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Fortnite-maker Epic has accused Google of abusing power in the Android apps market by charging fees for Google Play Store use, forcing its own payment system, and stifling competition, and now the antitrust trial is on the floors at the US court in San Francisco. The first day of the antitrust trial between Epic Games and Google concluded following opening statements and testimony from two witnesses.
The trial opened with Epic’s lead attorney, Gary Bornstein, presenting a chart indicating that in 2020, Google Play Store accounted for 90% of apps installed, while Samsung’s app store was installed on only a small percentage of Android smartphones. Bornstein argued that Google pays competitors not to compete and gives them money and other incentives, which he believes is anti-competitive.
Despite Google’s argument that it allows “sideloading” of apps, where users can use a browser to install apps, Epic argued that Google discourages users who consider sideloading. Epic also claimed that Google’s 30% fee on app store sales amounts to $12 billion a year and carries a 70% profit margin, which is much higher than the 24% margin in 2014.
Google’s Project Hug
According to Bornstein, Google’s codename for these deals was Project Hug, which allegedly paid developers, such as Riot Games, not to compete with the Google Play Store. Bornstein also addressed Google’s accusation that Epic’s Project Liberty was an unfair trap, stating that Epic admitted to making a hotfix update to enable alternative payments and sideloading without informing Google or Apple, but it caused no consumer harm.
The judge allowed Epic to say that Google employees, including CEO Sundar Pichai, set some of their chats to “auto-delete” to keep them out of the evidence trail. Finally, Bornstein argued that Google didn’t need to engage in these anti-competitive acts to protect its fledgling app store in 2019. Rather, it was intended to protect its monopoly. He also stated that Google doesn’t have a monopoly on making app downloading secure and that sideloaded apps don’t represent a real security threat.
Google Play Store’s 30% fee is a “market fee,” says Google attorney
Google’s attorney, Glenn Pomerantz, came next, arguing that the market definition is crucial in such cases. Google competes with Apple, and every Samsung phone comes with two app stores on the home screen, giving users a choice. Google claims that its Anti-Fragmentation Agreements (AFA) are necessary for Android developers to save time and money.
Google charges a 30% fee, which Pomerantz calls a market fee, not a monopoly fee. The Play Store and Android offer more than just simple payment processing fees. Pomerantz also disputed that Riot Games could not open a competing app store if it wanted to and that just because Google deleted some chats, it didn’t mean that the company violated antitrust laws.
Epic’s head of the game store appeared as the first witness
Steve Allison, the first witness for Epic, testified that the opportunity to disrupt Steam‘s higher royalty with Fortnite was the reason for the launch of the Epic Games Store. Steam’s 30% royalty was based on physical retail markup, not on any particular costs.
Allison previously helped Telltale Games keep 95% of revenue, but Epic’s 12% royalty still hasn’t made the Epic Games Store profitable.
After Epic’s launch, Valve’s Steam, Microsoft’s Windows, and Discord all gave more money to developers. During cross-examination, Google’s attorney questioned Allison about Epic’s warnings against downloading its game launcher from other sources and Epic’s fee for its store being for access to Epic’s audience.
During the trial, Benjamin Simon, the developer of Yoga Buddhi, stated that Apple had repeatedly rejected his app for violating their rules against “steering” customers to sign up outside the app store. This practice is considered anti-competitive, as highlighted by a previous court ruling in the App case.
On Google Play, Simon charges $60 per year or $10 per month for his app, Down Dog. However, on his own website, he only charges $40 per year or $8 per month. Simon also revealed that after Google forced him to remove an in-app button that advertised a way to pay less on an alternative website, 28% fewer potential users decided to pay for his app at all.
Google attempted to discredit Simon’s testimony during cross-testimony.
This was just the first day of the trial. In the coming days of the Epic vs Google case, it is expected that both CEOs will be called as witnesses, with Google CEO Sundar Pichai and Epic CEO Tim Sweeney leading the way. Google has also stated that its current Android (and Chrome, and Chrome OS) boss, Hiroshi Lockheimer, and representatives from Apple, Netflix, Motorola, and AT&T may also testify.
