Android app makers suing to stop Google from siphoning up to 30% of their sales received little reassurance about their chances in court as a judge allowed a comparable fee charged by Apple to stand.
Developers including Fortnite game maker, Epic Games over the last one year, have been fighting to get the two biggest mobile app stores, run by Apple and Google to reduce their fees.
The developers view the 30% fee as needlessly high, costing developers collectively billions of dollars a year, and a function of the two big tech companies having monopoly power.
Google’s trial is at least a year away, but in a ruling on Friday following a trial between Epic Games and Apple, US district judge Yvonne Gonzalez Rogers required Apple to let developers tell customers about ways to pay outside of its App Store, leading Apple shares to fall 3.3%. Google parent Alphabet also dropped 1.9%.
Google’s Play Store employs rules similar to the ones struck down in the Apple case, limiting developer communications with their customers.
Tom Forte, an analyst at D.A. Davidson, said Google could be at risk, too. He also noted the remaining risk of new regulatory action by lawmakers.
Fees
But the judge in Apple’s case allowed some of the biggest rules developers complained about to stand unchanged. Those rules, including that in-app payments be made on Apple’s own system, allow the company to collect its 15-30% fee.
Apple general counsel Katherine Adams told reporters that her company was “extremely pleased”. Epic CEO Tim Sweeney wrote on Twitter: “Today’s ruling isn’t a win for developers or for consumers.”
Vanderbilt Law School professor Rebecca Haw Allensworth said she agreed Gonzalez Rogers’ findings were discouraging for the case against Google, while Valarie Williams, an antitrust partner at law firm Alston & Bird, said Google “will likely be encouraged by the ruling”.
Google has made similar arguments of privacy and security benefits as justification for its rules and fee.
The judge said the Apple restrictions allow users to rest assured that the apps they buy for the most part are free of viruses and pornography and that what they paid for will be delivered.
“App distribution restrictions increase security in the ‘broad’ sense by allowing Apple to filter fraud, objectionable content and piracy during app review while imposing heightened requirements for privacy,” Gonzalez Rogers wrote.
Apple’s fee leads to “extraordinary profits”, according to her ruling. But if she forced Apple to ease restrictions, the company might struggle to gain any remuneration for providing a platform to developers, she said. Apple’s selling point to consumers about having strong security and a centralised system also would be undermined, the judge added.
Its 30% rate, she said, was set “almost by accident when it first launched the App Store” rather than as a result of market power.
Google has made similar arguments of privacy and security benefits as justification for its rules and fee, and it has long followed Apple’s lead on commission levels, Google documents revealed in lawsuits show.
With Google’s smaller share in the US mobile app market, plaintiffs may have to reframe arguments to succeed against Google. Gonzalez Rogers said Epic’s challenge of any commission at all was an unreasonable position versus Apple, and that Epic failed to offer clear evidence of the iPhone maker being a monopolist.
Tweaked arguments may not be enough. The case against Google has been more difficult from the start. Google makes it possible to install apps from other sources, taking away from the monopoly argument. It also historically has been more lenient in enforcing some of its policies.
Google, Epic and attorneys for other developers suing the Play store operator declined to comment. Utah’s attorney-general, which is helping lead a related lawsuit by US states, said it is reviewing the judgment.
