May 27, 2024

Google’s recent legal loss to Epic Games, the developer behind “Fortnite,” has potential implications for the Android mobile system. The jury found Google’s Play app store to be an illegal monopoly. This ruling could pave the way for rival app stores to thrive.

However, the lengthy appeals process is expected to delay any considerable changes for years, according to analysts and legal experts.

Monopoly Findings and Financial Impact

The California jury determined that Google’s Play app store, owned by Alphabet Inc., operating as an illegal monopoly, has led them into stifling competition. As such, the giant imposes high fees of up to 30% on app developers. 

The verdict could prompt changes in the Play Store’s revenue model, impacting Google’s estimated $10 billion annual revenue from app sales and in-app purchases. Epic Games will now have the opportunity to propose remedies for fixing Google’s Play Store. 

If the court adopts a remedy allowing developers to use payment systems other than Google’s, it could significantly impact the entire ecosystem and business model.

Google currently takes a percentage of each digital purchase through the Play Store, contributing to its high-margin business. The potential remedies may force Google to permit rival app stores or reduce the fees on app sales and in-app purchases. In response to the legal setback, Alphabet shares were down nearly 1%.

Meanwhile, this legal defeat adds to the pressure on Google, which is concurrently entangled in a legal battle with the U.S. Justice Department (DoJ), which accused it of breaking antitrust law to maintain dominance. 

Analysts speculate that the recent jury ruling may encourage the DoJ in its case against Google.

Impact on Apple and Broader Market Questions

While Apple (AAPL.O) won a similar legal battle against Epic, both companies have appealed to the Supreme Court to review their dispute. The Google ruling is expected to raise questions about Apple’s market dominance through its App Store. 

Analysts suggest that the verdict could potentially influence the perception of Apple as a monopoly, though it may not have a direct impact on the ongoing legal proceedings.

According to an online news site, professor emerita at the New York University School of Law, Eleanor Fox, noted that Apple should be concerned about being found a monopoly, considering the parallels drawn from the Google case.

Meanwhile, Google has expressed its intention to appeal the jury’s verdict. The case will move to the San Francisco-based 9th U.S. Circuit Court of Appeals, the same court that previously heard Epic’s arguments against Apple. 

An injunction hearing is scheduled for January, where U.S. District Judge James Donato will evaluate Epic’s request.

Antitrust legal scholars anticipate Google arguing against the proposed injunction, emphasizing the need for a more tailored remedy. Analysts, drawing parallels with the Epic v. Apple timeline, expect the 9th Circuit to rule around Q2 2025. 

Notably, Google’s defeat in the legal battle with Epic Games sets the stage for potential changes in its app store policies. However, the prolonged appeals process is expected to defer any significant alterations.

This could leave the industry and stakeholders awaiting the final outcome in the years to come.

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