On Monday, Fortnite publisher Epic Games will take a tech giant to court, claiming its mobile app store is an illegal monopoly. You may feel a sense of déjà vu!
After all, hasn’t Epic already gone to court with Apple, resulting in a verdict in which Apple (mostly) won? Didn’t Epic fail #FreeFortnite with its legal Llamacorn move? Didn’t this all happen years ago? What are we doing here again?
The short answer: While Epic’s antitrust lawsuits against Apple made it through the courts, a similar lawsuit against Google never came to fruition. On November 6th, Epic vs. Google will finally go to trial… just 1,180 days after Epic’s original lawsuit.
Hello, I’m Sean and I’ll be your guide through this whole delightful mess.
Llamacorn, what now? What happens?
Before we get to the llamacorn, a little background. Epic is, of course, the studio behind Fortnite, the hugely popular free-to-play game. Fortnite makes money by selling in-game items using its virtual currency, V-Bucks. Players often purchase V-Bucks wherever they play Fortnite. And if the player used an Android or iOS device by August 13, 2020 and installed the game through an official app store, that purchase triggered an in-app payment fee to Google or Apple.
Critics call such fees the “Google tax” or “Apple tax,” and Epic definitely wasn’t a fan.
When Epic decided to take action against these respective “taxes,” August 13, 2020 was a very busy day for Apple, Google, Epic, and us here at The Verge. First, Epic announced that it would bypass Apple and Google’s App Store fees. It has rolled out a hotfix update to Fortnite without either company’s knowledge, allowing you to purchase V-Bucks at a discount directly through its own payment processing option. Apple and Google responded almost immediately by banning Fortnite from their app stores for violating the rules.
Then: surprise! Epic was ready and waiting with two lawsuits and an attack ad in which a Fortnite hero throws a unicorn-llama hammer at a giant screen reminiscent of Apple’s famous “1984” Macintosh ad.
It was a sensational PR campaign that was followed by many lengthy legal proceedings. While Apple’s lawsuit ended up in court in 2021, Google’s lawsuit continued to be delayed. The Apple trial in September received a ruling that was overwhelmingly in Apple’s favor, although both parties are waiting for the Supreme Court to potentially weigh in. Meanwhile, the machinations in the fight against Google continued, and now…
It’s time for attempt number two.
That sounds fascinating, but what’s the point if I don’t care about Fortnite or rich companies suing each other?
The future of Google’s App Store could depend on this test – both Epic and Google agree on that. Epic wants to break Google’s alleged monopoly on Android app stores and payment methods so that developers aren’t forced to pay the “Google tax” or pass that fee on to you.
But if Epic wins – at least according to Google – it could make Android phones less secure by removing basic protections against sideloaded apps, and hurt Android’s ability to compete with the iPhone because it (presumably) doesn’t have a competitive app -Store can operate by donating it away for free.
What exactly does Epic claim?
Epic argues that Google makes it so difficult for developers and users to bypass its Android app store and that app store’s standard fees that it has created an illegal monopoly that unjustly enriches Google while artificially inflating app prices Drives up because other stores can’t keep up.
Epic also claims that Google is illegally tying its Google Play payment platform to the Google Play app store, thereby also discouraging other potential app payment mechanisms from competing.
So does Google have a monopoly?
A monopoly on what? This is one of the biggest questions the court will decide. Epic claims that Google has illegal monopolies in “Android app distribution” and “Android in-app payment processing.” It is argued that you have to pay Google tax when you buy or develop Android phones.
But Google will say the real competition comes from Apple because people can buy an iPhone instead. It’s pretty hard to argue that Google has a monopoly on app stores in general.
This whole argument is called “market definition.” If the court rules that the relevant market is mobile phones and app stores and not specifically Android stores, then Google is on its way to victory. If it accepts that Android apps are its own market, Epic will be in better shape. Or it could choose a completely different market definition, as the judge in the Apple case ultimately did.
Looking at this from a less academic perspective, it’s worth noting that Google charges up to ten times more per transaction than you pay with PayPal or a credit card, which seems like a lot! And while Epic can’t argue this in court, I want to point out that Apple couldn’t specifically justify a 30 percent fee to the judge in this case.
On the other hand, it looks like Epic wants something for free! As far as I can tell, Epic didn’t specify what kind of fee would actually be appropriate for Google to charge in exchange for placement in the Google Store – instead, Epic CEO said Tim Sweeney apparently suggests There should be no Google fee at all if a developer wants to use their own payment system.
How did Epic’s argument against Apple play out?
Well… both sides lost! But Epic probably lost more. Although Apple has incredible power over the iPhone, Judge Yvonne Gonzalez Rogers ruled that the company did not have an unfair monopoly in this case – in part because she ruled that the relevant market for Fortnite was “digital mobile gaming transactions” and not, for example, the iPhone be apps. She also ruled that Epic had violated its developer agreement with Apple and had to pay.
But it also prohibited Apple from keeping iPhone users in the dark about alternative payment options for apps – and potentially even allowed developers to add their own payment mechanisms. I won’t go into detail about the Apple ruling because of my ethical commitment, but my colleague Adi Robertson has a comprehensive breakdown.
How can Epic take action against Google if Apple has already won?
Epic declined to officially answer this question, among other questions we asked… but three things should be noted:
1) That was a different case. Furthermore, this won’t end until the Supreme Court takes a stand or refuses to take a look.
