Another Bite at the “Apple”: Epic Games v. Google

by Audrey Rotman, Associate Member, University of Cincinnati Law Review Vol. 92

I. Introduction

Epic Games is back in court this year, taking on one of the tech giants—Google—over its alleged “tax” on Google Play Store purchases—the official and predownloaded app store of all Android devices.¹ This case follows Epic Games’ loss against Apple in case over a very similar fact pattern and claims of antitrust.² This time though, the case will be tried in front of a jury, rather than a judge, which gives Epic Games a better chance at success in court.³ Epic Games and Apple have also filed their appeal to the Supreme Court to take up their 2021 case that was recently affirmed in the Ninth Circuit.⁴ With a potential split in the rulings looming ahead, the Supreme Court might make the ultimate decision in the next year or two—ruling on whether Apple and Google have a monopoly on the market of app stores. If defined as a market monopoly, the decision may potentially open up the smartphone market to third-party app stores.

This article will discuss the differences between the Apple and Google cases, what the likely outcome of the Google case will be, and how the Supreme Court might rule on the two cases under antitrust law and the influence of the European Union (“EU”) regulations. Part II will provide background on the history of both the Apple and Google cases. Part III will discuss why the Google ruling might differ from the Apple ruling. This Part will further explore Apple’s stubborn compliance with the EU’s Digital Markets Acts and what the Supreme Court might ultimately hold if it does decide to grant certiorari to resolve a potential split in the law.

II. Background

Epic Games wants to break up the alleged monopoly that Google and Apple hold on the market of app stores and payment options for both consumers and app developers.⁵ Both cases rest on claims of antitrust and monopolistic business ventures, mainly those covered by the Sherman Antitrust Act.⁶ If the court were to find Google and Apple in violation of antitrust laws, the companies could be forced to open up their systems to third-party markets.

A. Antitrust Law

The general collection of federal antitrust laws in the United States includes the Sherman Act of 1890, the Clayton Act, and the Federal Trade Commission Act of 1914.⁷ Together, the legislation prohibits collusive practices that restrain trade, mergers and acquisitions that tend to create a monopoly, and general prohibition of monopolization.⁸ Most of Epic Games’ claims focus on the Sherman Antitrust Act (the “Sherman Act”) or California’s Cartwright Act.⁹ The Sherman Act is linked to the Congress’s power under the constitution to regulate interstate commerce.¹⁰ Any trust-formed company can be dissolved by the federal government if found to be monopolistic, with the goal of the Sherman act to ensure a competitive free market economy.¹¹

B. Current Case: Epic Games v. Google

Epic Games is suing Google under antitrust law, both under state and federal antitrust law.¹² While the case was filed very shortly after Epic’s case against Apple, it is just now seeing its day in court.¹³ Under Google’s current Play Store model, the tech company takes a fifteen percent fee of customer payments for app subscriptions and a thirty percent cut for in-app purchases.¹⁴ Furthermore, it is extremely difficult and time-consuming for consumers to uninstall the Google Play Store and attempt to install third-party app stores on Android devices.¹⁵ Google and Android have a deal in place that has the Google Play Store pre-installed on Android devices.¹⁶ Epic Games tried to bypass this fee system by allowing players of its famous game—Fortnite—to pay them directly for in-app purchases. Google subsequently barred them from the Play Store, sparking this litigation.¹⁷

Epic Games is claiming that Google’s Play Store monopoly stifles innovation among app developers and distributors and hurts consumers financially who must pay artificially higher prices created by Google’s pricing model.¹⁸ Epic Games argues that “as a result of its anticompetitive acts, Google faces no meaningful competition or threat of competition.”¹⁹ Part of Epic Games’ evidence includes Google forcing phone makers to pre-install its apps on their devices, as well as Project Hug, a Google program that paid off developers to keep using Google’s Play Store and payment system on their apps.²⁰ If Google loses this case and is found to have a monopoly on the market, it opens the potential for other companies to offer competing app stores, and it allows app developers like Epic Games to avoid the “Google tax.”²¹

