- Google’s loss and Sony’s $8 billion lawsuit over their monopolies are a step in the right direction for the industry.
- Victory in both cases means that digital stores will have to start charging lower commission rates on studios.
- Public reactions to these lawsuits have been mixed, with some in favor/against the points being made.
In a surprising turn of events, Epic Games and its CEO, Tim Sweeney, secured a significant victory against Google in a federal court, with the jury concluding that Google’s monopoly over the Android app store, Google Play, engages in anti-competitive practices harmful not only to consumers, but to developers too, similar to the ongoing Sony lawsuit.
Recently Sony too was hit with a whopping $8 billion lawsuit for holding a monopoly over its PlayStation store. Both the win against google and the Sony lawsuit has broader implications, not just for consumers but potentially for the entire digital app market dominated by tech giants.
Google just lost a major anti-trust case brought by Epic Games—the first ruling of this kind against Big Tech.
— System Update (@SystemUpdate_) December 13, 2023
Unveiling The Industry Giants’ Misconduct
The main point of Epic’s lawsuit against Google revolved around the tech giant’s alleged misuse of its monopoly in the Android ecosystem. Epic accused Google of striking exclusive deals with handset makers, leading to the collection of exorbitant fees from consumers on top of a 30% commission charged to devs themselves.
And to make matters worse, Google was also caught deleting records related to these secretive dealings during the trial. The jury’s unanimous verdict in favor of Epic Games indicates a recognition of Google’s violation of antitrust laws and monopoly power in the Android app distribution market.
The brazenness of Google executives violating the law, and then deleting all of the records of violating the law, that was really astonishing.” – Tim Sweeny.
It’s a similar story for the Sony lawsuit too. Consumer advocate Alex Neill brought this case against Sony’s UK branch for allegedly violating fair Competition Law. According to these laws, put in place by the British government to prevent monopolies, Sony has been overcharging its customers for digital games and in-game content.
This explains why some games are almost hitting the $100 mark on the PS Store nowadays. It suggests that Sony has been using its dominant position as the only marketplace on Play Station to set unfair prices. The harm extends to developers as well, since like Google, Sony too charges a 30% commission fee for each game.
A Shift in Power
The court’s decision could potentially reshape the landscape of the mobile app market, currently dominated by Google and Apple, with a combined worth of approximately $200 billion per year. Google’s loss may empower other antitrust challenges, including those initiated by the Department of Justice.
This ruling, coupled with the ongoing scrutiny of major tech companies, might pave the way for increased competition and a more equitable distribution of revenue among app developers. The gaming industry stands to benefit from potential changes that could provide developers with a more significant share of the revenue pie.
Let's talk about the recent ruling in favor of @EpicGames against Google.
How does this impact the current mobile app landscape and more specifically @solanamobile ?
— Justin (@justinzard) December 18, 2023
Likewise, although Sony’s lawsuit has only just begun taking shape, Google’s loss can be used by Neill and her fellow solicitors at Milberg Law LLP. It’s going to be a significant talking point in the case because it proves that their point is valid. However, it does feel weird that only Sony’s being singled out despite the fact that Microsoft has similar practices and commission rates.
Still, if the case goes in Neill’s favor, it will set the stage for a bigger suit against other console giants. Sony’s been tight-lipped about the whole drama so far, aside from calling it “flawed from start to finish”. However, the lengthy nature of cases under Competition law means that it’s going to be years until we see a conclusion to all the drama.
Why Did Epic Lose To Apple Then?
Epic Games’ lawsuit against Google yielded a markedly different outcome compared to its parallel effort against Apple. While the Google case ended with a unanimous jury verdict in Epic’s favor, the legal battle against Apple resulted in a less favorable outcome, with Epic losing nine out of ten counts in 2021. Sweeney attributes this disparity to several factors.
First, obtaining internal documentation from Apple proved nearly impossible. Additionally, Apple and Google are fundamentally different in how they operate. Apple’s vertically integrated monopoly approach blocks competition at a technical level. Meanwhile, Google was engaged in anti-competitive deals and deleting records of the dealings.
The big difference between Apple and Google is Apple didn’t write anything down.” – Tim Sweeney
The Apple lawsuit wasn’t a complete loss though. As a result, the European Commission passed a new law that will force Apple to stop operating in a “closed environment”. This means that for games where you can make in-game purchases, users will be able to make the purchases from outside the app store, avoiding the extra fees.
While mobile gamers might’ve gotten a win in these cases, something like this isn’t possible for console gamers. This is because companies like PlayStation are consoles in and of itself. There’s no way for studios to sell digital copies of games or addons (DLCs etc) from any other sources unless they stick to selling physical copies instead of course.
Google’s Response And Investor Sentiment
Unsurprisingly, Google has announced its intention to appeal the verdict, asserting that Android and Google Play offer more choice and openness than other major mobile platforms. While the trial highlighted Google’s competition with Apple, Google remains committed to defending its Android business model.
Despite the potential impact on Google’s app business, investors seem relatively unfazed. Google’s stock experienced a minimal decrease of less than 1% during the session following the verdict. Analysts from Wells Fargo estimate Google’s business revenue to be around $38.5 billion annually, marking the market’s confidence in the tech giant.
Implications For Google And Developers
As the legal dust settles, attention turns to what changes Google might be compelled to make. U.S. District Judge James Donato will hold hearings in January to determine the necessary modifications to Google’s practices. Potential alterations, such as opening up billing and distribution options outside of the store, are on the table.
Epic Games, for its part, aims to advocate for lower fees, alternative platforms, and reduced warnings about installing software from the internet. Tim Sweeney, however, expresses skepticism about immediate change, suggesting that if Google resists, Epic Games may consider severing ties with Google’s services.
I’m not sure if we’ll ever be back on Play. That is very much dependent on a bunch of Google decisions.” – Tim Sweeney.
Public Reactions To Sony’s Lawsuit
While you can draw parallels to the Epic vs. Google and Apple cases, the Sony lawsuit is unique because of its potential implications for a major section of the community. PlayStation is the most dominant console on the market, after all. Niell also held an AMA (Ask Me Anything) on Reddit, and the sentiments were divided, to say the least.
Like some, I too believe that you have a choice in purchasing the games that you want to play. Still, it’s a bit unfair to know that corporations can raise the price of a game just because they put it on display on a digital storefront. But hey, if the lawsuit leads to lower prices in the long run, then I don’t really have any problem with it.
Some users also pointed out the fact that the Epic Games store only charges between 8-10% in commission on their store. So it’s possible for an industry giant like Sony to lower their rates as well, right? Not really, because you have to consider the fact that even the Epic Game Store head, Steve Allison, stated that they’ve yet to make any substantial profit.
A Potential Paradigm Shift For Gamers
In conclusion, Epic Games’ triumph over Google in the courtroom and Sony’s ongoing lawsuit has set the stage for a potential major shift in the digital gaming market. The ruling not only underscores the need for accountability among tech giants but also signals a victory for developers and, by extension, gamers.
The push for lower fees, alternative platforms, and increased transparency in dealings could foster a more competitive environment, allowing developers to thrive and offering consumers a broader array of choices. As the legal battle unfolds, the gaming community eagerly awaits the positive repercussions that may emerge from these landmark victories.
On a side note, here’s our take on how monopolies can change the face of gaming as we know it.
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