2) Google can’t tell the jury that Apple won its case or that other plaintiffs settled. The judge in this case says so!
3) Oh, and by the way, this is a jury trial.
Wait, why does this matter?
Epic and Google have to convince a jury, not the judge, which is completely different than the Apple case. (This was a “test bed”.)
Maybe any evidence of tricky dealings within Google could convince a jury against the company? Maybe Google’s scaremongering that sideloaded apps equal gaping security holes can convince a jury against Epic instead? Who knows!
(If you’re an Epic judge reading this – stop it! Judge Donato specifically said you’re in a “news-free bubble” until mid-December, folks.)
Haven’t other parties also sued Google?
They did! And then they all settled in. All 50 state attorneys general and a number of consumers have reached a tentative agreement with Google over App Store antitrust lawsuits, but it’s not clear what the deal might entail.
Match Group, the company behind Tinder, Match.com, OkCupid and other dating apps, has just achieved Also a surprising last-minute agreement that makes it seem like Match has actually given up.
Could we also reach an agreement between Google and Epic?
Epic appears to have no interest in a settlement as long as the “Google tax” remains in place, and the company has repeatedly stated that it is not interested in cash. To date, the company has been willing to pursue these cases through multiple appeals, no matter the cost.
It’s not clear what Google could proactively offer to satisfy Epic as CEO Tim Sweeney has also publicly suggested this that Google would simply bypass any settlement it offered.
However, if you want to see a vision of the future that Epic would accept, this letter to the state attorneys general is for you. It lays out a settlement that would essentially stop Google from doing the anti-competitive things that Epic allegedly did.
There’s also this tweet from Sweeney:
Google would not yet tell The Verge whether it has offered Epic any kind of settlement.
Why, if that’s all I want dirty laundry on these two companies?
Are you in it for the juicy smut? It could be good.
The allegations made before the trial suggest that Google played a lot of dirty tricks with names like “Project Hug”, “Project Agave” and “Project Banyan”, with Epic claiming that there is evidence that Google is targeting game developers and Phone maker paid to not abandon its App Store – worth hundreds of millions of dollars. Google was even reportedly considering buying Epic to prevent Fortnite from inspiring other game developers to go out of business.
Additionally, there is evidence that Google deleted potentially incriminating messages to prevent them from ending up in the hands of a court. Enough that the judge decided to specifically tell the jury that we’re not seeing all the evidence because Google employees up to CEO Sundar Pichai were caught setting these conversations to be automatically deleted. This issue was also raised in the USA v. Google antitrust case in Washington, DC, which was still ongoing at the start of the Epic trial.
And the dirt isn’t just on Google’s side. Epic was caught right out of the gate when it admitted to premeditating the entire plan to bypass Google’s payment systems. Since Google objects to this, it could be a big deal.
When you say, “Admit it yourself…”
Here’s an email from Epic CEO Tim Sweeney that I think speaks for itself:
“Here is our official plan for communicating with Google about bypassing the Google Play Store: DON’T SAY ANYTHING UNTIL IT SHIPS” Image via Epic vs. Apple
We’ll be calling a whole host of fascinating people as witnesses during the trial, who may have more to dish out.
Who will Epic and Google call as witnesses?
We’re going straight to the top of the org chart, folks. Google CEO Sundar Pichai and Epic CEO Tim Sweeney are definitely expected. Android co-founder Andy Rubin could be deposed, and Google says we’ll hear from current Android (and Chrome and Chrome OS) boss Hiroshi Lockheimer. Google also tells us that representatives from Apple, Netflix, Motorola and AT&T are also scheduled to testify.
How much hypocrisy can we expect in the courtroom?
I would say quite a lot! For example:
- Epic says this isn’t about money, just about ending Google’s monopoly – but Epic would certainly benefit from not having to pay Google’s cut.
- It seems like Epic is arguing that once you buy an Android phone you’re locked into Android, but I can personally attest that switching between platforms is easier than ever.
- Google will say that every Samsung Galaxy phone has “a competing app store right on the home screen,” although Google has apparently tried to abolish that store too, fearing it could cost the company billions.
- We caught Google trying to play the China card during a preliminary press briefing, and were reminded that Epic is 40 percent owned by Chinese company Tencent – even though Google itself is reportedly considering a collaboration with Tencent to eliminate the Epic threat. While the parties can’t argue about it in court, Google can try to subtly play the China card: “Google may question a witness once about Tencent’s residence,” one of Judge Donato’s orders reads.
- In the same press conference, Google suggested to journalists that Epic should have joined the company’s “User Choice Billing” program if it wanted an alternative payment system instead of suing. But that program didn’t exist until 2022, long after the lawsuit, and it only reduces Google’s fee by 4 percent.
When can we expect a jury verdict?
Judge Donato told the jury that we are embarking on an approximately five-week trial beginning November 6th and extending into early December. The schedule calls for the court to take Thanksgiving off, finish reviewing all the evidence by Dec. 4, take a few more days off before concluding arguments and then let the jury make a decision.
“I expect that we will have plenty of time to reach a verdict well before the December holidays,” Judge Donato said.
Okay, I’m convinced – how can I follow the progress of the process?
It’s not on Twitch or Zoom or anything like that. But I personally will be in the courtroom, and starting November 6th, we’ll have a StoryStream full of trial coverage here at The Verge.