C. Previous Case: Epic Games v. Apple

In 2021, Epic Games sued Apple under very similar circumstances.²² The gaming company accused Apple of monopolistic control of its app store after Fortnite was removed from the iOS app store for the same bypass of in-app purchases.²³ However, Apple is even more rigid than Google about the application store on its devices.²⁴ As a closed ecosystem, the iOS app store is the only option for iPhone users to download applications onto their iPhones.²⁵ There is no option to install third-party app store at all. While Apple technically “won” the case as it was allowed to ban Epic from its iOS app store and was not deemed a monopoly, the compromised ruling required Apple to remove policies that banned app developers from notifying customers about alternative payment options.²⁶ The Ninth Circuit affirmed the ruling in April 2023.²⁷ Both sides have appealed to the Supreme Court, who is expected to make a decision by January 2024 on whether it will take up the case.²⁸

III. Discussion

While the Apple case is not a binding precedent for the Google case, the Apple ruling still provides some insight into how the Google case might be resolved. But, if the Supreme Court decides to weigh in on technology development, an entirely new ruling could change the way tech companies are allowed to connect app stores to their devices, especially in light of what the EU requires of Apple and other tech companies.

A. What the Apple Case Means for Google

The ruling in the Google case, like in Apple, might come down to the definition of “market.” Much of the Apple case hinged on the definition of “market” and whether Apple had the market monopoly on games, mobile games, or video games.²⁹ If the court determines that Google and Apple each present an alternative option for consumers, then neither would be a monopoly as they are in competition with each other. If Android and Apple apps are their own market, then the court would find that Google and Apple each have a monopoly and would be forced to allow other app stores on their devices. This is similar to the landmark antitrust case—United States v. Microsoft Corp.—in which Microsoft was found to have violated the Sherman Act due to its monopolization of personal computers and internet browsers.³⁰ The same could be found here between application stores and tech companies.³¹

However, there are key differences in the cases that might mean the definition of market does not matter until the case reaches the Supreme Court. The first main difference is that the Apple case was decided by a judge, while the Google case will be determined by a jury.³² A jury trial means that the average California citizen will be scrutinizing Google’s behavior, not a judge with niche legal insight into antitrust jurisprudence. Consumers are wary of monopolies and how they ultimately affect their pockets when it comes to their phones and the games and applications they can access on these devices. This gives Epic Games an advantage with the support of consumers behind it.

The other difference is the way in which Apple and Google run their app stores. As Apple is the developer and marker of the iPhone, it unilaterally controls and restricts access to its own devices.³³ Google, however, has to go through a third-party—the maker of whatever phone uses the Google Play Store, which has typically been Android.³⁴ However, the ability to still sidestep, making the restrictions not absolute, might mean that the monopoly claim is not as strong in Google case. This is a disadvantage for Epic Games. It will all fall on the jury process and how each side is able to present its case to the average California citizen who will be determining if Google is running a monopoly with its Play Store.

B. Apple’s Compliance with the EU’s Digital Markets Act

While Apple is a closed ecosystem in the United States, it will soon open up its operating system to third parties in the EU in order to be in compliance with the Digital Markets Act (“DMA”), tech regulations introduced to create fair competition.³⁵ The EU’s legislation is the bloc’s attempt to prevent tech giants from dominating the market and forcing them to innovate faster in a competitive and rapidly-developing industry.³⁶ The DMA prevents phone manufactures from prohibiting the installation of third-party app stores, which is something currently forbidden on Apple devices worldwide.³⁷ Apple has until March 7, 2024, to make the change, or face financial petalites.³⁸

This is something that will be required in all EU countries, but the US could follow suit. Under the DMA, users will be able to decide what application stores they want their devices—not the companies.³⁹ While the US has introduced antitrust tech reform bills in the past few years, nothing substantial has come of it.⁴⁰ However, once Apple is required to successfully implement an open system in the EU, American legislatures might take note of the capabilities and propose new legislation, especially in the wake of fears over TikTok and other foreign tech monopolies that have already dominated the Congressional floors this past year.

