- A jury in the Northern District of California in Epic Games, Inc. v. Google LLP found that Google maintained an unlawful monopoly of the Google Play app store and Google Play Billing service in violation of Sections 1 and 2 of Sherman Act and California State law.1 Judge James Donato will decide remedies in 2024, which could have significant ramifications because Epic did not seek monetary damages and only requested injunctive relief. The parties will reconvene in January on post-trial issues, including remedies. Regardless of the ultimate remedies imposed by Judge Donato, there will likely be an extensive push to stay any remedies pending an inevitable appeal.
- Although Epic lost to Apple on all but one count on similar claims in an earlier decided lawsuit, Google markets itself as an open-source operating system that is intended to interoperate with a wide range of devices and Google was forced to reconcile why its various agreements restricted interoperability despite its claim to have an open platform.
- The decision comes as Google is defending against two other landmark antitrust cases brought by the Department of Justice over Google’s alleged dominance in search and search advertising technology. Last month, the DOJ concluded the evidentiary phase of its search trial with closing arguments set for May 2024.2 The DOJ’s search advertising technology case is expected to go to trial in 2024, with a pre-trial conference scheduled on January 18, 2024.3
Introduction
After less than four hours of deliberation, the jury in Epic v. Google delivered a unanimous verdict on all counts that Google unlawfully maintained a monopoly over the Google Play Store and Google Play Billing.4 The ruling comes more than three years after Epic first filed separate antitrust lawsuits against Apple and Google.5 Epic’s case against Google was later consolidated with four similar lawsuits brought by 39 attorneys general, a class of consumer plaintiffs, a class of developer plaintiffs, and Match Group.6 The ruling also comes 8 months after the Ninth Circuit affirmed a Northern District of California ruling in Epic v. Apple, which Epic largely lost with the Court finding in favor of Apple on all but one count.7
The ruling is also significant because, prior to trial, Google reached settlement agreements with the Developer Plaintiffs, Consumer Plaintiffs, State AGs, and Match Group.8 Those settlements likely permitted Epic to narrow and simplify its case for the jury contributing to Epic’s success on those claims.
Case History
This case centers on Epic’s challenge to Google’s contracts with app developers to: (1) restrict iOS app distribution to Google’s Play Store, (2) require in-app purchases to utilize Google’s payment processor, and (3) limit the ability of app developers to communicate the availability of other payment options to Android users. The lawsuit stems from Epic’s 2020 decision to implement its own in-app payment system for its popular game, Fortnite, which evaded Google’s and Apple’s 30% commission charged for use of Google Play Billing and Apple Pay, respectively.
After Google banned Fortnite from the Google Play Store for violating its Play Store policies, Epic brought claims against Google under Sherman Act §§ 1 and 2 and under California state law alleging Google maintained an unlawful monopoly, unreasonably restrained trade, and engaged in an unlawful tying arrangement between the Google Play Store and Google Play Billing.
Market Definition and Market Power
Despite Google’s CEO Sundar Pichai testifying that Google did not have an app store monopoly and that Google competes “fiercely” with Apple,9 the jury found that Google unlawfully monopolized both the Android app distribution market and the market for Android in-app billing services for digital goods and services.10 To make this finding, the jury was required to find that the relevant markets were valid, Google possessed monopoly power in those markets, Google willfully acquired and maintained its monopoly power in the relevant market by engaging in anticompetitive conduct, and Epic was injured because of Google’s conduct. The jury answered “yes” to each element.11
Foreclosure and Harm
In its opening statements, Epic told the jury that Google has “harmed consumers who have less choice and pay more [and] it has harmed app developers like Epic.”12 Epic argued that this conduct resulted in higher prices, lower quality, and less choice while permitting Google to make billions in profit including 30 percent on all revenue from app downloads. For example, testimony at trial included lower-cost in-app payment processing solutions that could be offered to Android developers in addition to Google Play Billing “but for” Google’s Play Store policies. As a result, the jury found that Google’s conduct caused substantial harm to competition. Specifically, the jury found that Google’s agreements with developers and OEMs that sell mobile devices constituted an unreasonable restraint of trade in violation of Sherman Act § 1.13
Procompetitive Benefits
The jury was instructed to “balance any competitive harms . . . against any competitive benefits”.14 The jury instructions also provided that “[i]f the harms to competition resulting from Google’s conduct substantially outweigh the competitive benefits, then you must find that Google willfully acquired or maintained monopoly power through anticompetitive acts.”15
Google argued that its Google Play Store policies have several procompetitive benefits including added security for Android devices when apps are downloaded from the Play Store, and the ability for developers and consumers to access Google Play and Google Play Billing for free. Epic, by contrast, argued that any procompetitive benefits were outweighed by the substantial harm to competition of “systematically, deliberately, and unlawfully preventing all competition against the Google Play Store”.16 The jury, after the instruction, found the harm outweighed any procompetitive benefits.
Document Spoliation
The Epic trial also highlighted the importance of adequate document retention policies at the outset of litigation. At issue was the absence of Google employees’ “Chat” messages, which served as the company’s default instant-messaging platform.
