Google, owned by Alphabet, suffered a major setback in a California court. A jury ruled on Monday that Google's Play app store was operating like an illegal monopoly. This means it was stifling competition and unfairly charging app developers fees as high as 30%.
Epic Games, the creator of "Fortnite," emerged victorious in this legal battle. The outcome could potentially open doors for other app stores to compete on Google's Android system. However, experts say that any real changes may take years due to a lengthy appeals process.
The jury's decision forces Google to face some consequences. Epic Games now has the opportunity to suggest how Google's Play Store should be fixed. This could jeopardize an estimated $10 billion in yearly revenue for Google from app sales and in-app purchases, according to Wells Fargo.
Pinar Akman, a professor of competition law at the University of Leeds, called this a significant win for Epic Games. If a common remedy is applied, it might require Google to allow developers to use payment systems other than its own. This potential change could have a broad impact on the entire ecosystem and business model.
Currently, Google takes a percentage of every digital purchase made through the Play Store on Android. Although this revenue is just a fraction of the total sales, it's a highly profitable business for the company.
The potential remedies could force Google to permit rival app stores or reduce the fees it charges on app sales and in-app purchases. As a result of this legal blow, Alphabet's shares saw a nearly 1% drop on Tuesday.
This unanimous jury ruling adds more pressure on Google, especially as it faces another legal battle with the U.S. Justice Department over allegations of breaking antitrust laws.
Analysts at TD Cowen noted that this ruling might encourage the Justice Department, particularly in the ongoing ad tech case. While ad tech is more complex than app stores, the jury ruling is seen as a positive sign for the Department of Justice.
This decision also raises questions about Apple's dominance in the market. Although Apple won a similar fight against Epic, both companies are taking their dispute to the Supreme Court for review.
