Technology

Google’s Epic court loss may upend the €185bn app economy

Court ruling that Google’s Play Store is uncompetitive may have implications for the wider app industry

Fortnite maker Epic Games has won a court battle with Google - but what will it mean for app stores?

Ciara O'Brien
Tue Dec 12 2023 - 16:37

In the end, it took only four hours for the jury in a US court to reach a verdict that could blow apart the app store model that is worth almost $200 billion (€185 billion) a year.

Fortnite-maker Epic Games’s claim that Google’s Play Store was anticompetitive hit home. The court agreed, finding that Google’s conduct had harmed Epic and that the company was illegally forcing its billing system on developers.

The case has been three years in the making. And although Epic has won this round, it is not yet clear what will happen next. With the jury’s role complete, it is now up to the judge presiding over the case to decide the appropriate remedies.

Epic has two requests that may get rubber-stamped by the court: it wants developers to be able to have their own app stores, and also the ability to choose their own billing system rather than be forced to use Google’s.

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Under the current system, developers lose up to 30 per cent of revenue generated through the app store to the tech giant. If they can bypass that – as Epic tried to do, kick-starting this case – it will mean millions of dollars in revenue for Epic every year that currently goes to Google, the cost of using its billing system to reach customers.

Epic says that will mean more choice for consumers, and potentially lower prices for services. The latter may be true, with many companies already offering a two-tier pricing system for those who pay for their services through an app store versus buying directly.

The wider question is what this means for the app store model that Google and Apple have perfected over the years.

The days of a “walled garden” were already numbered. Although Apple had won a similar case brought by Epic two years ago – decided by a judge rather than a jury of potential customers of the App Store – regulators have been challenging the control exerted over the mobile platforms through the app store model, chipping away at the walls.

This is far from over. Google plans to appeal the case, which could drag it out for several more months. But regardless of how it plays out, it is clear that change is already on the way.

In 2021, Apple began announcing a series of changes to how the App Store worked, allowing companies to direct users to ways to pay outside the App Store. Developers can also contact users directly to tell them how they can subscribe outside the App Store. Apple has also lowered some of its commission fees for developers, particularly smaller ones.

The EU’s Digital Markets Act will also lead to changes; it is likely that the app stores will be forced to open up to third parties in the coming months.

Whether the app stores choose to change or are forced to by regulations, the business is set to change.

Ciara O'Brien

Ciara O'Brien

Ciara O'Brien is an Irish Times business and technology journalist

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