Google has suffered a major blow to its Play apps store model if this new ruling survives appeal. A Federal jury returned what the Washington Post deemed to be a verdict against Google on all counts, after mere hours of deliberation. A link to the verdict form 1.
Readers may recall, at a 50,000 foot level, that Epic defied both the Google and Apple app store tolling by providing a direct way to pay for, download and install at a discount to the Google and Apple store prices….because Google and Apple charge a 30% fee, giving Epic plenty of pricing room on a direct sales basis. Epic argued that this direct payment model did not reduce safety, since Apple allowed many developers, such as Amazon and Grab, to provide direct payments.2
From the Financial Times’ overview:
Epic’s lawsuit alleged Google abused its power to charge excessive fees, and made an operating profit of $12bn on its Play Store in 2021 alone. Epic had sought to use an alternative billing mechanism on the Play Store that avoids Google’s fees.
Matt Stoller pointed out that the Epic cases against Google and Apple were business customers revolting against the app stores’ chokehold:
Three years ago, Epic’s CEO Tim Sweeney launched a dramatic legal assault against Apple and Google for monopolizing the on-ramp to the phone. This case didn’t come from the left or right, but from the commercial world. It was part of what I called a civil war in American business, as smaller companies across the economy began marshaling against dominant big tech goliaths.
Again, without belaboring details, Epic lost on most counts in it suit against Apple. Arguably the fact set is different since Apple controls hardware and software. But Epic is appealing to the Supreme Court. This conflicting Google ruling should increase the odds the Apple ruling will be reviewed (interestingly Apple also wants the Supreme Court to opine).
In November, The Verge explained why this case matters to Google:
The future of Google’s app store could depend on this trial — both Epic and Google agree on that. Epic wants to break up Google’s alleged monopoly on Android app stores and payment methods, so developers aren’t stuck paying the “Google Tax” or passing that fee along to you.
But if Epic wins — according to Google, anyhow — it could make Android phones less safe by dismantling basic protections against sideloaded apps, and damage Android’s ability to compete with the iPhone because it (arguably) can’t run a competitive app store by giving it away for free.
Google did attempt to make that argument in court. Per Reuters:
Google has denied wrongdoing, arguing that it competes “intensely on price, quality, and security” against Apple’s App Store.
A lawyer for Google, Jonathan Kravis, told jurors that “Google does not want to lose 60 million Android users to Apple every year.” Google lowered its fee structure to compete with Apple, Kravis said.
“This is not the behavior of a monopolist,” he said.
If I were a juror, I would find that claim an insult to intelligence. Android and Apple users are two different markets. The idea that non-trivial numbers of Android users would run out to buy markedly more expensive iPhones….because Apple Store would become somehow better….is lunacy.
It didn’t help that Google apparently destroyed evidence. Again from Reuters:
Among the more sensational allegations were that Google had a system for deleting texts and internal messages for the purpose of concealing its anticompetitive behavior. An attorney for Epic instructed jurors on Monday that they could assume the content of the deleted messages was pertinent to the case and “would have been unfavorable to Google.”
The findings in the case, summarized by The Verge:
… the jury unanimously answered yes to every question put before them — that Google has monopoly power in the Android app distribution markets and in-app billing services markets, that Google did anticompetitive things in those markets, and that Epic was injured by that behavior. They decided Google has an illegal tie between its Google Play app store and its Google Play Billing payment services, too, and that its distribution agreement, Project Hug deals with game developers and deals with OEMs were all anticompetitive.
Epic has asked for structural remedies, and not monetary damages, when the case goes into the sentencing phase in January. And Epic wants very serious changes. Again from Stoller:
Specifically, [Epic CEO Tim] Sweeney asked for the right for firms to have their own app stores, and the ability to use their own billing systems.
Ouch.
Since I have not been close to the case, I could be missing something, but the Google positioning seems tone deaf. Again from the Financial Times:
It now falls to the judge in the case to determine what remedies Google should face. In a statement, Wilson White, Google’s vice-president for government affairs and public policy, said the company would appeal against the verdict. “Android and Google Play provide more choice and openness than any other major mobile platform,” he wrote.
Eerm, even from my remove, a 30% nick for extremely popular games with millions of users and a refusal to negotiate on that sure sounds like a monopoly to me. And Epic banged on about that point. Again from the pink paper:
Sweeney said the verdict called into question the widespread use of the 30 per cent commission fee across the gaming industry.
“To me that’s the antitrust elephant in the room — that they all charge the same rate because they all have no competition,” he said. “I think 30 per cent’s days are numbered.”
Stoller pointed out that Google had managed to buy off the other original plaintiffs in the Epic case:
It’s a long and winding road for Epic. The firm lost the Apple case, which is on appeal, but got the Google case to a jury, along with several other plaintiffs. Nearly every other firm challenging Google gradually dropped out of the case, getting special deals from the search giant in return for abandoning their claims. But Sweeney was righteous, and believed that Google helped ruined the internet. He didn’t ask for money or a special deal, instead seeking to have Judge James Donato force Google to make good on its “broken promise,” which he characterized as “an open, competitive Android ecosystem for all users and industry participants.”
