Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Alphabet has been ordered to open its Android operating system to rivals, allowing them to create their own app marketplaces and payment systems to compete with its dominant Google Play Store, in the latest blow for the search giant that has lost recent antitrust cases.
A federal judge in San Francisco ordered the changes on Monday following a successful lawsuit from Epic, the maker of popular video game Fortnite, which argued Google suppressed competition in Android apps and used its monopoly to charge excessive fees.
US district judge James Donato issued an injunction that bans Google from paying developers to “launch an app first or exclusively” in the Play Store and can no longer force customers to use its in-house billing system, which charges fees of as much as 30 per cent.
Additionally, Google can no longer strike revenue share deals with mobile device manufacturers such as Samsung and LG to preinstall Play Store prominently on their home screens — or pay them not to preinstall a rival Android app distribution platform — under the injunction, which takes effect on 1 November and lasts for three years.
Google must also allow third-parties access to its app library for that period of time in order for them to build a legitimately competitive product. Epic had argued in the lawsuit that Google paid off network operators such as AT&T and T-Mobile, and game developers such as Activision Blizzard, to prevent them from launching Play Store rivals.
The ruling gives Epic most of what it sought in the case and could potentially affect a lucrative stream of revenue for Google, which made an operating profit of $12bn from its Play Store in 2021 alone, according to evidence presented in the case (the company does not routinely disclose performance of its Play unit). Alphabet shares fell 2.3 per cent after the news.
Google said it will appeal against the verdict and asked the changes be put on hold, arguing they would put customers’ privacy and data security at risk. “The Epic verdict missed the obvious: Apple and Android clearly compete,” the company said of the underlying judgment.
The injunction could have a wider impact on the strict controls that Big Tech groups wield in their mobile app stores. Epic lost a related case against Apple in 2021, when a California judge concluded the iPhone maker did not break the law by imposing rules that block rival stores and payment methods on its devices. The ruling was upheld by an appeals court; Epic is seeking a US Supreme Court review.
Epic chief executive Tim Sweeney said on X: “All app developers, store makers, carriers, and manufacturers have 3 years to build a vibrant and competitive Android ecosystem with such critical mass that Google can’t stop it.”
“The court’s injunction applies to the United States only, so the legal and regulatory battle will continue around the world,” Sweeney added.
In August 2020, the games maker deliberately circumvented Apple and Google’s payment rules, resulting in Fortnite being removed from their respective stores.
The app store is just one of the antitrust battles that Google is defending. In August, it lost a case against the US Department of Justice for running a monopoly in online search. On Tuesday, the DoJ will propose remedies which could be as drastic as breaking up the company.
Furthermore, the DoJ is also suing Google for its alleged monopolistic control over digital advertising, with the future of its $20bn ad tech business at stake. The trial started last month in Virginia.
