Analysis: Epic’s narrow victory in the App Store case strengthens the fight against Google Play rules | The powerful 790 KFGO

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By Paresh Dave

OAKLAND, Calif. (Reuters) Android app makers suing to stop Alphabet Incs Google from stealing up to 30% of their sales received little reassurance about their chances on Friday as a judge cleared a comparable fee charged by Apple Inc .

Developers, including Fortnite producer Epic Games, have targeted the two largest mobile app stores, operated by Apple and Google, over the past year. Critics view the commission as unnecessarily high, costing developers billions of dollars a year collectively and a function of the two big tech companies that have monopoly power.

Google’s trial is at least a year away, time both sides could use to refine arguments based on Apple’s decision, legal experts said.

In a Friday ruling following a trial between Epic Games and Apple, U.S. District Judge Yvonne Gonzalez Rogers asked Apple to allow developers to inform customers about ways to pay outside of its App Store, bringing Apple’s shares to fall 3.3%. The alphabet fell by 1.9%.

Google’s Play Store uses rules similar to those dropped in Apple’s case, limiting developers’ communications with their customers, and DA Davidson analyst Tom Forte said Google could also be at risk. He also noted the residual risk of new regulatory action by lawmakers.

But Gonzalez Rogers made it possible to meet requirements that developers complain even more. Those rules, including the fact that in-app payments are made on Apple’s system, allow the company to collect the 15-30% commission.

Apple general counsel Katherine Adams told reporters that her company was extremely satisfied. Epic CEO Tim Sweeney tweeted that today’s ruling is not a win for developers or consumers.

Vanderbilt Law School professor Rebecca Haw Allensworth said she agrees that Gonzalez Rogers’ findings are daunting for the case against Google, while Valarie Williams, an antitrust partner at Alston & Bird law firm, said that Google will likely be encouraged by the ruling.

The judge said Apple’s restrictions allow users to be confident that the apps they buy for the most part are free from viruses and pornography, and that what they paid for will be delivered.

App distribution restrictions increase security broadly by allowing Apple to filter out fraud, objectionable content and piracy while reviewing apps, while imposing higher privacy requirements, Gonzalez Rogers wrote.

The apple tax leads to extraordinary profits, according to its ruling. But if it forces Apple to relax the restrictions, the company could struggle to get paid to provide a platform for developers, he said. The point of sale of apples to consumers on having strong security and even a centralized system would be compromised, the judge added.

Its 30% rate, he said, was set almost by accident when it first launched the App Store rather than as a result of market power.

Google has made similar arguments about privacy and security benefits as a justification for its rules and fees, and has long followed Apple’s lead on commission levels, as Google’s documents revealed in lawsuits show.

With Google’s smaller share of the US mobile app market, plaintiffs may have to rephrase the arguments to be successful against Google. Gonzalez Rogers said Epic’s challenge to any commission was an unreasonable stance towards Apple and that Epic has failed to offer clear evidence that the iPhone maker is a monopolist.

Optimized arguments may not be enough. The case against Google was more difficult from the start. Google makes it possible to install apps from other sources, avoiding the monopoly argument. Furthermore, it has historically been more lenient in applying some of its policies.

Google, Epic, and other developer lawyers suing the Play Store operator declined to comment. The Utah Attorney General, who is helping lead a related lawsuit from the US states, said he is reviewing the ruling.

(Reporting by Paresh Dave; additional reporting by Akanksha Rana in Bangalore and Stephen Nellis; editing by Peter Henderson and Daniel Wallis)

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