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Videogames developer Epic Games’ victory over Google in an antitrust case is a decision that casts doubt on the app-store model of companies like Google-parent
Alphabet
and
Apple.
It also effects the Big Tech peers who are seeking to displace them.
Alphabet
shares were down 1% in premarket trading on Tuesday after a jury decision that Google maintains a monopoly in its app store’s distribution and payments market, following a case brought by Fortnite-developer Epic.
A judge will decide next year what remedies Epic will be awarded. Epic originally said in its lawsuit that it wasn’t seeking monetary damages or favorable treatment from Google but did want it to open up its Android ecosystem. Google has said it intends to challenge the decision.
The big short-term question is whether Epic’s victory will add to pressure on
Apple
to compromise on its own policy of taking up to 30% of the revenue for apps in its own App Store.
“The net result is that there is going to be some ongoing pressure on the traditional 30% / 70% split of revenue, and I think that it will gradually erode over time,” wrote independent analyst Richard Windsor, who publishes Radio Free Mobile.
Apple faced its own antitrust lawsuit brought by Epic but a judge in 2021 largely sided with the iPhone maker, a ruling that was upheld by an appeals court this year.
Apple didn’t immediately respond to a request for comment on the potential implications of the Google decision for its own business. Apple shares were down 0.2% in premarket trading.
The Google judgment could incentivize other companies to seek to establish their own app stores in a more open market, but the business will likely be less lucrative than under the current revenue-split model.
Microsoft
plans to launch a new app store for games on iPhones and Android smartphones as soon as next year, The Financial Times reported earlier this year citing an interview with the company’s head of gaming.
Meanwhile, it’s not clear whether a more fragmented market is a positive for the technology sector overall.
“An eventual… ruling against Google does not pave a clear and easy path for mobile game publishers and ecosystem around mobile app marketing to see better bookings, better margins, or both,” wrote Oppenheimer analyst Martin Yang in a research note.
Write to Adam Clark at [email protected]
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