitrust lawsuit against Google in 2020. Epic Games accused Google of engaging in anti-competitive behavior, including paying hardware companies and Android phone manufacturers to prevent them from developing competitive app stores.

The latest ruling by the U.S. judge is expected to allow developers to gain a larger market share, as Google and Apple's app stores typically take a 15%-30% cut from the total sales of high-revenue apps. The new restrictions on Google Play may enable developers to bypass Google's rules or fees, thereby earning more revenue.

According to the ruling document, starting from November, for three years, Google will not be allowed to:

• Pay companies to have apps exclusively or preferentially released on Google Play.
• Pay companies to prevent them from competing with Google Play.
• Pay companies to pre-install Google Play on new devices.
• Require app developers to use Google Play's payment system or prohibit app developers from informing users of cheaper online goods on their websites (Google Play charges 15%-30% for in-app purchases by large app developers).
• Google must also allow competing Android app stores access to Google Play's app directory.
• Google must provide third-party Android app stores in its Google Play app store.

According to the document, Epic Games and Google will also establish a three-person committee to review technical issues related to Google's compliance.

Games like "Fortnite" under Epic Games generate revenue through in-app purchases of character outfits and other so-called "skins." In 2020, Epic Games updated the iOS and Android versions of "Fortnite," allowing users to directly pay them discounted prices for in-app currency, bypassing payments through the Apple App Store and Google Play Store to avoid the 30% commission At that time, Apple removed the game for violating the App Store rules, and Google took similar measures, but Android users could still download it through third-party stores. After "Fortnite" was taken down, Epic Games immediately sued Apple and Google, mainly because they considered the 30% commission fee they charged in the app store to be "excessive."

Epic Games won the lawsuit against Google at the end of last year, and Monday's documents detailed the changes Google must make. Epic Games mostly lost in a very similar case against Apple. Google's trial was decided by a jury. Apple's trial was decided by a judge.

During the trial of the Google case, Epic Games focused on whether Google locked the app store market through deals with phone manufacturers, and whether they scared users away from using Android's sideloading feature by issuing security warnings, which allows Android users to install apps from the internet.

Epic Games CEO Tim Sweeney said,

This means that all app developers, store manufacturers, carriers, and manufacturers have three years to build a vibrant and competitive Android ecosystem that Google cannot stop.

Sweeney previously stated that Google's corporate culture contributed to Epic's victory because Google employees often documented business practices in emails or communications, which were exposed during the trial.

Google had urged Donato to reject the reform proposals put forward by Epic Games, stating that these proposals were costly, overly restrictive, and could harm consumer privacy and security. The judge largely rejected these arguments at the August hearing. Donato told Google's legal team, "After being found to have a monopoly, you will eventually pay the price to restore the world to normal."

Google has now stated that it will request the court to suspend the pending changes and will appeal the court's ruling.

According to Sensor Tower data, consumers spent $124 billion on applications in 2023.

Analysts believe that the judge's latest ruling may accelerate the weakening of the control of tech giants Google and Apple over the app store, as these two companies have long been criticized by global regulators and legislators.

In another antitrust case in Washington, U.S. District Judge Amit Mehta ruled on August 5 that the U.S. Department of Justice had won the case, stating that Google illegally monopolized internet search and invested billions of dollars to become the default search engine on the internet