Alphabet’s Google faces a significant blow as a U.S. judge ordered the technology company to overhaul its mobile app business, specifically its Play Store operations, following a legal battle with “Fortnite” maker Epic Games.
The ruling by U.S. District Judge James Donato in San Francisco mandates that Google must allow Android users to download apps from rival sources and use alternative in-app payment methods, a move that challenges the tech giant’s stronghold over app distribution on its platform. The development will assist around 3.9 billion Android users in the world, across 190 countries. Google has 70 percent market share of the mobile operating system (OS).
Industry estimates that Google’s Play Store revenue from mobile apps has reached $47 billion in 2023. Google’s total revenue in 2023 was $ 305.63 billion. Google’s Play Store revenue compares with Apple’s App Store revenue of $89.6 billion last year.
The ruling, which stems from Epic’s 2020 lawsuit accusing Google of monopolizing app distribution and in-app payment systems, restricts Google’s ability to make exclusive deals with device manufacturers for pre-installing its Play Store.
It also prohibits the company from sharing revenue generated by the Google Play Store with other distributors. This decision could open up the Android ecosystem to greater competition, giving developers and users more choices, while potentially reducing Google’s revenue from app transactions.
In response, Google announced it would appeal the verdict and seek to pause the order, warning that the mandated changes could have “unintended consequences” harmful to consumers, developers, and device manufacturers. The ruling requires that Google implement these changes by November 1, 2024, giving the company a short window to adapt its practices.
Epic Games CEO Tim Sweeney welcomed the ruling, stating it marked a significant win for developers and app store competitors, who will have more opportunities to challenge Google’s dominance by 2025. He believes the ruling will help foster a more competitive Android ecosystem.
The negative impact on Google’s business was reflected in its share price, which fell 2.5 percent following the ruling, closing at $164.39 on Monday, Reuters news report said. The company now faces growing regulatory pressures as it contends with multiple antitrust cases.
In August, a separate case found Google guilty of illegally monopolizing web search, and the company is also currently on trial in Virginia over its dominance in the advertising technology market.
Baburajan Kizhakedath
