US Judge Orders Google to Open Google Play Store to Competition
In a significant antitrust ruling, a US federal judge has ordered Alphabet's Google to overhaul its mobile app business, allowing Android users greater flexibility in downloading applications and processing payments within those apps. This directive follows a jury's decision last year in favor of Epic Games, the creator of Fortnite.
U.S. District Judge James Donato in San Francisco detailed the necessary modifications Google must implement to enhance competition within its profitable app marketplace, the Play Store. These changes include enabling access to Android applications from competing sources, permitting users to download alternative third-party Android app platforms or stores, and prohibiting Google from restricting in-app payment options for the next three years.
Additionally, the order forbids Google from compensating device manufacturers for preinstalling its app marketplace and from sharing revenue accrued from the Play Store with other application distributors. This ruling aims to prevent Google from creating a competitive barrier in the Android app ecosystem.
Impact on Google and Its Stock
Following this verdict, Alphabet's stock experienced a decline of 2.5%, closing at $164.39 on Monday. Judge Donato instructed both Epic and Google to form a three-member technical committee responsible for executing and overseeing the injunction. Each party will select one member, and those two will then choose the third.
Google has announced its intention to appeal the ruling that prompted this injunction and may request the Ninth Circuit Court of Appeals in San Francisco to suspend Donato's order while the appeal is processed. The judge indicated that the injunction will take effect on November 1, allowing Google time to align its current practices and agreements with the new requirements.
Epic Games' Victory and Future Plans
Epic Games initiated its lawsuit in 2020, accusing Google of monopolizing access to applications on Android devices and controlling payment methods for in-app transactions. The company successfully convinced the jury that Google fully hindered competition through its management of app distribution and payment processes, leading to Donato's injunction.
In response to the ruling, Tim Sweeney, the CEO of Epic, remarked that this decision represents 'significant news' and announced plans for his company's game store to launch on Android devices next year. He emphasized that app developers would have three years to create a viable alternative to the Play Store, one that would be so compelling that Google could not eliminate it.
Google's Concerns and Ongoing Antitrust Cases
Google expressed concerns that while the ruling may benefit Epic Games, it could ultimately disadvantage consumers and app developers. The company has vowed to continue its legal battle in court, arguing that these adjustments could lead to various unintended repercussions detrimental to American consumers, developers, and device manufacturers.
In unrelated antitrust matters, a judge determined in August that Google had unlawfully monopolized web search, having invested billions to establish itself as the internet's default search engine. Additionally, Google is facing another trial in Virginia concerning a Justice Department lawsuit regarding its dominance in the advertising technology sector. The company has consistently denied all allegations in the various ongoing legal proceedings.
Future Implications and Compliance Timeline
Google has been given until November to comply with the mandated adjustments. The company previously claimed that it would need 12 to 16 months to establish the necessary safeguards to mitigate the risk of harmful software infiltrating rival Android app stores and potentially compromising millions of Samsung devices and other gadgets utilizing its free Android operating system.
Judge Donato's injunction is set to take effect on November 1, providing Google with an opportunity to align its existing agreements and practices with the new requirements. The financial implications of these changes for Google remain uncertain, with Epic arguing that Google could achieve a balanced environment for as little as $1 million, while Google contended that the costs could be as high as $600 billion.