So this is a very welcome development. Let’s hope Epic continues on its winning ways.
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1 What is wrong with these people? Why is a 6 page pdf 2.2 MB, as in too big to embed, and also resistant to file size reduction via the Mac’s Preview? Tell me how grossly oversized files of simple text documents are in the public interest. UPDATE: Kind reader Tim H sent a reduced version, embedded below. A round of thanks!
2 Epic had tried bypassing Google from its very launch of what came to be a blockbuster game, Fortnite. As Verge had described that part of the saga:
00 Epic v. Google reduced verrdict formOf course, the battle between Epic and mobile app stores isn’t new. In 2018, the developer ignored Google Play completely when launching Fortnite on Android, before eventually giving in earlier this year [2020].
“After 18 months of operating Fortnite on Android outside of the Google Play Store, we’ve come to a basic realization,” Epic said in a statement back in April. “Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings, Google public relations characterizing third party software sources as malware, and new efforts such as Google Play Protect to outright block software obtained outside the Google Play store.”
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According to Cory Doctorow (in my view very accessible on this entire issue), the fight for interoperability is our key to a free future, something neither Google nor Apple “prefer” with their 30% App Store toll booth.
I would be happier if Apple would stop making it so damned obvious how much they want to spy on me. My phone is CONSTANTLY asking me to log into my Apple ID. I keep nothing of interest on my phone (I copy the few photos I want to keep over to my computer pronto) and I do not like my phone talking to Apple.
It’s not necessarily to spy on you. They want you to log in, and add 2-factor, because of course you have money connected to your phone so you can buy more digital stuff.
But they ask ALL THE TIME. They could ask when you are about to use an app that connects to money. It would make for fewer logins to the stupid Apple ID. I don’t have money connected to my phone.
Thank you for this clear and concise piece, Yves. Much appreciated, and will be shared.
Monopoly power in a distrubution market…a problem as old as retail itself.
Is that what “tech” means? Making old problems fresh again? Tweaked to ensure one has less control over their lives?
VC tech yes. “Tech” is a broader umbrella, and includes things like Linux, GNU, the FSF, and crazies like Richard Stallman, who are diametrically opposed to the greed is good VC mindset.
Great news. Not only are the two monopoly systems unfair and counterproductive, but they have helped to raise a generation which thinks if a corporation provides an operating platform, it is entitled to dictate how all of civilization conducts their business and lives. Training people in There Is No Alternative thinking. It sets the stage for fascism.
Sets the stage? More like fills in the seats and turns down the house lights.
I have an Android phone and I “sideload” almost all of the open source apps that I use. I presume Google allows this as part of their open source license since Android is a version of Linux.
So I’d say this makes Android the lesser evil compared to Apple which is totally proprietary and is the true monopolist to anyone who wants to put software on an iPhone. On Android I could even write my own app and install it if I wanted to learn how.
What Android is doing with the game makers is charging them a marketing fee which is the same percentage as Apple and no doubt excessive in both cases. They are really a duopoly when it comes to smartphones with barriers to entry for competing phone operating systems tangled in telecom policies and practices. But some have tried.
Google is indeed evil these days. But personally I don’t think Android is evil at all. However I avoid the spybot aspect as much as possible and do my portable web computing with a laptop.
> Google has suffered a major blow to its Play apps store model….
That’s a damn shame.
I have both an Android phone and an iPad. Both stores are horrid, an absolutely vile user experience where it’s clear that all product placement is paid for, and search is lousy.
Oh, FFS. So charge for it then! Just do it fairly, representing the cost of the service plus a modest margin, not using it as a platform for monopoly rent extraction.
Lambert’s next comment after this was about insults to the jurors’ intelligence and I think it’s apt for this one.
From the consumer perspective Google is free. And you do not have to use the app store but loading things outside of the app store is pretty complicated. And for the app writers to be able to piggyback their way into the Android ecosystem means that a successful app ends up being very profitable. Maybe Fortnite would do fine without Google and Apple but how many more specialized apps would? I am thinking about learning apps especially. People pay for games but for more serious apps? Like a metronome program or a violin tuner? And that might impact the app universe which is now quite interesting. This litigation may just lead to a pruning of the app universe to a bunch of stupid games. Going to a US jury is a crapshoot. Google needed to find another way. Big mistake.
Free is NEVER free. They are selling your data. They have crapified the product with ads.
People here tell me Line and WhatsApp are free when both are evil. Line on the iPhone REQUIRES you give them access to your contacts. I deliberately don’t use Apple’s’ Address Book simply to make it harder for snoops. But Line would require me to use that rather than create Line-only contacts in Line. I’ll happily pay for cell calls and use a paid VOIP service instead. At least that way I am not the product.
