Lawyers win as Epic levels up against Google

• Epic winning in its battle with Google.
• The federal courts rule in games developer’s favor.
• this is just round one in a longer process.

The highly lucrative online payment process in the two leading app stores for mobile operating systems has been dealt a potential shake-up by a San Francisco court. After three hours of deliberation following a four-week trial, a jury found that anti-competitive practices protect Google’s Play Store.

Epic Games, a company best known for Fortnite and its litigious approach to app stores, has brought cases against both the Apple App Store and Google’s Play Store. The issue for Epic is the levy taken by both stores from purchases made in-app by players, amounting to between 15% and 30% of any purchase.

Although Apple came out best in the US federal courts and elsewhere, it’s a win currently under review by the US Supreme Court. Google will also appeal its decision after the court’s full ruling, which is due to appear in January 2024.

There are some differences between the Play Store and Apple’s App Store policies affecting in-app payments, primarily that Android phone users can obtain their apps from sources other than the official Play Store. Therefore, any in-app purchases made in so-called sideloaded apps will go 100% to the developer. However, Apple’s iOS makes the sideloading of apps practically impossible, meaning that app developers always suffer a standard 30% cut in potential post-download revenues.

Google’s practices are, therefore, in theory, slightly less monopolistic than Apple’s, yet Google has found itself at the wrong end of the San Francisco court’s decision. Epic winning against Alphabet and Google makes the current tally of court rulings 1-1, with plenty of extra time added as the rulings escalate and are appealed.

Before the trial began, Google attempted to change the proceedings so a jury would not decide the verdict, a move dismissed pre-trial by presiding judge James Donato. The unanimous verdict and the mere three hours of deliberation show that Google was correct in assuming a single judge’s ruling would stand a better chance of being in its favor.

Epic winning in subscription models

Many apps available on both app stores are written by household-name technology companies that offer free apps but whose service is subscription-based. Disney and Netflix, for example, run a business model analogous to Epic’s Fortnite, where games are free to play, but players can buy perks and upgrades in-app. It’s assumed that companies as large as Disney reach separate agreements with Apple and Google to pay set fees for the privilege of having their apps available, as in their cases, subscriptions go straight to the media streamers. Therefore, the monetary exchange is between consumer and provider (or watcher and streamer), removing the possibility of a 30% cut taken by the app stores’ operators.

In these cases, it’s mutually advantageous for both parties to hammer out a deal: the likes of HBO and Sky need their apps in the two major app stores for maximum subscriber numbers, and the app stores need to offer the apps that consumers expect, regardless of whether they can be monetized in the way that the likes of Epic’s Fortnite is.

Epic winning for lawyers

Legal machinations are only to be expected as software producers like Epic find themselves running multi-billion dollar companies and expect the same considerations to be shown to them as to, say, Netflix and Amazon. Epic Games’s CEO Tim Sweeney has been publicly vociferous when discussing his issues with Google and Apple, stating in typically subjective language, “Victory over Google!” on an X post after the federal court’s recent decision.

Like all matters of law as they affect the obscenely wealthy, there is a great deal of incentive for Apple and Google to protract the legal arguments, regardless of the final decisions. Despite lawyers being an expensive commodity, their total bills do not exceed the revenues flowing from apps to the app stores, which continue to accrue while the world’s courts go through due process.

Epic losing for end-users

Google and Apple’s battles are not, it should be noted, in the interests of gamers or app users, despite Sweeney’s company-wide post that hailed the court’s ruling as, “a win for all app developers and consumers.” If, by some stroke of fate, or after decades of costly legal battles, Apple and Google were forced to stop levying their 15%-30% payment taxes, would end-users begin to see their $10 in-app purchases for a Fortnite skin suddenly reduced to $7? Perhaps on the same day, we can expect to see Satan himself ice-skating to the office.

Should Epic or other app developers win the right to allow software to be installed on devices from any source the end-user prefers, it would be a great leap forward for phone users. The current situation is that, in 99% of cases, we spend around $1,000 on a portable device, yet we can only install software that its OSes’ creators allow.

Sideloading apps on Android is often portrayed as a security issue, which it potentially is. It’s worth noting that it’s potentially possible to be mowed down on your way work by an ice-skating Satan, too.

There are few alternatives to the Play Store as a reliable source of mainstream apps, and Google’s approach to those few is aggressively litigious. Apps on both ‘official’ stores are bound by Terms and Conditions, which mandate a levy on all payments. Whether that situation creates an anti-competitive situation (ie, a monopoly) is a question making lawyers richer and Tim Sweeney progressively more angry.