Google has lost an appeal on Thursday, with the company failing to persuade a US appeals panel to rescind a jury verdict and federal court order in its lawsuit against Epic Games that requires it to make changes to its app store, Play Store.
The 9th US Circuit Court of Appeals, based in San Francisco, in its unanimous ruling, rejected claims from Google that the trial judge made legal errors that benefited Epic Games in the antitrust ruling from 2020.
Google says decision could affect user safety significantly
The ruling by the Court of Appeals on Thursday means that Google Play Store will have to remove the restrictions it has set to prevent developers from setting up rival marketplaces and billing systems. The injunction, which was announced last year, was expected to have gone into effect but was held up because of Google’s appeal.
“It is well established that antitrust remedies can and often must proscribe otherwise lawful conduct to unwind and further prevent violators’ anticompetitive activity,” Judge Margaret McKeown wrote in a statement for the unanimous panel. McKeown also mentioned that the district court has the right to order Google to work with parties that have been harmed by its anticompetitive conduct, even if they are competitors.
Google, however, believes that the decision has the potential to significantly affect user safety and also undermine innovation for the Android operating system. Lee-Anne Mulholland, Google’s Vice President for Regulatory Affairs, spoke about the subject: “Our top priority remains protecting our users and developers, and ensuring a secure platform as we continue our appeal.”
Meanwhile, Epic Games‘ CEO Tim Sweeney has praised the verdict via a post on X, saying it would allow the company to offer its Epic Game Store using Google Play. This change is expected to affect Google, but how much is yet to be determined because Alphabet does not process app store revenue separately from its earnings.
Bloomberg Intelligence analyst Mandeep Singh mentioned in a note last year that increased use of third-party billing systems by media and gaming companies poses a bigger threat to Google than rival app stores. “In a worst case scenario, this could be a 20-30% drag on gross app store sales of around $50 billion, mostly subscriptions, which could be a $1-$1.5 billion drag on the company’s gross profit, based on our estimates,” he said.
Epic finalized its case against Samsung weeks ago
Epic Games is also finalizing its case against Google weeks after the company settled its antitrust claims against Samsung earlier last month. The lawsuit, which also involved Google, claimed that Samsung conspired with the search engine company to shield its app store, Google Play, from competition by using Samsung’s Auto Blocker feature, which allegedly discouraged users from downloading apps outside the store and Samsung’s Galaxy store.
Both Samsung and Google have denied any wrongdoing and have also refused to disclose specific terms of the settlement. However, Epic Games is satisfied with the outcome of the ruling, with Sweeney expressing gratitude, claiming that Samsung has agreed to look into its concerns in a post on X. As for its ongoing lawsuit with Google, it is a little early to break out the champagne because Google’s possible Supreme Court appeal could delay or alter the outcome.