The trial opened with Epic’s lead attorney, Gary Bornstein, presenting a chart indicating that in 2020, Google Play Store accounted for 90% of apps installed, while Samsung’s app store was installed on only a small percentage of Android smartphones. Bornstein argued that Google pays competitors not to compete and gives them money and other incentives, which he believes is anti-competitive.
Despite Google’s argument that it allows “sideloading” of apps, where users can use a browser to install apps, Epic argued that Google discourages users who consider sideloading. Epic also claimed that Google’s 30% fee on app store sales amounts to $12 billion a year and carries a 70% profit margin, which is much higher than the 24% margin in 2014.
Google’s Project Hug
According to Bornstein, Google’s codename for these deals was Project Hug, which allegedly paid developers, such as Riot Games, not to compete with the Google Play Store. Bornstein also addressed Google’s accusation that Epic’s Project Liberty was an unfair trap, stating that Epic admitted to making a hotfix update to enable alternative payments and sideloading without informing Google or Apple, but it caused no consumer harm.
The judge allowed Epic to say that Google employees, including CEO Sundar Pichai, set some of their chats to “auto-delete” to keep them out of the evidence trail. Finally, Bornstein argued that Google didn’t need to engage in these anti-competitive acts to protect its fledgling app store in 2019. Rather, it was intended to protect its monopoly. He also stated that Google doesn’t have a monopoly on making app downloading secure and that sideloaded apps don’t represent a real security threat.
Google Play Store’s 30% fee is a “market fee,” says Google attorney
Google’s attorney, Glenn Pomerantz, came next, arguing that the market definition is crucial in such cases. Google competes with Apple, and every Samsung phone comes with two app stores on the home screen, giving users a choice. Google claims that its Anti-Fragmentation Agreements (AFA) are necessary for Android developers to save time and money.
Google charges a 30% fee, which Pomerantz calls a market fee, not a monopoly fee. The Play Store and Android offer more than just simple payment processing fees. Pomerantz also disputed that Riot Games could not open a competing app store if it wanted to and that just because Google deleted some chats, it didn’t mean that the company violated antitrust laws.
Epic’s head of the game store appeared as the first witness
Steve Allison, the first witness for Epic, testified that the opportunity to disrupt Steam‘s higher royalty with Fortnite was the reason for the launch of the Epic Games Store. Steam’s 30% royalty was based on physical retail markup, not on any particular costs.
Allison previously helped Telltale Games keep 95% of revenue, but Epic’s 12% royalty still hasn’t made the Epic Games Store profitable.
After Epic’s launch, Valve’s Steam, Microsoft’s Windows, and Discord all gave more money to developers. During cross-examination, Google’s attorney questioned Allison about Epic’s warnings against downloading its game launcher from other sources and Epic’s fee for its store being for access to Epic’s audience.
During the trial, Benjamin Simon, the developer of Yoga Buddhi, stated that Apple had repeatedly rejected his app for violating their rules against “steering” customers to sign up outside the app store. This practice is considered anti-competitive, as highlighted by a previous court ruling in the App case.
On Google Play, Simon charges $60 per year or $10 per month for his app, Down Dog. However, on his own website, he only charges $40 per year or $8 per month. Simon also revealed that after Google forced him to remove an in-app button that advertised a way to pay less on an alternative website, 28% fewer potential users decided to pay for his app at all.
Google attempted to discredit Simon’s testimony during cross-testimony.
This was just the first day of the trial. In the coming days of the Epic vs Google case, it is expected that both CEOs will be called as witnesses, with Google CEO Sundar Pichai and Epic CEO Tim Sweeney leading the way. Google has also stated that its current Android (and Chrome, and Chrome OS) boss, Hiroshi Lockheimer, and representatives from Apple, Netflix, Motorola, and AT&T may also testify.
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