A court has barred Google from paying for app exclusivity in Play, putting its programs in smartphones and other anti-competitive practices

On Monday, October 7, a U.S. court issued a permanent injunction requiring Google to
ease its stance toward alternative Android app stores. Google is prohibited from engaging in anti-competitive practices that advantage Google Play.

The ruling restricts Google from making payments or engaging in non-competitive revenue-sharing with companies in exchange for not using competing platforms. Following this news, Alphabet's shares dropped by more than 2%.

The decision by Judge James Donato from California stems from the antitrust lawsuit filed by Epic Games against Google, which began in 2020. The Fortnite maker and owner of a popular gaming store accused Google of anti-competitive actions, particularly in making payments to hardware companies and Android phone manufacturers to prevent them from developing competing app stores or using third-party options.

In December 2023, a jury found in favor of Epic Games, unanimously concluding that Google illegally dominates the Android app and in-app payment markets. The court identified an illegal link between Google Play and Google Play Billing, labeling the distribution agreements with software developers and OEM manufacturers as anti-competitive.

The new ruling could lead to a reshaping of the Android app market in favor of independent companies. New restrictions on Google Play may allow developers to earn higher profits by circumventing Google's rules or fees. According to the ruling, starting in November for a period of three years, Google is barred from:

• Paying companies to launch apps exclusively or first on Google Play
• Paying companies to refrain from competing with Google Play
• Paying companies for pre-installing Google Play on new devices
• Mandating developers to use Google Play Billing
• Prohibiting disclosures of cheaper online offers on their websites within apps
• Google must allow competing Android app stores on Google Play

Epic Games and Google are to form a three-member committee to address technical issues surrounding compliance.

The conflict originated from in-game purchases offered by Epic Games in Fortnite. The company challenged Google and Apple's control over mobile app distribution. Its violation of the two monopolists' rules resulted in the removal of its apps and subsequent lawsuits.

During the proceedings, Epic Games focused on blocking Google’s app store market through agreements with phone manufacturers and hindering users' ability to download Android apps from alternative sources.

Epic Games CEO Tim Sweeney previously mentioned that Google's corporate culture contributed to Epic's victory, as Google representatives frequently documented their business practices in emails or messages during the litigation.

“This means that all app developers, stores, operators, and manufacturers have 3 years to build a dynamic and competitive Android ecosystem with such critical mass that Google will be unable to stop it,” Sweeney writes.

In a blog post, Google announced that it would seek to suspend the changes and appeal the court's decision.

Source: CNBC