The fight over the lucrative app market ropes another manufacturer into the fray.
Nine months after persuading a jury that Google LLC had monopolized the markets for Android app distribution and in-app billing, Epic Games has filed a new antitrust suit against Google, this time adding Android manufacturer Samsung Electronics, for allegedly working with Google to maintain its monopoly in exchange for huge benefits flowing to Samsung (Epic Games, Inc. v. Samsung Electronics Co. Ltd; Samsung Electronics America, Inc.; and Google LLC, No. 3:24-cv-06843, N.D.Calif.).
Previously commenting on these cases, MoginRubin’s Jonathan Rubin wrote, “The question for antitrust is: At what point do … ‘marketplace platforms’ deserve to be treated as markets under the control of the platform operator? [E]ven private marketplaces organized within the confines of a private company should be subject to antitrust oversight.”
That is what happened in December 2023 when San Francisco jurors returned a verdict tagging Google as a monopolist. They also found Google liable for unreasonable restraints of trade through its developer distribution agreements with application developers; its mobile application distribution agreements and revenue sharing agreements with original equipment manufacturers (OEMs); its side-deals with app developers to keep them from challenging the Google Play Store monopoly; and its unlawful tying the use of Google Play Store to Google Play’s billing. The court has not yet decided on remedies.
The stage for the court battle was set when Epic knowingly broke Google’s developer distribution agreement. In 2020, Epic updated the popular Fortnite game app to allow players to buy software directly from gaming giant, bypassing Google’s fees on in-app purchases. Google then banned Fortnite, Epic sued, as did developers and others, and Epic prevailed at trial.
Samsung’s Payday
With the wind of a win at its back, Epic sued again on Sept. 30, 2024, repeating its accusations that Google is maintaining an illegal monopoly, but is doing so in collaboration with Samsung. Samsung has not actively competed with Google in app distribution despite being a major Android OEM, Epic says, adding that the two companies have had a close and lucrative relationship for more than a decade. Billions of dollars have flowed to the Android maker which agreed not use its own app platform, the Samsung Galaxy Store, to compete with Google’s Play Store, which Samsung and other OEMs are required to preload on Androids.
After Epic launched the Epic Games Store on Android to compete with the Play Store, Samsung introduced “Auto Blocker” on new phones to prevent users from accessing competing app sources. Epic says this was an obvious move to help Google maintain its dominance in app distribution.
Counts brought against Samsung and Google include violations of Sherman Act Section 1 for Unreasonable Restraint of Trade and Unlawful Group Boycott; Sherman Act Section 2 for Unlawful Conspiracy to Maintain a Monopoly; the California Cartwright Act for Unreasonable Restraint of Trade; and the California Unfair Competition Law for Unlawful and Unfair Agreement. Two counts were lodged against Samsung alone for violations of the California Unfair Competition Law for Unfair Practices and for Trade Libel/Commercial Disparagement under California law. The complaint, like the previous one, was filed in the Northern District of California.
Epic v. Apple Went Differently
Epic didn’t fare as well when it brought a similar case alleging that Apple Inc. monopolized the markets for sales and payment processing for iOS applications by requiring all iOS app sales and payments be transacted through Apple’s App Store (see our previous post on the Ninth Circuit opinion in that case by MoginRubin’s Tim LaComb).
On April 24, 2023, the Ninth Circuit largely affirmed a district court’s judgment that Epic failed to prove its antitrust claims against Apple, which challenged the iPhone company’s rules that: 1) restricted app distribution on iOS devices to Apple’s App Store; 2) required in-app purchases on iOS to use Apple’s in-app payment processor; and 3) limited the ability of app developers to communicate the availability of alternative payment options to iOS device users.
Despite finding several legal errors in the district court’s analysis, the Ninth Circuit upheld its ultimate conclusions that Epic failed to properly define the relevant market and provide a sufficiently specific less restrictive alternative for Apple to accomplish its procompetitive justifications for its restrictions.
EC Tough on App Platforms
Apple didn’t do as well in Europe, however. In March, the European Commission fined the company more than €1.8 billion ($2 billion) for allegedly abusing its dominant position in the market for the distribution of music streaming apps to iPhone and iPad users through its App Store. Apple drew the fine by restricting app developers from informing these iOS users about alternative and cheaper music subscription services available outside of the app. Anti-steering policies violate the European Union’s antitrust rules.
Google Play Store has also had a rough time in Europe. In 2018, the European Commission imposed a €4.34 billion ($5 billion) fine on the company for anticompetitive practices related to its Android mobile operating system. The Commission found that Google had engaged in practices that forced smartphone manufacturers to pre-install Google’s search app and Chrome browser as a condition for licensing Google’s Play Store.
A separate fine relating to Google’s online advertising practices was recently overturned. See the post.
U.S. v. Google
Meanwhile, trial of the remedies phase of the Department of Justice case against Google is under way in Washington, DC., following the judge’s June 20 decision finding the company liable for monopolizing the general search and search text advertising markets. The DOJ has filed a motion for contempt against Google, alleging that the company has failed to comply with the terms of the final judgment. Google has denied these allegations. The court is currently considering the DOJ’s motion and may issue additional orders or remedies to ensure Google’s compliance. The remedies phase of the case could continue for some time, as the DOJ and Google may engage in further legal battles over the implementation of the final judgment (United States, et al. v. Google LLC (No. 1:20-CV-3010-APM, D.D.C.).
Additional Reading
Read Jonathan Rubin’s commentary on the significance of the D.C. District Court’s decision in U.S. v. Google. Rubin has frequently commented on the antitrust enforcement agencies’ successful arguments that Google’s exclusive deals with smartphone manufacturers, browser developers, and wireless carriers amounted to anticompetitive conduct to maintain its search monopolies. In his recent post, he discusses behavioral remedies, which Google will likely prefer, and structural remedies, which would involve separating the company into smaller parts. Antitrust enforcers have voiced skepticism in recent years over whether behavioral remedies can be effective, he wrote.
Also, see Rubin’s article in Law360 on the subject. There, he comments that technological advancements may resolve the issue before the law does. “It is always a fraught situation when decisions in the fast-moving tech industry take a long time. In this case,” Rubin wrote, “the advent of artificial intelligence and the enhancement such technology could bring to general search services could alter the competitive landscape far more significantly than any court-ordered remedy.”