Google loses US appeal over its app store in Epic Games case

Google loses US appeal                                                                   

Google loses US appeal over its app store in Epic Games case

Alphabet Inc.'s Google lost its appeal of a court order requiring it to overhaul its Google Play app store policies in an antitrust case brought by Fortnite developer Epic Games.

The ruling by the Ninth U.S. Circuit Court of Appeals on Thursday means that Google Play will be required to lift restrictions preventing app developers from creating competing marketplaces and billing systems. The injunction against Google has been on hold since last year pending an appeal, according to a Bloomberg report.

 Google said the decision would "seriously harm user safety" and undermine innovation in the Android operating system. "Our top priority remains protecting our users and developers and ensuring a safe platform as we continue our appeal," said Lee Ann Mulholland, Google's vice president of regulatory affairs.

Epic CEO Tim Sweeney praised the ruling in a post on X, saying it would enable the company to offer its Epic Games Store through Google Play. It's difficult to determine how much impact the Google Play restructuring will have on the company's bottom line, as Alphabet doesn't separate app store revenue in its earnings.

But Mandeep Singh, an analyst with Bloomberg Intelligence, said in a note last year that the increased use of third-party billing systems by media and gaming companies poses a greater threat to Google than competing app stores. "In a worst-case scenario, this could result in a 20-30% decline in the App Store's roughly $50 billion in total sales, mostly subscriptions, which could be a $1 billion to $1.5 billion hit to the company's overall revenue, based on our estimates," Singh said. In December 2023, a jury ruled in favor of Epic Games in its lawsuit, which alleged that Alphabet Inc. set restrictive policies for the Google Play Store and engaged in anticompetitive behavior by paying phone manufacturers and popular app developers to use its app store exclusively. Following the ruling, U.S. District Judge James Donato in San Francisco ruled last year that Google should be more cooperative with its competitors.

Google's lawyers argued in the appeal that Judge Donato should have followed the example of another judge who ruled against Epic in 2021 in its case regarding Apple's App Store policies. The appeals court rejected that argument on Thursday. The antitrust battle between Google and Epic Games has escalated as the tech giant faces increasing scrutiny of its business practices from regulators around the world.

A federal judge in Washington is scheduled to rule next month on the changes Google must make to its online search business, after the court found the company unlawfully monopolizing the search and advertising markets. A federal judge in Virginia will hold a hearing in September to consider whether Google should be forced to sell part of its online advertising business.