File - Epic Games CEO Tim Sweeney leaves a courtroom at the Ninth Circuit Court of Appeals in San Francisco, Nov. 14, 2022. A federal court jury is expected to begin its deliberations Monday, Dec. 11, 2023, in an antitrust trial focused on whether Google's efforts to thwart competition against its app store for Android smartphones has also been illegally gouging consumers and stifling innovation. The case was filed by Epic Games, the maker of the popular Fortnite video game. (AP Photo/Jeff Chiu, File)
SAN FRANCISCO (AP) – A federal court jury has decided that Google’s Android app store has been protected by anticompetitive barriers that have damaged smartphone consumers and software developers, dealing a blow to a major pillar of a technology empire.
The unanimous verdict reached Monday came after just three hours of deliberation following a four-week trial revolving around a lucrative payment system within Google’s Play store. The store is the main place where hundreds of millions of people around the world download and install apps that work on smartphones powered by Google’s Android software.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
A federal court jury on Monday began its deliberations in an antitrust trial focused on whether Google’s efforts to profit from its app store for Android smartphones have been illegally gouging consumers and stifling innovation.
Before the nine-person jury in San Francisco started to weigh the evidence laid out during the four-week trial, lawyers on opposing sides of the legal battle spent about two hours making their closing arguments in the filed by Epic Games, the maker of the popular Fortnite video game.
Epic lawyer Gary Bornstein depicted Google as a ruthless bully that deploys a “bribe and block” strategy to discourage competition against its Play Store for Android apps. Google lawyer Jonathan Kravis attacked Epic as a self-interested game maker trying to use the courts to save itself money while undermining an ecosystem that has spawned billions of Android smartphones to compete against Apple and its iPhone.
Much of the two lawyers’ dueling arguments touched upon the testimony from a litany of witnesses who came to court during the trial.
The key witnesses included Google CEO Sundar Pichai, who sometimes seemed like a professor explaining complex topics while standing behind a lectern because of a health issue, and Epic CEO Tim Sweeney, who painted himself as a video game lover on a mission to take down a greedy tech titan. Pichai and Sweeney met for about an hour late last week in an unsuccessful attempt to reach a settlement before the case went into jury deliberations, according to court documents.
Epic alleged that Google has been exploiting its wealth and control of the Android software that powers most of the world’s smartphones to protect a lucrative payment system within its Play Store for distributing Android apps. Just as Apple does for its iPhone app store, Google collects a 15-30% commission from digital transactions completed within apps – a setup that generates billions of dollars annually in profit.
That commission system “has led to higher prices for developers and consumers, as well as less innovation and quality,” Bornstein said during his closing argument.
Google has staunchly defended the commissions as a way to help recoup the more than $40 billion vestments that it has poured into building into the Android software that it has been giving away since 2007 to manufacturers to compete against the iPhone.
“Android phones cannot compete against the iPhone without a great app store on them,” Kravis asserted in his closing argument. “The competition between the app stores is tied to the competition between the phones.”
The jury’s verdict may hinge largely on whether its market definition embraces Google’s argument about Apple being a rival or whether it latches on to far narrower competitive landscape drawn in Epic’s case.
While Epic has been contending Google’s Play Store is a de facto monopoly that drives up prices and discourages app makers from creating new products, Google drew a picture of a broad and fiercely competitive market that includes Apple’s iPhone app store in addition to the Android alternatives to its Play Store, even though the operating systems powering Android phones and iPhones aren’t compatible,
“Apple is not the “˜get out of jail for free’ card that Google wants it to be,” Bornstein told the jury Monday.
But Kravis repeatedly insisted that more consumers would feel compelled to buy iPhones if the Play Store didn’t provide a safe and trustworthy place to download Android apps.
“From the beginning, the competition between the phones also has been about the competition between the app stores,” Kravis said of a rivalry that began in 2008.
Google also pointed to rival Android app stores such as the one that Samsung installs on its popular smartphones as evidence of a free market. Combined with the rival app stores pre-installed on devices made by other companies, more than 60% of Android phones offer alternative outlets for Android apps.
Epic, though, presented evidence asserting the notion that Google welcomes competition as a pretense, citing the hundreds of billions of dollars it has doled out to companies such as game maker Activision Blizzard to discourage them from opening rival app stores. Besides making these payments, Bornstein also urged the jury to consider the Google “scare screens” that pop up warning consumers of potential security threats when they try to download Android apps from some of the alternatives to the Play Store.
“These are classic anticompetitive strategies used by dominant firms to protect their monopolies,” Bornstein said.
Google’s insistence that it competes against Apple in the distribution of apps despite the company’s reliance on incompatible mobile operating systems cast a spotlight on the two companies’ cozy relationship in online search – the subject of another major antitrust trial in Washington that will be decided by a federal judge after hearing final arguments in May.
The Washington trial centers on U.S. Justice Department allegations that Google has been abusing its dominance of the online search market, partly by paying billions of dollars to be the automatic place to field queries placed on personal computers and mobile devices, including the iPhone.
Epic’s lawsuit against Google’s Android app store mirror another case that the video game maker brought against Apple and its iPhone app store. The Apple lawsuit resulted in a monthlong trial in 2021 amid the pandemic, with Epic losing on all its key claims.
But the Apple trial was decided by a federal judge as opposed to a jury that will hand down the verdict in the Google case.
