A middleman lives inside your phone. Tech giants Google and Apple don’t just make phones, they make money by doing things with them. If you want to do something fun with your phone, you have to use the app store. When you buy a game or fitness app, Google and Apple get a cut of your credit card payment. What’s more, you get that slice when you buy the app and make in-app purchases. thatwhich costs a whopping 30% of the payment amount.
Anil Dash, who runs the coding platform Glitch, says the system has left app stores full of junk. Your phone is full of AI-generated apps, rip-offs, and fraudulent games. What isn’t junk is often made by huge corporations. For mid-sized players, it is very difficult to earn money to support the development of new and exciting apps. “It’s a pretty grim space,” Dash says.
But now Epic Games (arguably a tech giant in its own right) has managed to beat the system by winning the sympathy of a San Francisco jury. The jury found that Google abused its monopoly power in the app store and in-app purchasing markets. A federal judge will begin deliberating legal remedies in January. (Google has also announced that it will appeal.) It may take a while for Android users to notice the changes, but the end of the two-party system for the app economy is over. A new era of apps is upon us.
Before we tell you what it is, you should know about Epic Games (incidentally, Epic Games won an antitrust case against Google, successfully getting the U.S. government to do its bidding). Also I’m currently trying to run it). Epic Games is nowhere near the size of Google. Google is his $1.67 trillion company with more powerful businesses than you might imagine. But Epic is still a huge, $32 billion brand and widely popular among young people around the world. The greatest treasure, the one that is really raking in the money, is fortnite. Battle royale fighting games are more than just games. Marshmello, Travis Scott, Ariana Grande and Eminem have all performed virtual concerts there. In this world, fortnite sells a virtual currency called V-Bucks that players can use to buy different outfits, dance moves for their avatars, and other fun stuff. But much of that sweet video game merchandise money, the money spent when a user was using his iPhone or his Android device, was getting Apple and Google’s cut.
Epic didn’t like that status quo, so in the summer of 2020 it broke both companies’ rules and introduced its own payment system that avoided these fees. fortnite was immediately removed from both Apple’s App Store and Google’s Play Store. The gaming companies filed suit under federal antitrust law, which is designed to prevent companies from unfairly stifling competition. Epic (almost) lost a court case against Apple in 2021, but its battle with Google continued into this week. The news that Epic beat his Google was shocking to many onlookers. (Actually, this isn’t a David and Goliath situation, because again, epics are big. It’s more like Perseus beheading Medusa.)
What’s happening now that Google has been found guilty? When U.S. District Judge James Donato resumes his court proceedings to find a legal solution in the new year, he will have a choice. Epic specifically did not seek monetary damages in suing Google, preferring to seek actual changes to the way Google operates rather than simply extracting large amounts of cash. Epic wants to allow developers to list their apps on his Google Play Store. Of course, the price will be lower, but at the same time we want to be able to offer the app freely to users. Own App store and billing system.
Depending on Donato’s decisions, Android users may suddenly find themselves with more options to download and purchase from alternative app stores, pay for apps and make in-app purchases, the company’s vice president said. said Diana Moss, director of competition policy. Progressive Policy Research Institute. “In a world where consumers are facing two dominant smartphone manufacturers, this would be a welcome surprise,” she says.
In the future, users will be able to shop around for deals and find products in categories that are largely taboo for Apple and Google, including adult content. “OnlyFans could easily become an app store,” Dash says.
However, Epic’s victory may not directly lead to that future right away. Moss said he expected Donato to choose the easiest outcome, perhaps issuing an injunction against Google’s exclusive deals with prominent app makers like Netflix. Google is different from Apple because Technically Allow third-party app stores to download mobile software from the web without going through the Play Store. But Epic has successfully argued that Google is open in name only. How can a rival app store succeed if it can’t offer popular apps like Netflix? It’s like a bookstore that can’t carry romance novels or Colleen Hoover works.
A nuanced solution that still leaves Apple and Google in control (perhaps some new app stores emerging alongside Apple’s) may actually be most beneficial to consumers. there is. Apple and Google claim that cracks in their app stores reduce quality and security. Phillip Shoemaker, who helped build Apple’s App Store, said he completely agrees with that assertion.
“This revenue will be retained [Apple] Shoemaker, who is currently executive director at digital identity company Identity, said: “We have a strong team of staff investigating app security and safety concerns on a daily basis, and our security team is always on the lookout for security concerns. We’re making sure we can investigate.” .com. “That said, both of these companies are making more money than they should to meet security and safety concerns,” Shoemaker said. We believe we can afford to take a 5% cut in in-app purchases instead of a 30% cut. In other words, if users don’t notice any major changes to their phones as a result of this trial, that might be a good thing.
Thomas Leonard, a senior fellow at the Technology Policy Institute, basically shares this view. “If there is a remedy that fragments the operating system and makes it less secure or less usable in other ways, that clearly would not be in the consumer’s interest,” he says. . “Similarly, if there is less incentive for Google to continue improving its platform, it will not be in the interest of consumers either.”
Brian Albrecht, chief economist at the International Center for Law and Economics, similarly noted that some changes that could hypothetically result from this trial could clearly worsen the user experience. . “Opening up isn’t always a good thing. People love Apple products because they’re easy to use without having to think about it,” he says. Consumers “tend to prefer things that can be more easily integrated.”
Even if some of what Apple and Google skimmed off the top of the sales list declines, it may still reshape the App Store experience, at least in terms of what we line up there. Dash said many of today’s most important technology companies cannot build on today’s mobile app infrastructure because 30% margins are prohibitive. “Adobe is a multibillion-dollar company, Photoshop is a common language, and you can’t build Adobe on one of your app stores,” he says. “No one has turned an app from Google Play or the App Store into something with an enterprise sales team and its own campus.”
Dash said the days of two companies’ centralized control over the app economy are over, whether through Epic’s decision or the kind of government regulations already in place in some form in South Korea and Europe. I believe. And with the tech giants being slightly reined in, it’s almost certain that subtle changes will grace our phones one way or the other. another.