Federal judge orders Google to open its Android app store to competition
SAN FRANCISCO– A federal judge on Monday ordered Google to tear down the digital walls that protect the Android App Store from competition, as punishment for maintaining an illegal monopoly that has helped expand the company’s Internet empire.
The order issued by U.S. District Judge James Donato will require Google to make several changes that the Mountain View, California-based company opposed. These include a provision that requires the Play Store for Android apps to distribute competing third-party app stores so that consumers can download them to their phones if they wish.
The judge’s order will also open up the millions of Android apps in the Play Store library to rivals, allowing them to offer a competitive selection.
Donato gives Google until November to implement the changes dictated in his order. The company had insisted that it would take 12 to 16 months to design the security measures needed to reduce the chance of potentially malicious software getting into competing Android app stores and killing millions of Samsung phones and other mobile devices running the free Android software running, infects.
The court-ordered review is intended to prevent Google from foreclosing competition in the Android app market as part of an effort to protect a commission system that has been a boon to one of the world’s most wealthy companies and has helped increase the market value of his company. parent company Alphabet Inc. up to $2 trillion.
Google writes this in a blog post that it will ask the court to pause the pending amendments, and will appeal the court’s decision.
Donato also ruled that for a three-year period ending November 1, 2027, Google cannot share Play Store revenues with anyone who distributes Android apps or is considering launching an Android app distribution platform or store. It is also not allowed to pay developers or share revenue so that they launch an app first or exclusively on the Google Play Store, and cannot make deals with manufacturers to pre-install the Google Play Store in a specific location on an Android device. It also won’t be able to require apps to use its billing system or tell customers they can download apps elsewhere and possibly cheaper.
The Play Store has been making billions of dollars annually for years, mainly through 15% to 30% commissions that Google charges on digital transactions completed within Android apps. It’s a similar compensation structure to the one Apple has in its iPhone App Store — a structure that prompted video game maker Epic Games to file antitrust lawsuits four years ago in an effort to promote competition that could help drive down prices for app makers alike as consumers.
A federal judge usually the Apple side in a September 2021 decision that was upheld by an appeals court. Still, a jury favored Epic Games after completing a four-week trial that concluded last year and handed down a verdict that labeled the Play Store an illegal monopoly.
That early another round of hearings this year to help Donato determine what steps should be taken to restore fair competition. Google argued that Epic Games was seeking extreme changes, saddled the company with costs that could reach $600 billion. Epic claimed that Google could level the playing field for just $1 million. It is unclear how much the changes ordered by Donato will cost Google.
Although Epic lost its antitrust case against Apple, Donato’s ruling could still have a ripple effect on the iPhone App Store as another federal judge weighs whether Apple makes it easy enough to promote different ways for consumers to pay for digital transactions. Apple was ordered to allow in-app links to alternative payment systems as part of U.S. District Judge Yvonne Gonzalez Rogers’ decision in that case, but Epic claims that provision is undermined by the creation of another commission system that hinders consumer choice.
The upcoming Play Store shakeup could be just the first unwanted shock that antitrust law brings to Google. In the largest antitrust case brought by the U.S. Department of Justice in a quarter century, U.S. District Judge Amit Mehta said in August that Google dominant search engine is an illegal monopolyand is now preparing for hearings on how Google can be punished for that bad behavior. Google is appealing Mehta’s ruling in the search engine case, hoping to avert a fine that could hurt its business even more than the changes ordered to the Play Store.
“Provided the ruling survives the appeal process, Google will almost certainly suffer a revenue hit,” said Emarketer analyst Evelyn Mitchell-Wolf. “No doubt some of the biggest app developers, like Epic Games, will encroach on Google Play Store market share, meaning Google will miss out on the usual discounts on subscriptions and in-app purchases.”
The analyst added that while the Google Play Store will likely continue to benefit from brand recognition because it was the default Android app store for so long, “some consumers may be turned away if they can get better deals on their favorite apps elsewhere.” And app developers will likely take advantage of the opportunity to notify consumers about direct downloads.
“So Google may see less Play Store revenue, even among Android users who adhere to the standard,” Mitchell-Wolf said.
Shares of Alphabet fell $4.08, or 2.4%, to close Monday at $162.98.