It’s unclear what changes the U.S. lawsuits will bring, but together with international efforts, these lawsuits represent one of the biggest attacks on the company’s dominance since it became the monarch of the mobile world. means.
“The app store issue is being resolved as we speak,” said Yuri Khojamilian, an investor specializing in monopolistic industries at Tema ETF. “When people feel pressure in different places, they start to change.”
An Apple spokesperson declined to comment. Wilson White, Google’s vice president of government affairs and public policy, said in a statement that Google plans to appeal the jury’s decision.
Regulators, competitors and antitrust advocates have targeted Apple and Google’s app stores for years, arguing that the fees they charge amount to a tax on app developers to reach customers. . Although the mobile phone functions as a full-fledged handheld computer, app downloads are overwhelmingly done via his Apple and Google stores. This bottleneck allows companies to make billions of dollars by charging commissions as high as 30% on sales and transactions. When a company like Epic sells something through its regular website, he only pays single-digit fees to payment processors. However, if you sell the same product through a mobile app, you will have to pay a fee to Apple or Google.
So far this year, Apple has generated $23.7 billion in revenue from its app store, while Google has earned $13.5 billion, according to mobile data research firm Data.ai.
On the iPhone, Apple explicitly prohibits downloads outside of the App Store. Google’s Android system is more open, allowing users to install other app stores and download apps directly from companies. However, the majority of downloads still go through the official Google Store, and the company warns users that downloading directly from the internet, a practice known as “sideloading”, can lead to risks such as viruses. are doing.
Epic focused on these warnings in the trial, arguing that Google is trying to scare users away from straying from the official app store, which can charge transaction fees on purchases. Epic released a study showing that Google’s warnings deter people from downloading outside of the App Store. Google argued in court that the warnings were not as onerous as critics said, and that it was important for the company to warn users about the risks of computer viruses and malware.
Apple and Google both argue that the fees are justified because they vet apps for security risks and provide a functional marketplace that connects app developers with customers. According to reports, fraudulent apps are still getting past these defenses.
The case is the culmination of a three-year battle between gaming giant Epic, maker of the hit game Fortnite, and Apple and Google. In 2020, Epic released a feature that allowed customers to purchase in-app purchases directly from the company, which violated Apple and Google rules and resulted in the company being banned from the two app stores. Epic sued both companies in retaliation. Earlier this year, a judge ruled against Epic in its lawsuit with Apple. However, the jury in the Google trial found the opposite and ruled in favor of the game maker.
Epic joins executives seeking to dismantle corporate control over the app ecosystem. A bipartisan push to pass legislation regulating Apple and Google’s app stores last Congress came amid intense corporate lobbying as industry groups warned the bill would harm consumer privacy and security. It collapsed.
Sen. Amy Klobuchar (D-Minn.), a co-sponsor of a bill aimed at regulating app stores, said in a statement that “those of us who seek fairer competition and rules of the road for mobile app stores and other online marketplaces… “The fight is gaining momentum.” statement. “Now we must take the next steps in Congress to finally update consumer law for the digital age.”
Meta is under pressure from lawmakers to prevent young users from accessing harmful content on its apps, giving Apple and Google a bigger role in scrutinizing the age of people who download apps through their stores. We have started a campaign to make this happen.
Meanwhile, other jurisdictions are enacting their own App Store laws, which could soon have far-reaching implications for iPhone and Android users around the world. The European Union recently designated both Apple’s App Store and Google Play as “gatekeepers” under its Digital Markets Act, which aims to boost online competition. Companies have until early March to comply with a law that requires people to install alternative app stores or allow apps to be sideloaded.
In 2021, South Korea passed the world’s first law requiring tech giants to offer alternative payment systems on their app stores. In 2022, Apple announced that it would allow apps distributed only in South Korea to offer alternative payment processing systems, but its developers may not be able to use other payment processing systems, such as Family Sharing, which allows users to share subscriptions with other members of their family. Function is no longer available. Apple lowered its fees from 30% to 27% in 2022 in response to a challenge from the Dutch competition regulator.
Opening up the app store represents a rare victory for those who have long argued that big tech companies are too powerful.
“The major antitrust lawsuits currently in court against big tech companies (Google, Amazon, Facebook) are still ongoing,” says American Economic Liberties, a think tank critical of big tech. said Katherine Van Dyke, senior legal counsel for the project. technology. This is “a crack or a hole in the dam that has been exploited to cut off the monopoly power of these companies,” she said.
Epic’s victory against Google bucks the trend of big tech companies winning antitrust cases. Congress has failed to pass any significant antitrust changes in years, and in July a judge blocked the Federal Trade Commission’s attempt to block Microsoft’s acquisition of video game giant Activision Blizzard. While Epic won against Google, it lost against Apple, meaning both cases will likely continue to be appealed until the Supreme Court potentially intervenes.
Meanwhile, the jury’s verdict against Google will send a notice to other tech companies with large platforms to be careful with their business operations, said an antitrust partner at law firm Holland & Hart. Paul Swanson said.
“They’re going to have to think again and look more carefully at their business model,” Swanson said.