Google trial focused on app store payments to be handed off to jury

A federal court jury is poised begin its deliberations in an antitrust trial focused on whether Google's efforts to profit from its app store for Android smartphones have been illegally gouging consumers and stifling innovation.

Before the nine-person jury in San Francisco starts weighing the evidence on Monday, the lawyers on the opposing sides of the trial will present their closing arguments in a three-year-old case filed by Epic Games, the maker of the popular Fortnite video game.

The four-week trial included testimony from both Google CEO Sundar Pichai, who sometimes seemed like a professor explaining complex topics while standing behind a lectern because of a health issue, and Epic CEO Tim Sweeney, who painted himself as a video game lover on a mission to take down a greedy tech titan.

 

Epic alleged that Google has been exploiting its wealth and control of the Android software that powers most of the world's smartphones to protect a lucrative payment system within its Play Store for distributing Android apps. Just as Apple does for its iPhone app store, Google collects a 15-30 per cent commission from digital transactions completed within apps a setup that generates billions of dollars annually in profit.

Google has staunchly defended the commissions as a way to help recoup the huge investments it has poured into building into the Android software that it has been giving away since 2007 to manufacturers to compete against the iPhone and pointed to rival Android app stores such as the one that Samsung installs on its popular smartphones as evidence of a free market.

Epic, though, presented evidence asserting the notion that Google welcomes competition as a pretense, citing the hundreds of billions of dollars it has doled out to companies such as game maker Activision Blizzard to discourage them from opening rival app stores.

The jury's verdict in the case will likely hinge on how the smartphone app market is defined. While Epic has been contending Google's Play Store is a de facto monopoly that drives up prices for consumers and discourages app makers from creating new products, Google drew a picture of a broad and fiercely competitive market that includes Apple's iPhone app store in addition to the Android alternatives to its Play Store.

Google's insistence that it competes against Apple in the distribution of apps despite the company's reliance on incompatible mobile operating systems cast a spotlight on the two companies' cozy relationship in online search the subject of another major antitrust trial in Washington that will be decided by a federal judge after hearing final arguments in May.

The Washington trial centres on US Justice Department allegations that Google has been abusing its dominance of the online search market, partly by paying billions of dollars to be the automatic place to field queries placed on personal computers and mobile devices, including the iPhone.

Evidence presented in both the San Francisco and Washington revealed Google paid USD 26.3 billion in 2021 for its search to be the default choice on a variety of web browsers and smartphones, with the bulk of the money going to Apple.

Without providing a precise dollar amount, Pichai confirmed Google shared 36 per cent of its revenue from searches in the Safari browser with Apple in 2021.

Epic's lawsuit against Google's Android app store mirror another case that the video game maker brought against Apple and its iPhone app store. The Apple lawsuit resulted in a monthlong trial in 2021 amid the pandemic, with Epic losing on all its key claims.

But the Apple trial was decided by a federal judge as opposed to a jury that will hand down the verdict in the Google case.