Google’s standard, pre-litigation retention policy was that one-on-one chat messages were deleted after 24 hours unless the employee activated a “history on” setting, which extended retention for 30 days.17 After the lawsuit was filed, Google preserved one-on-one Chat messages where history had previously been turned on by the user.18 But for all other one-on-one communications, Google left it up to recipients of the legal hold to decide whether their Chats would be preserved.19 Google did instruct hold recipients that history should be turned on for any conversations related to the case.20 But as the Court explained, “Google left employees largely on their own to determine what Chat communications might be relevant to the many critical legal and factual issues in this complex antitrust litigation.”21
Plaintiffs eventually moved for sanctions. The Court granted the motion and found that Google’s failure to preserve Chat messages was an intentional subversion of the discovery process.22 The Court made clear that pre-litigation, Google was free to set a retention period of its choosing for Chat.23 But after the lawsuit was filed, Google was required to comply with its preservation obligations and “fell strikingly short.”24
At trial, the Court reiterated its concerns about Google’s conduct, stating that it was “deeply troubling” and constituted a “frontal assault on the administration of justice.”25 This finding was reflected in the jury instructions issued at trial. Specifically, jurors were instructed that there was “evidence that Google Chat communications were deleted with the intent to prevent their use in litigation,” and based on this, the jury was permitted to infer that the deleted Chat messages would have been unfavorable to Google.26
While this instruction’s effect on the jury’s verdict is unknown, the potential negative inference that it resulted in highlights the importance of carefully designed and well-executed litigation holds.
Comparison to Epic v. Apple
Although Epic’s claims against both Apple and Google were nearly identical and both cases were heard in the same jurisdiction, there are at least two major differences between the Epic v. Apple and Epic v. Google litigations.
First, Google operates Android as an open-source platform that is meant to allow users to access, download, and modify Android source code and support integration with other hardware and technologies. Epic argued that Google promoted an open platform, but then used its dominance on the Google Play Store to restrict alternative app channels that threatened Google’s own product offerings. The jury was likely also swayed by arguments that Google made deals to lower its Google Play Billing commission with some large developers like Spotify and Samsung, but not others, underscoring how Google exercised market power over its app distribution platform.27
In contrast, Apple has always relied on Apple hardware and doesn’t allow multiple storefronts. Developers and consumers generally understand—and have from inception—that iPhones are only compatible with the Apple App Store and this is a key selling point to its consumers.
Second, the Google case was tried to a jury, where Epic was seemingly able to rely on narratives that preyed on the emotions of the jury to portray Google as a Goliath to Epic’s David. In addition, the jury was instructed that they could infer that certain Chats were not saved because they contained information that could have harmed Google’s case.
1 Jury Verdict, In re Google Play Store Antitrust Litigation, No. 20-cv-05671 (N.D. Cal. Dec. 11, 2023), ECF No. 606 [hereinafter “Jury Verdict”].
2 See United States v. Google LLC, No. 20-cv-03010 (D.D.C. filed Oct. 20, 2020).
3 See United States v. Google LLC, No. 1:23-cv-0108 (E.D.Va. filed Jan. 24, 2023).
4 See Jury Verdict.
5 Epic Games, Inc. v. Apple, Inc., No. 20-cv-05640 (N.D. Cal. filed Aug. 13, 2020).
6 See e.g., Utah et al. v. Google LLC, No. 3:21-cv-06227 (N.D. Cal. filed July 7, 2021); MatchGroup, LLC v. Google LLC, No. 3:22-cv-02746 (N.D. Cal. filed May 9, 2022).
7 Epic Games, Inc. v. Apple, Inc., 67 F.4th 946, 1004 (9th Cir. 2023).
8 Bonnie Eslinger, Google Inks Deal with Match as Epic Barrels to Antitrust Trial, Law360 (Oct. 31, 2023), https://www.law360.com/articles/1739043/google-inks-deal-with-match-as-epic-barrels-to-antitrust-trial.
9 Bonnie Eslinger, Google CEO Denies App Store Monopoly in Epic Games Trial, Law360 (Nov. 14, 2023), https://www.law360.com/articles/1766669/-google-ceo-denies-app-store-monopoly-in-epic-games-trial.
10 Jury Verdict, at *2.
11 Jury Verdict, at **2-4.
12 Bonnie Eslinger, Google Raked in Billions Blocking App Store Rivals, Jury Told, Law360 (Nov. 6, 2023), https://www.law360.com/articles/1763811/google-raked-in-billions-blocking-app-store-rivals-jury-told.
13 Jury Verdict, at *5.
14 Final Jury Instructions, In re Google Play Store Antitrust Litigation, No. 20-cv-05671 (N.D. Cal. Dec. 6, 2023), ECF No. 592.
15 Id.
16 See supra note 12.
17 In re Google Play Store Antitrust Litig., 2023 WL 2673109, at **1, 4 (N.D. Cal. Mar. 28, 2023).
18 Id. at *5.
19 Id. at **5-6.
20 Id. at *6.
21 Id.
22 Id. at *9.
23 Id. at *8.
24 Id.
25 Hannah Albarazi, Judge Slams Google’s ‘Deeply Troubling’ Tactics As Trial Ends, Law360 (Dec. 1, 2023), https://www.law360.com/articles/1772102/judge-slams-google-s-deeply-troubling-tactics-as-trial-ends.
26 Final Jury Instructions, In re Google Play Store Antitrust Litigation, No. 20-cv-05671 (N.D. Cal. Dec. 6, 2023), ECF No. 592.
27 Adi Robertson & Sean Hollister, A secret Google deal let Spotify completely bypass Android’s app store fees, The Verge (Nov. 20, 2023), https://www.theverge.com/2023/11/20/23969690/google-spotify-android-billing-commission-secret-deal.
