Google is now going through its second big antitrust trial in less than two months, which began on Monday in a federal court in San Francisco. By utilizing its massive resources and customers’ reliance on one of its primary goods, the firm is accused of limiting competition and harming consumers. Critics have described Google as a ruthless bully in the tech business.
The trial focuses on the Google Play Store, which is in charge of delivering software for the company’s Android platform, which powers nearly all non-Apple devices worldwide. The lawsuit is related to a complaint brought by video game company Epic Games, which claims that Google has formed an illegal monopoly on Android apps in order to earn revenue through commissions ranging from 15% to 30% on app sales.
Epic attorney Gary Bornstein said Monday during a 45-minute opening statement before the 10-member jury that will determine the case.
“The result of what Google is doing is higher prices, lower quality, and less choice for everybody.”
Epic’s Lawsuit
In the ongoing lawsuit between Epic and Google, an attorney representing Google, Glenn Pomerantz, tried to refute claims of the company’s monopoly on Android apps. Pomerantz provided examples of other mobile and gaming console stores that are competitors to Google, such as Apple’s app store for iPhones. It is worth noting that Google is currently facing a major antitrust trial in the US over payments made to Apple to ensure that Google’s search engine is the default on iPhones.
Epic has recently filed a lawsuit against both Google and Apple, citing similarities in both cases. The case against Apple is set to go to trial in May 2021. A federal judge mostly favored Apple in a recent ruling, but the outcome revealed a potential weakness in the digital protection that Apple has built around the iPhone. The judge and an appeals court found that Apple should allow apps to include links to other payment sources. This ruling could challenge the commissions that Apple and Google receive on digital sales made within mobile apps. Apple is currently appealing that specific portion of the verdict to the United States Supreme Court. In the same court, Epic is contesting most of the cases that it lost.
Commission system by Google
Epic is currently challenging Google’s commission system, despite the fact that Android already allows alternative app stores, such as the one found on Samsung phones, to distribute applications on the operating system. Epic argues that Google still dominates the Android app ecosystem and its payment mechanism, and has invested millions of dollars to limit competition, resulting in the Play Store accounting for over 90% of all Android app downloads. This has led to the commission structure earning more than $12 billion in revenue from operations. Alphabet Inc.’s financial records show that this amount represented approximately 13% of the approximately $92 billion in Google Services operating revenue, with most of the revenue coming from digital advertising in 2021.
In the trial against Epic in 2021, Pomerantz defended Google’s actions by claiming that their goal was to ensure the safety of Android apps. The commission structure was also justified as a means to cover the costs of powering an operating system that runs billions of smartphones globally. These arguments are similar to the ones used by Apple’s lawyers in their successful defense. Pomerantz argued that Epic’s motive was to increase its own profits by avoiding payment structures that would take away funds from its popular game Fortnite and other online games.
“They wish to take every advantage of Android and all the perks of the Play Store and not pay for them,” Pomerantz said of the company.
The case before U.S. District Judge James Donato is scheduled to continue until just prior to the Christmas holiday and will involve testimony from Sundar Pichai, a long-time Google executive who now serves as the CEO of Alphabet Inc., Google’s parent company. Pichai previously testified in an antitrust trial in Washington, D.C., which is set to conclude later this month, although the judge in that case is not expected to issue a ruling until next year.
The Match settlement caused Google to abandon its original request for a jury trial in favor of a judge-only procedure, but Donato turned down the offer. Match is obtaining a refund of $40 million in fees that were placed in an escrow account earlier this year, and the settlement includes Google’s “user choice billing” method. The contents of the settlement with the state attorneys general are expected to be made public during Google’s trial with Epic.
