Context: In December 2023, Epic Games won a jury trial in San Francisco against Google. It subsequently defended that outcome against Google’s post-trial motion for judgment as a matter of law or retrial (February 24, 2024 games fray article): as expected, Judge James Donato of the United States District Court for the Northern District of California threw out Google’s motion, but the real battle will be Google’s appeal to the Ninth Circuit.
What’s new: Late on Thursday (April 12, 2024), Epic filed its proposed permanent injunction. Google will get to state its objections, Epic will reply, and the court will hold an evidentiary hearing with economic expert witnesses to discuss remedies. Epic’s proposal is comprehensive and would require Google to take certain steps, and would prohibit Google from taking others, all for the purpose of ensuring that alternative Android app distribution (through non-Google app stores as well as direct installation, pejoratively called “sideloading”) will capture a much larger part of the market.
Direct impact: For now, Epic’s proposal has not been adopted by the district court, and considering how Judge Donato has managed this case, it’s a safe assumption that he won’t grant every one of Epic’s wishes. The district court’s injunction is unlikely to become enforceable immediately as Google will appeal and the appeals court will probably stay enforcement for the duration of the appeal, given that the impact on Google’s Android business would be profound and that Google is in a position to raise questions that . On appeal, Epic will have to defend its win on the merits as well as the specific remedies ordered.
Wider ramifications: Epic’s proposed injunction is designed to make it impossible or at least extremely hard to defend if Google took any measures of any kind that would disadvantage alternative app stores and apps distributed through other channels than the Google Play Store. The level of detail may in part also be attributable to enforcement disputes in the EU over the Digital Markets Act, which primarily involve Apple but to some extent also Google (March 11, 2024 games fray article). Epic’s proposed injunction would serve as a valuable source of inspiration for EU lawmakers and regulators with a view to what the DMA could have been (but thus far fails to be). The U.S. dispute between Epic and Apple is at a much later stage: all appeals have been exhausted, and the injunction in place is narrow (anti-anti-steering). Epic asked a the court (different judge, however) to hold Apple in contempt (March 13, 2024 games fray article). Apple’s opposition is due today.
Google will predictably tell the court that the injunction Epic is seeking is overbroad and overreaching. Equally predictably, Epic will argue that it is perfectly justified given the extent of the anticompetitive conduct identified by the jury. Epic will say that anything less won’t do as Google would just find and exploit loopholes.
Here’s Epic’s preferred injunction (14 pages plus a title page and a signature page):
Note that this article, unless there are quotes denoted by quotation marks, uses different terminology to sum up what Epic’s proposal says in more words and more formal terms.
Section I clarifies that the injunction applies to all Google entities and decision makers.
Section II is about enabling alternative Android app distribution methods (rival app stores and direct web installs aka “sideloading”) more effectively:
- no anticompetitive agreements that would make it harder or impossible for rival app stores to work out pre-install deals with device makers or network operators
- no agreements that disincentivize rival app store operators from competing
- no exclusive deals for apps and content to be only on the Google Play Store
- apps that are on the Google Play Store may also be available on alternative app stores with exclusive content or functionality
- Google must not prevent app makers from withdrawing their apps from the Play Store
- no extra permissions, scare screens etc. (the document also mentions “friction”, a term that often comes up in the DMA context) that disadvantage app downloads outside the Google Play Store
- no restrictions on access of app stores or apps to Android functionality
- no restrictions on access of app stores or apps to other Google products or services
- “catalog access and library porting”: for six years, alternative app stores must have the ability to offer all the apps that are on the Play Store, and those apps will then be installed via a Google background service; this way, users can choose an alternative app stores without having less choice
- also for six years, Google must offer the frontend apps of alternative app stores on the Google Play Store
- no new agreements and no enforcement of existing agreements ensuring the presence of the Google Play Store icon on the first page of the home screen
Section III is about in-app payments. In that case, apps are still distributed via the Play Store, but payments go through other payment services:
- no anti-steering; using the language of the Epic v. Apple injunction, Epic’s proposal refers to “free flow of information” concerning alternative payment options
- no restrictions on how apps communicate
- no “coercive fees” by which Epic means fees that make it unprofitable to use such alternative payment services
- no tying (meaning that Google can’t require apps to use its payment service in order to get distribution via the Google Play Store)
Section IV would require Google to set up a Compliance Committee and appoint a Compliance Officer. There would be annual compliance reports.
Section V (the final one) is meant to shield Epic from retaliation.
Section IV is just about legal technicalities, not about remedies per se.
Is Epic’s proposal justified?
There are different angles from which to look at this topic.
Looking at the compliance debate over what Google and Apple are doing in the EU and in some other jurisdictions (Korea, India etc.), there’s no denying that only hard, fast and tight rules will close loopholes. Otherwise there will be ways in which the owners of those platforms can disadvantage rivals through rules, fees, technical and other measures.
It’s similarly clear that it would be a Herculean task to get many users to search for apps on alternative app stores. There’s the Power of Default, and there are ingrained habits.
That’s one side of the equation. The other side is that Google has a very different business model from Apple’s. If the same rules that Epic suggests here were imposed on Apple, it would cost Apple a lot of money (in terms of app-related revenues Apple would lose), and Apple would complain about the iPhone losing some of what differentiates it, but the iPhone would still be an insanely profitable product. By contrast, Google has so far made Android available on “free” terms (there is debate over that as well, especially with more and more parts of Android having become “closed-sourced” over the years, meaning that device makers needed to license them from Google as opposed to getting to use them under a general open-source license). Unlike Apple, Google would have to come up with a new Android business model to replace some revenue streams that are not just “icing on the cake” but essential.
That is not Epic’s problem, but it is a fact that will have to be considered. It will weigh strongly in favor of an enforcement stay, for instance.
Google will presumably also argue that Epic’s proposal goes beyond a level playing field and actually amounts to one tilted against Google. For instance, Google could not do exclusive deals, but others could. Alternative app stores would always have the whole Google Play Store catalog plus their own apps, while Google Play wouldn’t have certain apps distributed only through rival stores.
Epic’s argument is then going to be that it’s necessary to bring down Google’s market share, some of the measures are time-limited and in any event Epic’s injunction envisions that Google could go back to the court and point to a reduced market share in order to seek a modification of those rules.
Google is going to remind the court of a summary judgment decision according to which Google has no duty to deal to carry the frontend apps of rival app stores on the Google Play Store, but Epic wants that to be a requirement for six years (or less, should Google previously show a major loss of market share). Epic’s argument is presumably going to be that it’s just a necessary and temporary remedy, not a duty-to-deal question.
At the evidentiary hearing before Judge Donato’s remedies decision, Epic’s expert witnesses will argue that such measures are absolutely needed or Google will retain its Android app distribution near-monopoly, while Google’s experts will argue that much less incisive remedies would already have a major impact.
And all of that would be a total waste of time should Google’s appeal succeed. Overcoming a clean sweep at a jury trial is no easy task, but Google’s JMOL motions (pre-verdict and post-verdict) raise various issues, some of which (such as with respect to market definition) could indeed change the situation. That would be disappointing for competition, but it could easily happen. For now, however, the parties are going to fight over remedies based on the December 2023 jury verdict.