February 22, 2024

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Google loses antitrust court battle with the makers of the Fortnite video game

Google loses antitrust court battle with the makers of the Fortnite video game

A jury ruled Monday that Google violated antitrust laws to extract fees and limit competition from Epic Games and other developers on its Play mobile app store, in a case that could rewrite the rules on how thousands of companies make money from Google’s smartphone operating system. . ,Android.

After deliberating for just over three hours, a nine-person federal jury sided with Epic Games on all 11 questions in a month-long trial that marked the final turn in a three-year legal battle.

A jury in San Francisco found that Epic, maker of the popular game Fortnite, proved that Google maintained a monopoly in the smartphone app market and engaged in anticompetitive conduct that harmed the video game maker.

Google may have to change the rules of its Play Store, allowing other companies to offer competing app stores and making it easier for developers to avoid the cut it collects from in-app purchases.

Judge James Donato of the US District Court for the Northern District of California is scheduled to decide what remedial measures are needed to address Google’s conduct next year. Google said it would appeal the ruling.

Throughout the trial, Google’s lawyers and executives argued that it competes with Apple’s App Store, which is more popular in the United States, making it impossible to monopolize Android.

The ruling provided a boost to Epic’s years-long quest to weaken the power that Google and Apple have over the mobile app ecosystem, and came two years after Epic mostly lost a similar case against Apple — a ruling that both sides are trying to appeal in court. US Supreme Court. The judge decided this ruling.

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In a follow-up to the case against Google in 2020, Epic sought to retain more of the revenue it generates from in-app purchases and offer an app store that competes with Play on Android.

Google was fighting Epic’s claims at the same time it was defending itself in another antitrust trial in Washington, D.C. The Justice Department and dozens of states have accused the company of illegally maintaining a monopoly on search and advertising, in a landmark antitrust case that could reshape tech power when it is determined next year.

In the Play Store, Google charges app makers 15 percent for customer payments for app subscriptions and up to 30 percent for purchases made within popular apps downloaded from the store. Google says 99 percent of developers qualify for a fee of 15 percent or less on in-app purchases.

Google plans to appeal the ruling and will continue to defend the Android business model, Wilson White, Google’s vice president of government affairs, said in a statement. He added that the experience “made clear that we are competing strongly with Apple and its App Store, in addition to the app stores on Android devices and game consoles.”

The epic said in A Blog post That the ruling was “a victory for all app developers and consumers around the world” and “proved that Google’s App Store practices are illegal and that they abuse their monopoly to extract exorbitant fees, stifle competition, and reduce innovation.”

Epic CEO Tim Sweeney posted, “Fortnite is free!” on X, formerly called Twitter, after the ruling.

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Epic fueled the fight with Google, by allowing customers to make in-app purchases directly with Epic, bypassing Google and violating its rules. Google quickly banned Fortnite, and Epic responded by filing a lawsuit.

The jury found that Google violated antitrust laws in two markets, the Android Play Store and the Android in-app billing system. It also found that Google intentionally maintained its monopoly power, which allowed it to impose unreasonable restrictions on the ability of other market players to compete.

A jury took issue with Google’s efforts to pay big developers to continue using the Play Store, in an initiative called Project Hug. Epic’s lawyers have portrayed these efforts as “kickbacks” to major app makers, something Google has denied.

“Such a clear ruling will make it difficult for Google to overcome in the post-trial hearing and on appeal,” Paul Swanson, an antitrust lawyer at Holland & Hard, said in an interview. He added that the district court process could end within a few months, and that Google’s appeal to the US Court of Appeals for the Ninth Circuit could take between 12 and 18 months.

The jury also criticized Google’s agreements with Android phone makers like Samsung, which force them to pre-install Google apps on their devices and set other rules they must adhere to.

During the trial, Epic’s lawyers argued that Google deleted some internal chat messages that may have been relevant to the case, which undermined the search companies’ credibility, Mr. Swanson said.

“Google’s concern was that the jury would look at all these cases that it had considered for weeks and put them through the lens of, ‘Can I even trust Google?'” Swanson said. “The stark reality is that Google has finally had to face its customers in court.”

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