We had a rare peek this week into the legal world of antitrust and its enforcement in the games industry. Google is appealing its loss in an antitrust trial as Epic Games convinced a federal court that Google had illegally acted as a monopolist in restricting Epic’s access to Android users.
Now Google has taken the case to the U.S. Court of Appeals and is trying to get the remedies that Epic Games won tossed out. The two sides argued before a panel of three federal judges in San Francisco.
The case started back in 2020, when Epic Games filed lawsuits against Apple and Google on the same day, after they removed Fortnite from their stores, after Epic tried to enable users to download Fortnite or buy Fortnite goods via their Apple and Google-based smartphones from directly within an Epic Games app. Apple won the antitrust lawsuit, while Google lost.
I also had a chance to hear developers from the Google-funded Developers Alliance this week as they talked about the arguments they had about the remedies and how they could harm their business. It was a rare chance to hear from some of the parties — partisans on behalf of Google — express their viewpoints, as detailed in an amicus brief filed in favor of Google. Google also faces tough enforcement remedies in the Google search antitrust lawsuit. They noted something Apple and Google brought up repeatedly — that security concerns meant that Epic should not be easily allowed to “sideload” Fortnite into the user’s phones because it introduced security risks. Epic argued its security was fine and this was an attempt to create friction, or keep users from straying off the Google Play store.
In the case, I believe Apple won against Epic Games in part because it was a monolithic company. Apple could decide its own policies for its store and also enforce the policies on the phones that it makes. Google, however, had no such control over the whole ecosystem. Rather, it had to persuade phone makers like Samsung to adopt Android and use the Google Play Store. But that’s where it got into antitrust trouble with a real evidence trail.
Epic Games argued that Google paid Samsung to make the Google Play Store the default store on Samsung phones and keep others like the Epic Games Store off. Epic Games called witnesses who were former Google employees and they confirmed this was Google’s intent in signing those contracts. Because Google paid to keep Epic and others off the Android smartphones and that likely harmed consumers in the form of higher prices, the jury found that Google violated antitrust law.
I listened to the arguments before the court over a livestream. A three-judge panel heard arguments from both sides for two hours and signaled that they seemed skeptical of Google’s appeal.
Epic Games argued that Google monopolized the way consumer access and pay for apps on Android devices. In 2023, a jury concluded that Google illegally blocked competition, and a trial judge ordered it to change the Google Play Store. Google is appealing. Meanwhile, Epic Games lost all of its claims against Apple in a similar antitrust case, winning only one matter on the right for developers to advertise lower prices on alternative app stores within their App Store apps. Google agreed to pay consumers $700 million and make changes in response to a lawsuit by state attorneys general over Play Store practices.
Hogan Lovells US lawyer Jessica Ellsworth represented Google. She argued that Apple’s victory against Epic Games should bar an opposite result in Google’s case.
Jessica Ellsworth for Google argued that Google and Apple are fierce competitors and that this should be taken into account when Epic Games argues that they are monopolists. She argued that Apple’s App Store, the Google Play Store and other Android stores all compete for mobile gaming transactions in a marketplace that is fundamentally competitive. And she noted Apple won, while Google lost.
“You can’t just lose an issue that’s fully litigated the first time around and then pretend that didn’t happen and try to get a different result against a different adversary,” Ellsworth said, implying that this is what Epic did when it lost to Apple and then won against Google. The discussion focused on whether the Apple case was “preclusive,” where Apple’s victory against Epic should preclude an Epic victory over Google. One judge asked Ellsworth if she believed the second trial should never have taken place at all.
Ellsworth also argued that the judge in the Google trial, U.S. District Judge James Donato, failed to instruct the jury on what was required to prove how defendants handle aftermarket sales, while she said the Apple jury received such instructions.
“The very same products should be subject to the same governing legal framework,” she said.
Judge Danielle Jo Forrest said each case has to stand on its own. In the Apple case, Google alleged the judge told the jury to work out what the relevant market was for antitrust enforcement. Google presumed that, if instructed to do so in its case, the jury would have similarly found that Google did not have the monopoly in the relevant market. The judge asked if the instructional error was a reason to throw out the jury’s conclusion.
“What we’re saying is that the jury was not given the proper instructions about what the standard is to find an aftermarket, and so having not been properly instructed, that is presumed prejudicial,” Ellsworth, the attorney for Google, said. “We know it was prejudicial here because that’s the same element of an antitrust claim. That is the reason Epic’s proposed markets, this siloed approach, failed in the Apple case.”
The judge responded that an overarching antitrust principle is that you take every case on its facts. And there are “clear factual differences between the Android world and the Apple world.”
Judge Gabriel Sanchez also said he was having difficulty with the argument that the companies were somehow in the same position, even though Apple makes phones while Google creates software.
Senior circuit judge Margaret McKeown replied, “Just because they are players in the same market doesn’t mean the Apple case is preclusive here.”
Gary Bornstein, co-head of litigation at Cravath, Swaine & Moore, spoke for Epic Games. The attorney pointed out the differences between Apple’s phones and Google’s business model, where it did not sell devices but did transactions with the likes of Samsung.
“The problem is continued delay in bringing relief to a market that has been suffering under anticompetitive behavior for the better part of a decade,” Bornstein said. “Sending it back for the district court to do the homework assignment of writing an opinion is completely unnecessary. And my friend made the comment earlier that there’s a problem here because we don’t have findings on market definition and findings on competitive effects from the district court the way we did in the Apple case, sufficient for this court to assess. And I quote the liability decision well, juries decide liability in antitrust cases all the time. There’s no reason why this court needs” to review a liability decision.
He said there was no inconsistency between the two cases because there were overlapping markets. Apple operates everything from making the phone to creating the app store on it. Google doesn’t operate the whole ecosystem, and consumers behave under a different structure with Android.
“For there to be preclusion, which is really the context in which this issue is being presented to the court, there needs to be some actual inconsistency, so that the two results can’t both be correct at the same time,” Bornstein said. “That’s not true here. You can have overlapping markets, even if one accepts, just hypothetically for a moment, that the finding in Epic vs. Apple about the nature of the market were taken carved in stone, that would not preclude because it would not be inconsistent with the existence of the markets found by the jury.”
Bornstein disputed Google when it argued that the changes Donato ordered would results in a big harm for user privacy and security. Epic Games CEO Tim Sweeney has called the 15 steps required to sideload Fortnite onto an Android phone “scare screens.”
Microsoft filed a brief in support of Epic Games, as did the Federal Trade Commission. David Lawrence, policy director at the antitrust division of the U.S. Department of Justice, argued in support of upholding Epic’s victory.
“District Courts have broad authority and discretion to craft monopolization remedies, and when the law has been violated, the remedy must restore competition. We’re most concerned today that Google’s arguments threaten those bedrock principles. We’d like to urge this court not to adopt categorical constraints proposed by counsel here on the remedial discretion of the district courts,” Lawrence said. “We’re concerned that those constraints, if adopted, could prevent future courts from doing their duty under the law to restore competition to monopolized markets.”
Lawrence said, “We have unlawful conduct that affected the point of sale, whether or not competing app stores were preloaded onto Android phones. Those Android phones are in the hands of millions of Americans today. Restoring competition just through that avenue could become more interventionist. Loading app stores directly under the phones, without the user desiring to interacting with the point of sale in a really interventionist way. This court found what we think is very reasonable means of opening up competition. It took the app stores that are already there on the phone the Google Play Store, and it said a customer wants to download a competing App Store, let it use that store for a limited period of time as necessary to reopen the market to competition.”
The court of appeals is expected to rule this year and it will likely be appealed to the U.S. Supreme Court.
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