Epic Victory Against Google for Software Distribution

Operators of third-party app stores may see their profits dwindle thanks to Epic Games’ recent antitrust win against Google. A jury verdict in the Ninth Circuit of the US Court of Appeals found that the search engine giant quashed competition by charging third-party developers up to 30% of their sales on its Google Play Store app.

“By paying developers to abandon their own store efforts and direct distribution plans and offering highly lucrative agreements with device manufacturers in exchange for excluding competing app stores,”Epic Games officials posted on the company blog after the verdict came down. “These deals were meant to cement Google’s dominance as the only app store in town—and it worked. More than 95% of apps are distributed through the Play Store on Android.”

For its part, Google argued that the maker of Fortnite and game-development software wanted all the distribution benefits of the Android mobile operating system and Google Play without paying for them.

“Android enables developers to distribute through multiple app stores or directly to users through the web, bypassing app stores altogether,” said Wilson White, vice president of government affairs and public policy at Google, in a prepared statement.

The decision will have far-reaching implications for software developers, app developers, and the ultimate consumer, says Jay Jurata, a Washington, DC-based partner with the global law practice Dechert.

“If Google Play Billing is no longer the only payment solution on Android devices, it could open the Android market to alternative, lower-cost payment solutions and allow app developers to choose which payment solutions to integrate with their apps,” he notes.

District Judge James Donato, who oversaw the trial, will consider which remedy the court will impose in January, which could be fines, change of business practices or both.

“One potential remedy would be to require Google to allow developers to use payment solutions other than Google Play Billing,” Jurate suggests. “If that remedy is adopted, it could impact the entire Android ecosystem and transform the in-app payment business model.” Any final remedy is likely to be delayed for a year as Google asks for a stay during its appeal, he adds. And just how much long-term impact the decision will have remains debatable.