Apple rules the iPhone App Store with an iron fist: downloads outside of it are not allowed. Google allows anyone to install any app on an Android phone. But guess which of these two companies has an illegal monopoly, according to the courts?
As you probably already know, Google is the one that lost the fight against Epic Games this week. It's a fight that Apple previously won (mostly) in a similar trial in 2021, overcoming accusations that it had violated antitrust laws by charging mandatory fees for in-app transactions and kicking Epic's game. fortnite outside the app store. Google attempted a similar measure, but in its case, a jury determined that it had maintained an illegal monopoly with the Play Store; A judge is scheduled to consider the solutions next month.
Listening to the verdict live in the courtroom, at first I couldn't believe my ears. Readers of our comments and on the Internet felt the same. How could Epic have won? against the company that gives away its open source operating system, especially after losing to that company's more restricted competitor?
Here is my set of theories, which I spent half an hour discussing The Vergecast this week.
1. Logistically, Epic v. Google is a new roll of the dice.
The court made it clear from day one: Epic against Google It is a different case than Epic vs. Apple, with different evidence, in front of a different judge. Nothing in the Apple case is directly relevant to the Google case; in fact, the judge prohibited both sides from even mentioning it. Google's lawyers were never able to argue to the jury that Apple won. Furthermore, Apple does not quite won yet: we are waiting for the Supreme Court to decide whether it will hear a final appeal. (I will not cover the Apple case other than the brief summary I give you here, as I am ethically obligated.) Google has also said it plans to appeal the decision in its case.
Obviously, precedent plays a role in the legal system, where judges take guidance from things like Supreme Court rulings. But as Nilay Patel points out in The Vergecastwe shouldn't think of it as a deterministic algorithm: a new case is a new roll of the dice.
2. Google controls its ecosystem with commercial agreements with third parties, which means that documents that seem unfair are in more hands.
Apple sells the iPhone. It's Apple's way or the highway, and almost always has been.
Google does not sell the Samsung Galaxy line of phones or the Motorola Droid. It builds Google's ecosystem within Android by sharing a portion of its advertising and app store revenue if phone makers agree to showcase its apps (such as Chrome, Gmail, and Play), use its APIs, and release timely security patches. Epic's lawyers could lay out details about these deals and argue that they showed Google using its power in one layer of the phone market to kill off competition in another.
As we learned in this test, Google also tried to offer major deals to app and game developers to prevent them from bypassing the Google Play Store, such as Project Hug, which awarded top game developers up to hundreds of millions of dollars in credits. marketing and support. Paradoxically, the fact that Google allowed some competition created a paper trail of discussions about the degree of potential threat that competition posed, including forecasts of a “contagion effect” if game developers like Epic defected from Play.
Apple also faced some uncomfortable revelations in its case, such as an internal email that referred to iMessage as a “serious crashing” factor for iOS. But Epic vs. Apple The essay included long digressions on topics such as app store moderation, giving plenty of air time to Apple's non-monopoly rationale for a walled garden. While Epic argued that these rationales were simply a pretext for running a monopoly, the ruling ended up treating them as valid concerns, albeit with some skepticism. In an antitrust lawsuit, intentions matter, and in the course of its numerous negotiations, Google wrote a batch of intentions downward.
Epic Games CEO Tim Sweeney told me it's unfortunate that the most open company is being penalized for that openness:
I think Apple is… it's a little unfortunate that in many ways Apple's restrictions on competition are absolute. You won't have a competing store on iOS and you won't use a competing payment method. And I think Apple should receive at least as severe antitrust scrutiny as Google..
3. Some of those deals seemed seriously unfair!
Putting Project Hug aside for a second, Spotify you don't pay anything to google To get almost all the benefits of the Google Play store, we found out in court. I repeat: Spotify pays 0 percent when using its own in-app payment system, while a competing subscription service could pay 11 percent of its revenue if it is allowed to use its own payment system. “If you're a smaller developer than Spotify, you're screwed,” Sweeney told me after the verdict.
Google offered Netflix a sweetheart deal to pay just 10 percent of its profits through Google Play as well, at a time when 15 percent was the norm. (Netflix refused and decided not to stop offering in-app purchases on the Google Store entirely.) This test destroyed any notion that Google treats developers fairly and equitably.
And while Apple has also offered developers great deals…
4. This case was presented to a jury, not a court.
That meant Epic could tell a story of good and evil, while Google was left explaining complicated business deals.
Epic showed the jury document after an unfair-looking document in which Google allegedly “bribed” or “blocked” its partners from becoming competitors with special offers, which at least disincentivized them from building, joining or carrying alternative app stores I would say. .
While a judge could very well have decided that such agreements are not out of the ordinary, the jury may have seen the sausage being made for the first time and, ultimately, the jury was in charge.
5. That jury saw that Google had something to hide.
Not only did Google have to explain that offering a game developer, say, $90 million in incentives wasn't necessarily a bribe, but the Google executives behind those deals had to explain that they weren't doing it to prevent those companies from They will build rival app stores. . Google employee after Google employee said they were doing it so Android phones could compete with the iPhone.
But Google's own internal emails and strategic plans clearly showed that those executives wanted to block rival app stores, and the jury was out on that.
The jury was also present for two rounds of oddities with Spotify numbers in particular, which Google effortful not reveal it in public hearing. At one point, a Google vice president admitted that if the terms of the deal “were known, other developers would come to us to do the same thing and… negotiate it, and that would go badly for us.”
6. That jury saw that Google also intentionally removed evidence.
Judge James Donato literally said these exact words to the jury just hours before reaching a verdict:
He has seen evidence that Google Chat communications were deleted with the intention of preventing their use in litigation. You can deduce that the deleted chat messages contained evidence that in this case would have been unfavorable to Google.
Can you imagine being a juror in this case and being told that Google probably removed even more Unfair settlements and potentially damning evidence than you've already seen? That's exactly what happened over and over again during this trial, with Epic questioning virtually every Google witness, right down to Google CEO Sundar Pichai, about why they didn't preserve all of their business communications as required by law.
It turned out that Google had set all individual chats to automatically delete after 24 hours by default, and employees, starting with the CEO, intentionally used that to make certain conversations disappear.
Not only did the jury see this, but at least one of them decided that Sundar Pichai was not credible on the stand and that the deleted chats were a factor in their decision to give Epic the win.
7. Perhaps the most important reason: market definition.
It would be difficult to argue that Google has a monopoly on phones or apps. For one, it doesn't sell them directly, and you can buy an iPhone instead.
Google wanted to argue that the “relevant antitrust market” was phones and app stores in general, or better yet, mobile transactions. That could have been a path to an easy victory.
In fact, market definition was arguably the deciding factor in the Apple case, when Judge Yvonne González Rogers single-handedly decided that the proper market definition was “digital mobile game transactions,” a market where cutting Apple's 30 percent seemed relatively fair, since Sony, Microsoft, and Nintendo nominally charge the same fee.
But in this case, the jury was able to choose the relevant market for itself (it was an option written on the verdict form) and the judge was publicly skeptical about Google's market definitions, casting serious doubt on the idea that the “digital transactions” made no sense as an antitrust market.
In the end, the jury decided to go with the market definitions chosen by Epic: Android application distribution and Android In-app billing services. From there, it was much easier to accept that Google had monopoly power and now it is up to the judge to decide what penalties it should incur.
