Google loses appeal in Epic Games lawsuit

Google tried and failed on Thursday to persuade a U.S. appeals panel to rescind a jury verdict and federal court order in the Epic Games lawsuit that requires it to revamp its app store, Play.

The San Francisco-based 9th U.S. Circuit Court of Appeals, in a unanimous ruling, rejected Google’s claims that the trial judge made legal errors in the antitrust case from 2020 that unfairly benefited Epic Games.

Google says the decision will harm user safety significantly

Thursday’s ruling means Google Play Store will have to remove restrictions put in place to prevent app developers from setting up rival marketplaces and billing systems. The injunction should have taken effect earlier, but it has been on hold since last year after Google’s appeal.

“It is well established that antitrust remedies can and often must proscribe otherwise lawful conduct to unwind and further prevent violators’ anticompetitive activity,” Judge Margaret McKeown wrote in a statement for the unanimous panel.

McKeown also pointed out that the district court has the right to require Google to deal with parties harmed by its anticompetitive conduct, even its competitors.

Google believes the decision has the potential to not only “significantly harm user safety” but also to undermine innovation for the Android operating system.

Lee-Anne Mulholland, Google’s Vice President for Regulatory Affairs, spoke about the subject: “Our top priority remains protecting our users and developers, and ensuring a secure platform as we continue our appeal.”

Meanwhile, Epic Chief Executive Officer Tim Sweeney has praised the ruling via a post shared on X, saying it would allow the company to offer its Epic Game Store via Google Play.

This revamp is sure to affect Google, but by how much that will be is hard to say because Alphabet doesn’t process app store revenue separately in earnings.

Mandeep Singh, an analyst at Bloomberg Intelligence, said in a note last year that heightened use of third-party billing systems by media and gaming companies poses a larger threat to Google than rival app stores.

“In a worst case scenario this could be a 20-30% drag on gross app store sales of around $50 billion, mostly subscriptions, which could be a $1-$1.5 billion drag on the company’s gross profit, based on our estimates,” Singh said.

Epic concluded its case against Samsung weeks ago

Epic Games’ case against Google is now taking center stage weeks after the company settled its antitrust claims against Samsung earlier this month.

The lawsuit, which also involved Google, claimed that it conspired with the search engine giant to shield its app store, Google Play, from competition by using Samsung’s Auto Blocker feature, which allegedly discouraged users from downloading apps outside of Google Play and Samsung’s Galaxy store.

Both Samsung and Google have denied any wrongdoing, and they have refused to disclose specific terms of the settlement. However, Epic Games is clearly satisfied with the outcome of the ruling, as the company’s chief executive Tim Sweeney expressed gratitude, claiming that Samsung will address its concerns in a post shared on X.

As for its ongoing lawsuit with Google, it is a little early to break out the champagne because Google’s possible Supreme Court appeal could delay or alter the final outcome. Depending on how it turns out, the ruling could potentially reshape the Android app market by reducing barriers for developers and increasing consumer choice.

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