C. What Will SCOTUS Say in the Future?

If the Supreme Court takes the Apple v. Epic Games appeal up in its next term, there are several ways in which the court could rule to regulate the industry. Apple argues that the lower court’s order is in violation of the Constitution as it oversteps the power of a federal judge.⁴¹ Epic has also appealed the ruling as Apple was not found to be engaging in monopolistic behavior.⁴² With both companies seeking a different result, it is clear that a new holding is necessary to resolve the iron fist that tech companies have on the application market.

Under the Sherman Act, the offense of monopoly power requires two elements: “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.”⁴³ In order to determine if Apple and Google are in possession of monopoly power in the relevant market, the court must define the meaning of the commercial activity that encompasses the relevant market.⁴⁴ Like in the Microsoft case, in which Microsoft applications—most importantly Internet Explorer—were tied to the operating system, the app stores under scrutiny are tied to Google and Apple.⁴⁵ Apple and Google are acting as monopolies in the app store market by dominating the phone market just like Microsoft was in operating systems. While Microsoft claimed that Internet Explorer was separate as a separate version was available for Mac users to download, the court still held that tying an internet browser and operating system was monopolistic behavior and violated the Sherman Antitrust Act.⁴⁶ Likewise, if Microsoft had continued to monopolize the web browser market, Firefox, Bing, Chrome, and Safari might’ve never existed. The same is true for small app store options that might offer better options to consumers, which will either force Apple and Google to change or put them out of business.

After a clear market monopoly is established, the plaintiff must show that the “defendant used anticompetitive methods to achieve or maintains its position.⁴⁷ Google’s deal with app developers—Project Hug—is arguably an anticompetitive method the tech company has used to keep its hold on the app store market.⁴⁸ By paying app game developers hundreds of millions of dollars, Google has financially incentive top game developers to stay on the Google Play store, an anticompetitive method that smaller app store companies could not afford to compete with.⁴⁹ In the Microsoft case, the company spent over four years preventing middleware technologies from eroding the application barrier and convinced developers to concentrate on Windows-specific APIs.⁵⁰ This predatory behavior mirrors Project Hug and the exclusionary acts that Google has achieved through financial incentivization. But for Google paying off developers, some might have turned to other app stores as alternatives for creative freedom.

The anticompetitive effects of allowing Apple and Google to continue to dominate the app store market will most likely be found to be in violation of monopolistic behavior. Antitrust lawsuits are often rooted in advancing an industry and promoting competition to drive innovation. By not allowing other app stores a fighting chance at even being installed on phones, there is no way to force companies like Apple and Google to develop what consumers want to drive innovation in the app store market. While each company individually might not dominate the market together, Google and Apple make up ninety-five percent of the app store market share.⁵¹ Microsoft also held ninety-five percent of the worldwide market share of Intel-compatible PC operating systems.⁵² This creates a substantial barrier to effective entry in the market that allowed Microsoft, and allows Apple and Google, to hold a monopoly on their respective markets.

IV. Conclusion

While Epic Games faces an uphill battle against Google and years of antitrust jurisprudence, the gaming company has a competitive edge with a jury, as well as with the controversy over Google’s third-party contracts with app developers and phone companies. With the previous Epic Games v. Apple case, as well as the EU’s Digital Market Act, setting the stage for what is possible and probable for app store markets, the Supreme Court might ultimately step in and make a decision, potentially mirroring its ruling in the 2001 United States v. Microsoft case and deeming Google and Apple to have monopolistic holds over app stores.

Cover Photo on Wikimedia Commons

Audrey Rotman

Audrey Rotman graduated from Furman University with a degree in German Studies and Communication Studies. Prior to law school, she worked in project management and journalism. Audrey is primarily interested in pursuing labor and employment litigation but is always open to expanding her knowledge in other areas of the law as well.

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