Context: Epic Games won a jury trial against Google over its Google Play Store practices across the board in late 2023. Earlier this month, Google brought a detailed post-trial motion for judgment as a matter of law (JMOL) seeking to overturn the jury verdict or at least get a new trial (February 2, 2024 games fray article). After Google’s JMOL motion has been predictably denied, the court will proceed to a remedies determination and tailor an injunction.
What’s new: On Thursday (February 22, 2024), Epic filed its opposition to Google’s JMOL motion.
Direct impact: It is unlikely that Judge James Donato of the United States District Court for the Northern District of California will overrule the jury, much less that he will find fault in his own jury instructions and other rulings. Google’s JMOL arguments will get interesting only at the appellate stage, where Google will likely focus on only a few theories out of the long list of arguments raised in its JMOL motion. For Google, the JMOL exercise is all about preserving theories and arguments for its appeal.
Wider ramifications: The most transcendental part of the JMOL dispute is market definition. Google argues that Epic would have had to prove (as it tried but failed to in the Apple case) a foremarket-aftermarket combination in accordance with the Supreme Court’s Eastman Kodak decision. Epic, however, argues that Android app distribution and Android in-app payment markets do not have to satisfy the Kodak requirements because there are alternative Android app stores and alternative options for Android in-app payment. Google is likely to seek an appellate decision that will raise the bar for market definitions that include a brand, even if there are multiple actors in a given market.
Here’s Epic’s opposition brief, followed by further commentary:
JMOL is an uphill battle with respect to factual findings. Juries enjoy considerable deference. Only if a jury reaches a conclusion that no reasonable jury could have arrived at will it be overruled.
Epic would have liked Judge Donato to make it easier to defeat Google, but the court’s conservative approach now makes it more difficult for Google to appeal from the judge’s jury instructions and evidentiary rulings.
To the extent that Google would have liked to benefit from the failure of Epic’s antitrust claims against Apple (the injunction that Epic won is based merely on California Unfair Competition Law), Epic has strong arguments that (a) the market definition decision in the Apple case was based on different evidence and couldn’t have a preclusive effect on the case against Google and (b) if the jury had been told of Epic’s defeat at Apple’s hands, that would have been prejudicial (given the different fact patterns) and if that were to be the standard, the jury should also have been told of different cases that were decided against Google.
Still, the fact that the Ninth Circuit rejected Epic’s proposed single-brand market definition in the Apple case (even if due to only a failure of proof) is something that Google will try to capitalize on when it takes this case up with the same appeals court.
While games fray believes Epic’s win has tremendous potential to make the Android app distribution business more competitive and bring significant benefits to app developr and consumers alike, Google has a valid argument that Android app distribution is an aftermarket of the smartphone market (and, effectively, the mobile operating system market).
The question is not whether a market definition that includes the word “Android” is a single-brand market in a colloquial sense: it undoubtedly is. Nor is the question whether mobile apps are an aftermarket of the smartphone market, which is an aftermarket of the smartphone operating system market: that it also the case, and it’s consistent with what Epic argued in the Apple case.
The most important difference between Epic’s Apple and Google cases is that in the Apple case the App Store would not have been a market in which two or more actors were competing: there’s only one App Store for iOS, and that’s Apple’s. To arrive at an iOS app distribution market despite there being only one market actor, the Kodak requirements for a foremarket-aftermarket combination with requirements such as lock-in (the part that Epic’s expert failed to convince the court of) were indispensable.
By contrast, Google does allow alternative Android app stores, just that those can’t really compete and the Google Play Store still has a monopoly by U.S. standards (or a dominant market position the way it would be labeled in the EU) in the Android app distribution market. Device makers’ stores are always just limited to particular devices, and other stores have failed to get traction. Even Amazon’s billion-dollar investment in its Android app store failed to capture more than approximately 1% of the market.
Oddly, this means yet another respect in which Google is disadvantaged in litigation with Epic despite being more open and flexible (the flipside of which can be called “less consistent”) than Apple.
If Google had never allowed any alternative Android app stores, not even by device makers, the Google Play Store would have been alone in its market and Epic would undoubtedly have had to meet the Kodak requirements.
Google’s JMOL motion makes the point in a more general way that the outcomes of Epic’s Apple and Google cases are contradictory. That is indeed not fair. But some of it is of Google’s own making (it’s shady dealings with game makers, for instance) and when there are two cases, it’s possible that the evidence presented is stronger than in the other. Here, Epic obviously learned its lessons from its loss to Apple, which occurred first.
The appeals court can’t solve the problem for Google that Apple was to some extent lucky and Epic’s performance against Apple possibly not at the same level as against Google. That happens. In fact, when patents are asserted against multiple defendants in different cases, it’s also possible that one is found to infringe and the other is not, despite the lucky defendant arguably having been no less of an infringer (or even more of one).
If Google wanted to ensure that it won’t be disadvantaged by the inconsistent trial outcomes as it competes with Apple in the smartphone operating system (and, with respect to the high-end Pixel phone, even in the smartphone) market, it would have two options that are not even mutually exclusive:
- Google could turn the disaster that is the outcome of the Epic case (though it’s not over until all appeals have been exhausted) into an opportunity. Google could look at the U.S. situation and also at the one in the EU, where Apple again benefits (with respect to the Digital Markets Act) of a stricter walled-garden approach. Google could position itself as the anti-Apple and get a lot of support from the developer community. The more open system might win in the end, not just in terms of unit volume but more generally. And Google would be able to reduce regulatory pressure, exposing Apple to even more heat on that front.
- Google could participate in and/or support efforts to put pressure on Apple. Google’s public pressure campaign about messenger interoperability didn’t change anything (it was Chinese regulation that forced Apple to open up). But Google also owns apps that are distributed on iOS and could pick a fight with Apple over payment systems in Pokémon or apps that make migration from iOS to Android easier.
Sadly, it is more likely that Google will not open up or force Apple to open up, but bet on the appeal. The market definition part is going to be an interesting one, and it cannot be ruled out that Google could win a retrial on that basis unless there are heightened requirements for all market definitions involving a (single) brand. But Google would need an antitrust-minimalist court decision comparable to the Supreme Court’s American Express ruling (where the problem was not the identification of a two-sided market but the requirement to prove a reduction in transaction volume as opposed to other anticompetitive effects of an anti-steering contract clause).
With the Ninth Circuit, it’s a bit of a coin toss. There can be progressive panels, and there can be panels where Trump appointees form a majority.
If the final decision on Epic’s non-Kodak but Android-only market definition is made by judges who are concerned that too many antitrust plaintiffs could prevail on market definitions that involve a brand (here, Android), Google may get a favorable ruling. That doesn’t mean Epic will necessarily lose the case, but it would be a major setback and delay the entry into force of what could be a game-changer injunction.