Google’s App Store Monopoly Upheld by Appeals Court

• A federal appeals court has affirmed a jury’s verdict against Google, ruling its Android app store is an illegal monopoly, paving the way for a major overhaul.

A federal appeals court has upheld a jury verdict that condemned Google’s Android app store as an illegal monopoly. This decision paves the way for a federal judge to enforce a potentially significant shakeup designed to offer consumers more choices. The unanimous ruling from the Ninth Circuit Court of Appeals represents another legal setback for Google. This is the third time since late 2023 that a major pillar of its business has been declared an illegal monopoly following separate antitrust trials.

The unsuccessful appeal marks a substantial victory for Epic Games, the developer of the popular game Fortnite. Epic initiated legal battles against both Google’s Play Store and Apple’s App Store almost five years ago. The company sought to bypass the exclusive payment processing systems that imposed commissions ranging from 15% to 30% on in-app transactions. The December 2023 jury verdict against Google’s app store began a series of legal defeats for the tech giant.

A Series of Antitrust Setbacks

The jury’s ruling against the Play Store was followed by monopoly judgments against Google’s search engine and its digital ad network. While not as large as the search or ad businesses, the Play Store has been a lucrative source of revenue for Google, generating billions of dollars annually. The company profited by taking a 15% to 30% cut from in-app transactions processed through its proprietary payment system. The jury concluded that Google had rigged its system to prevent competing app stores from offering better deals to both consumers and developers.

Following the verdict, U.S. District Judge James Donato ordered Google to remove the digital barriers protecting the Play Store from competition. Google quickly appealed, seeking to overturn the jury’s finding and void the judge’s mandate. However, a three-judge panel rejected Google’s argument. The panel dismissed the company’s claim that Judge Donato had erred by allowing the case to proceed with a jury that defined the market differently than in a related case against Apple.

The Path Forward for Android

Epic’s lawsuit presented substantial evidence showing that Google’s anti-competitive practices entrenched its market dominance. This dominance was further strengthened by what is known as “network effects,” as the judges noted in their decision. In response, Google’s Vice President of Regulatory Affairs, Lee-Anne Mulholland, expressed disappointment. She warned that the ruling “will significantly harm user safety, limit choice, and undermine the innovation that has always been central to the Android ecosystem.” This statement reflects the company’s stance that the new regulations could expose users to increased privacy and security risks.

Unless Google can extend the delay on Judge Donato’s order, the company will have to begin a major overhaul. This will include making the Play Store’s extensive library of more than two million apps available to rival platforms. It will also require Google to actively help distribute these alternative app stores. Epic’s legal team has dismissed Google’s warnings as “scare tactics” aimed at protecting the profits of its parent company, Alphabet Inc.

Continued Legal Challenges for Google

Despite a partial loss in its case against Apple, Epic’s efforts led to a significant change. A judge ordered Apple to allow links to alternative payment systems for in-app transactions, though it did not declare Apple’s app store a monopoly. Meanwhile, Google still faces other legal challenges that could have an even greater financial impact. A federal judge is considering a U.S. Justice Department proposal that could force the sale of the Chrome web browser.

The proposal also seeks to ban the multi-billion dollar agreements Google has with companies like Apple to maintain its search engine as the default option. Google is also facing a potential breakup of its advertising technology business. The proposed measures are aimed at addressing its monopoly in that market. A trial on that specific proposal is scheduled to begin in September, adding to Google’s ongoing legal battles.