For a long time, "walled garden" has been a synonym for closed platforms like Google App Store in the telecommunications industry, but now, Google's closed wall may be about to be broken.
On Monday Eastern Time, a federal jury in California, USA ruled that Google's parent company Alphabet lost an antitrust lawsuit against game developer Epic Games Inc.
The judge ruled that Google Mobile App Store maintains a monopoly in the program distribution and payment market based on its Android software. This means that Google may be forced to allow payment and app distribution channels outside of its app store in the future, and suffer billions of dollars in revenue losses as a result.
Google Encounters Anti Monopoly Defeat
Three years ago, Epic filed a lawsuit against Google, claiming that Google had monopolized the Android application distribution market for over a decade by entering into private transactions with competitors and using its own resources to hinder competition. Google argued in its defense that its partnership helps Android phones better compete with Apple's iPhone.
On Monday Eastern Time, a federal jury in California, USA, after nearly a month long trial, ultimately ruled that Google's Google Play store intentionally exercised its monopoly power through anti-competitive behavior.
After the verdict was read out, Tim Sweeney, the CEO of Epic, sat in the first row of the court's public seating area with a slight smile on his face. He quickly published an article on social network X, welcoming this ruling.
Google's stock price fell 0.4% in post market trading, and the company stated that it plans to question this ruling.
However, Holland& Paul Swanson, a partner at Hart Law Firm and a lawyer specializing in technology and antitrust law, said, "Google finds it difficult to overturn a comprehensive ruling like this in post trial proceedings or appeals."
Epic achieved a historic victory
This victory is historic for Epic Games. Two years ago, Epic and Apple lost a similar antitrust lawsuit.
But the litigation situation between Epic and Google is different, as the focus of this lawsuit is on the secret revenue sharing agreement between Google, smartphone manufacturers, and large game developers.
The jury found that Google unreasonably restricted the trading channels of other companies by sharing Google Play revenue with mobile device manufacturers, making its store the default store on the main screen of Android smartphones.
The jury also believes that Google has restricted transactions through its developer agreement - according to Epic, this makes it difficult for users to directly download applications from the internet to mobile devices. Google's developer agreement also prohibits developers from directly informing Android phone users that their products and services may be offered at lower prices on their own websites.
Google App Store revenue may suffer
US District Court Judge James Donato is responsible for overseeing the trial and will decide whether Google must open its doors to payment and app distribution channels outside of its own app store.
Stanford University law professor Mark Lemley said that this ruling "could have significant implications not only for Epic, but also for the entire internet as it will be able to sell games directly on Android phones."
Lemley believes that:
"The past 20 years have witnessed a profound transformation from an open internet to a walled garden... This is one of the reasons why the internet market is so concentrated. This ruling has knocked a big hole in the walls of the garden."