Google Play trial to test Alphabet’s app marketplace power

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Nov. 6, 2023 (Bloomberg) — Alphabet Inc. is facing off with Epic Games Inc. at a trial this week in an antitrust fight targeting the technology giant’s control over its money-spinning Google Play app store.

The showdown in San Francisco federal court threatens billions of dollars in revenue generated by Alphabet’s app marketplace. In a lawsuit filed three years ago, Epic claims Google has monopolized the Android app distribution market for more than a decade by striking side deals to pay off rivals and uses its “vast resources to snuff out all competition.” If Alphabet loses, it could be forced to open the door for payment and app distribution methods outside its own app store.

Epic, maker of the popular Fortnite game, largely lost a similar challenge two years ago to Apple Inc. over its app store. Epic Chief Executive Officer and billionaire Tim Sweeney, who says he went to court to stick up for app developers, is now asking the US Supreme Court to review the Apple dispute. Epic is the only stakeholder still suing Alphabet after the Mountain View, California-based company recently reached settlements with consumers, state attorneys general and Match Group Inc., all of whom had targeted Google Play in complaints.

Here’s what you need to know as the Google Play trial gets underway:

Epic’s Claims

Epic isn’t seeking monetary damages, but wants an order that would upend Google Play policies covering Android app distribution and payment methods. That “would make good on Google’s broken promise: an open, competitive Android ecosystem for all users and industry participants,” Epic said in its complaint. Policies that force developers and users to exclusively use Google Play while blocking third-party payment options violate antitrust law and hurt device makers, app developers and distributors, payment processing companies, and consumers, according to Epic.

Epic claims Google struck unlawful revenue-sharing and licensing agreements with electronic device makers so Google Play would be pre-installed and distinctly displayed on phones and tablets. It also negotiated agreements with device makers that thwart them from allowing third-party app stores or apps on their own, Epic said in its complaint.

Alphabet’s Defense

Alphabet has said that offering developers certain incentives to launch their apps on Google Play is how the store competes with Apple’s App Store, in addition to the Samsung Galaxy Store and Amazon Appstore, PCs and gaming consoles.

The company’s lawyers are expected to argue that Google Play policies are legal and that the security features and other benefits the store offers outweigh any harms caused to developers and users. Alphabet also claims the game maker breached its contract and acted in bad faith when it tried to set up its own app store in 2020 as an end-run around the Google Play billing system.

Two-Part Trial

A jury will decide whether Google Play’s policies violate federal antitrust statutes. If jurors find Google is breaking the law, the trial will move to a second phase in which US District Judge James Donato will decide how to fix any antitrust violations.

The trial is scheduled to run until early December and is expected to feature testimony from Sweeney and Alphabet CEO Sundar Pichai. Last week, Pichai testified in Washington federal court in the Justice Department’s landmark competition case over Google’s search dominance.

The case is In Re Google Play Store Antitrust Litigation, 21-md-02981, US District Court, Northern District of California (San Francisco).