I think that the requirement (I’m not sure it’s a platform requirement but it seems likely) to use Google or Apple APIs to handle contacts and passwords comes from their desire to protect their customers. They have best in industry engineers and they can handle passwords much better than your average app developer. Plus they can link your account to various other devices, Chrome browser and such. For example, Chrome also does periodic password checks and notifies me that some of my passwords are weak. So I’d argue there are solid benefits for the average consumer – if you have access to your Google/Apple account, you can restore all the rest that’s stored in there. Of course, it all breaks up when some government o law enforcement asks them to provide that data. And sure, they might use your contacts for whatever commercial purpose like serving better targeted ads but I think that less and less people care about it nowadays.
What I always found fascinating about app store taxes is that technically they are taxation on revenues. All these corporations whine about their taxes, which are not only often lower in percentage terms, but crucially are counted on profits. Yet if you are some small studio creating apps, they will take third of your income right away and don’t care what is your rent or salaries. If one listens to right wing economists, this sort of thing should be impossible, it would bankrupt companies and all the job creators would quit.
The existence of the Epic games store (https://store.epicgames.com/) is pertinent to this. Epic is not just a popular game developer, it is also attempting to compete in the platform space, where it also makes a profit on other developers selling games through its platform and payment mechanism.
So this is not a fight between a dev and a platform, but a fight between platforms over arenas of competition, using a wider argument to make its case.
A win for Epic doesn’t necessarily benefit what independent developers remain, although balance of probabilities is that its an improvement.
Google/Apple/Microsoft/Valve (Steam)/Epic and CD Projekt Red (makers of The Witcher series and Cyberpunk 2077) have gog.com in the platform space for game distribution too.
Epic is absolutely not making any kind of profit in the digital store business. Epic Game Store is simply an extremely poor, underdeveloped program, and has been for years with very little improvement. Epic infamously has been trying a strategy of bribing developers (both big and small) to have year long exclusivity releases of putting their games only on EGS before they make their way to other platforms, in a desperate bid to incentivize people to even bother using EGS. Their store front is a giant blackhole for money; Epic essentially uses Fortnite (as well as Unreal Engine 5) as a piggybank, a source of nigh unlimited cash to try and make their store front viable. It isn’t working.
Microsoft has also given up with its Windows store system and just releases everything on Steam as well, which probably accounts for something insane like 98% of sales.
Apple charges a $99 USD annual developer fee, which should be plenty to administer the app store and keep it secure. Google could do the same.
The 30% is a highway robbery beyond the greediest dreams of Bill Gates.
There are other apt stores.
Just do a search for Alternative Apt Stores.
Here’s a couple.
Android
https://www.slant.co/topics/2175/~best-google-play-store-alternative
Some for Apple
https://www.g2.com/articles/app-stores
If you use any to the alternate apt stores, you get lots of dire warnings.
On Android, you can directly download any apt file and install it, again with lots of warnings.
Apple has gotten pretty nasty on direct downloads and installs of non store apts.
You have to be in developer mode.
Can you get rid of Google stuff on an Android phone? The answer is yes.
There are some apts that supposedly remove it. They take away say 90%. But are not really what you
want. The only real way is called a custom ROM. It replaces all the phone manufacture specifics needed for Android on the device. The phone is then loaded with the open source version of Android.
That does not contain any Google stuff. The process is very involved and not for amateurs.
There are phones out there that are Google free (not cheap). Huawei is making them do to sanctions.
Nice phones, but you’ll need to get one out of Asia. The others are reROMed US and western phones.
With Apple you are locked in and out of luck.
Yves, you can run your Apple phone without and Apple Id.
Both Apple and Google phones are major surveillance devices. The NSA and CIA do not allow any of
these devices on the premises. An associate and did some testing on the information shipped out of cell phone. Google and Apple were in cases were minor offenders compared to the Apt store Apts.
I won’t go into the reasons. I can if any one wants to know.
So what do I do? I have an Android with a secure email apt. I use the phone contacts list for phone calls and texts, that’s all. Maps is useless, any search engine is becoming a waste of time. I have a 4gLte flip phone I’m moving all my contacts on to. The simple phone browser will get my email.
In the past, I designed a system to do secure communications on cell phones and cell connected devices. Most people don’t have any idea of the amount of tracking and information gathering going on. If they did, they’d want to go back to two cans and a string.
Or ‘apps’ would be more apt, wordwise?
You can’t remove the built in Google apps without root but you can disable most of them and most especially the Play store. What Google wants in practically everything you do is for you to be continuously connected to the web and this I don’t like at all. Personal computers were invented in those long ago garage days to empower us, not them.
Of course their excuse for the Play store and the 30 percent is that they are supposedly offering vetted software that won’t be hacking you and you do have to grant permissions for much of the spying. Saying no may then disable the software.