Alphabet's Google lost an antitrust lawsuit against "Fortnite" developer Epic Games in a ruling that required Google to change its app store policies. This means that the monopoly of the Android ecosystem may be broken.The U.S. Court of Appeals for the Ninth Circuit ruled on Thursday that it upheld a lower court order and refused to overturn a unanimous jury verdict in 2023 that Google's app store and payment system had constituted an illegal monopoly.
The ruling means Google will have to relax restrictions on the Google Play Store to allow app developers to set up competitive markets and use alternative billing systems. The court had previously made a ruling restricting Google, but the ruling was suspended due to Google's appeal.
Justice Margaret McKeown, writing for the full panel:
Antitrust remedies clearly can, and often must, prohibit certain otherwise lawful conduct in order to correct and prevent anticompetitive conduct from occurring. The district court has the power to require Google to make adjustments to all parties harmed by its anti-competitive behavior, including its competitors.
Google said the ruling would "seriously harm user security" and weaken the innovation capabilities of the Android platform. Lee-Anne Mulholland, Google's vice president of regulatory affairs, said: "Our top priority remains to protect the safety of users and developers and ensure the security of the platform as we continue to appeal." Google later said that the company would appeal again,A petition to the U.S. Supreme Court may be the next step.
Epic CEO Tim Sweeney said on Twitter: "Epic has achieved a comprehensive victory in the appeal against Google!" Epic also immediately announced that it would put its app store on Google Play.
In December 2023, a jury supported Epic's accusations and found that Alphabet implemented restrictive policies and anti-competitive behavior by paying mobile phone manufacturers and popular app developers to only allow them to use the Google Play Store. After the verdict, San Francisco Federal District Judge James Donato ruled that Google must make more concessions to competitors.
Google lawyers argued in the appeal that Judge Donato should refer to a 2021 ruling in which Apple won a similar case.
The case stems from Epic suing Google and Apple in 2020, after the two companies removed Epic for embedding "hidden code" in its game Fortnite that bypassed the platform's payment system. Although Epic never denied the move, the court acknowledged that it was a strategic move to challenge the monopoly system.
The antitrust battle between Google and Epic comes at a time when Google is facing increasing scrutiny of its business practices from regulatory agencies around the world.
Alphabet, the parent company of Google, fell more than 2% during the session, underperforming the U.S. stock market that day.