Dive Brief:
- Tech titan Microsoft wants a federal court to preserve an injunction that required rival Google to end its illegal monopoly in the Android apps market, including over payments, as part of protracted litigation involving Fortnite maker Epic Games.
- Microsoft’s friend-of-the-court brief, filed Jan. 16, came ahead of a Thursday hearing in U.S. District Court in San Francisco, at which Google and Epic executives teamed up to request that U.S. District Judge James Donato modify his October 2024 permanent injunction designed to remedy Google’s antitrust violations. The decree – to settle Epic’s 2020 lawsuit against Google – requires Google to give app makers access to its Android ecosystem and allow the use of external payment tools.
- “The Court should be alert to the possibility that the modification is designed to enhance Google’s ability to earn supracompetitive profits while delivering other benefits to Epic,” Microsoft said in its brief. On Wednesday, lawyers for the Federal Trade Commission also weighed in on the matter, emphasizing that a deal Epic favors may not necessarily benefit the public interest.
Dive Insight:
In November, Google and the game maker announced a “comprehensive settlement” to end a five-year legal battle over access to Google’s Play Store for Android apps and the use of third-party billing tools within Google’s operating system.
The settlement appears to involve a new business partnership between Epic and Google over Epic’s Unreal Engine technology – valued at $800 million over six years, The Verge reported Thursday, citing testimony from the hearing. Unreal Engine is a set of tools for game developers to create immersive gaming environments.
Donato suggested Thursday that the business deal is contingent upon court approval of the settlement, the technology publication reported. The judge allowed the companies to keep most of the details of their arrangement confidential.
Before Epic’s lawsuit, filed in August 2020, Google had imposed a 30% revenue-share mandate on sales through its apps store. Epic brought a similar, concurrent action against Apple.
Under the revised injunction Google and Epic have proposed, Google would be able to charge fees of 9% to 20%, with the latter applied to gaming purchases. The settlement with Epic would also allow Google to mandate its Play store billing method be included along with an alternate payment option, according to court filings.
That arrangement defeats the injunction’s purpose, Microsoft alleged.
“If a developer is forced to implement Google Play Billing as a condition of access to the Play Store, the developer has much less incentive to implement an additional form of in-app payment,” the company said. “Developers quickly saw that Google’s new fee structure will make it uneconomic to employ alternative billing methods.”
The proposed agreement – which is contingent upon Donato changing the injunction – came a month after the U.S. Supreme Court declined to hear Google’s appeal. Last July, the Ninth Circuit Court of Appeals affirmed the 2023 federal jury verdict in Epic’s favor and the terms of Donato’s injunction.
Before ruling on the settlement, Donato sought briefings from the FTC and appointed an MIT economics professor as an expert witness to assist the court’s review of the matter. He also allowed the filings of briefs from third parties, including Microsoft.
“The purpose and effect of the (modification) proposal is to permit what the injunction prohibits: requiring developers to implement Google Play Billing as a condition of access to the Play Store,” Microsoft lawyers wrote. “There is zero justification for reversing this Court’s injunction, and doing so would be against the public interest.”
Epic, based in Cary, North Carolina, said Tuesday that its games app is now available on Google Play worldwide.
