Epic Wins Lawsuit Against Google Amid Gaming Channel Disputes

Game developer Epic's lawsuit against Google comes to an end: the judge ruled that Google must dismantle barriers to third-party app platforms and prohibit paying companies to maintain a monopoly position.

Since the Google Play Store receives a certain percentage of app revenue, this ruling may allow app developers to bypass Google's channel, thereby obtaining higher income.

In addition to Google, Epic has a similar dispute with Apple, which has been going on for several years. During this period, Epic not only took the lead in removing its popular games from these channels, but also built its own client and mobile platform to disperse the monopoly advantage of these channels.

Winning against Google

On October 7, Judge James Donato of California, USA, issued a final ruling on Epic's lawsuit against Google: within three years starting from November this year, Google must support the provision of alternatives to Google Play on the Android platform.

In addition, Google is restricted during this period: paying companies to make Google Play exclusive or launch apps first; paying companies or sharing profits to make them give up competing with Google Play; paying companies to pre-install Google Play on new devices; requiring app developers to use Google Play for settlement, and preventing developers from introducing cheaper products on their websites to users.

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Google must also allow third-party Android app stores to access the Google Play app catalog and provide download channels for third-party app stores on Google Play.

In addition, Epic and Google will also establish a three-person committee responsible for reviewing technical issues related to Google's compliance.

Regarding the above lawsuit dispute, the reporter contacted Google for an interview, and had not received a response by the time of publication. However, Google's statement said that it would appeal the ruling in Epic's antitrust case and request the court to suspend the implementation of this injunction, because the ruling ignored the competition between Apple and Android.

Epic founder and CEO Tim Sweeney said that this ruling means that all app developers, app stores, operators, and manufacturers have 3 years to build a vibrant and competitive Android ecosystem, the scale of which Google cannot stop.This ruling could potentially lead to greater revenue for app developers. Google and Apple's app stores typically take a 15% to 30% cut from the revenue of high-earning apps. The new restrictions imposed on Google Play by the court might allow developers to retain more income by bypassing Google's rules or fees.

In addition to the aforementioned lawsuit with Epic, Google also faces the possibility of being broken up by the U.S. Department of Justice. A proposal submitted by the Department of Justice on October 8th indicates that the agency is considering requiring Google to sell off parts of its business to mitigate the damage caused by Google's monopoly on the online search market.

The document mentions that Google's businesses that may be divested include Chrome browser, Android operating system, and Google Play, among others. The document also mentions that the presiding judge in the monopoly case may also force Google to open up the underlying data for building search results and AI products.

Epic is a game developer and game engine supplier. Its Unreal Engine is the second-largest game engine in the global market share. Compared to Unity, the market leader, Unreal Engine has stronger graphics rendering and easier customization of content, mainly applied to high-performance hardware platforms such as PCs and consoles.

The highly popular "Black Myth: Wukong," which exploded this summer, migrated from Unreal Engine 4 to Unreal Engine 5 during its development process, achieving outstanding visual effects.

In 2017, Epic's battle royale game "Fortnite" was released and gradually grew into the company's flagship product. Due to a legal dispute with Apple, Epic submitted a financial statement to the court in 2021. The financial report shows that "Fortnite" generated a total revenue of $5.477 billion in 2018 and $3.709 billion in 2019, contributing to most of Epic's gaming business revenue. In 2018 and 2019, Epic's total revenue was $5.628 billion and $4.221 billion, respectively, with engine revenue at $124 million and $97 million, Epic Games Store revenue at $2 million and $233 million, and the vast majority of revenue came from "Fortnite."

Such a "cash cow" placed on Steam would require paying a 30% commission fee. To combat these mobile and client channel fees, Epic launched the Epic Games Store at the end of 2018, setting the commission ratio at 12%, and attracting users to the store through exclusive distribution of "Fortnite" and many top-tier games.According to Epic's disclosure in August 2023, the Epic Games Store has accumulated over 230 million global users, with a monthly active user (MAU) count reaching 68 million. Valve's "Steam—A Look Back at 2022" report indicates that by the end of October 2022, Steam had surpassed 30 million concurrent online users, and by early January 2023, this number had broken through 33 million. As early as 2019, Steam's global registered account numbers had already exceeded one billion. Although it cannot shake Steam's position, the Epic Games Store has also become a force to be reckoned with.

In 2024, the Epic Games Store launched on mobile platforms, with the store's exclusive games including the mobile versions of "Fortnite," "Rocket League Sideswipe," and the brand-new "Fall Guys."

Epic stated that, with the support of the EU's latest Digital Markets Act, it was able to release the iOS version in that region. However, due to Apple's prohibition, users outside the EU still cannot access the iOS version of "Fortnite" and the Epic Games Store.

Epic also introduced that, due to the intentional obstruction by Apple and Google, the process of installing the Epic Games Store on iOS and Android systems is relatively cumbersome. Users may encounter confusing device settings and warning screens. "We will continue to argue our case in court and work with regulators around the world to eliminate the monopolistic regulations imposed by Apple and Google on developers and users."

Epic first formally challenged Apple and Google in 2020. In that year, Epic attempted to bypass Apple's App Store by allowing players to pay directly within the "Fortnite" game, leading to its removal from the App Store.

On August 13, 2020, Epic filed a lawsuit against Google and Apple. It was counter-sued by Apple. In September 2021, the judge ruled that Apple won on nine out of ten charges, with one charge, namely preventing developers from referring users to other payment platforms within applications, losing the reverse referral policy.

Data from the third-party research institution Sensor Tower shows that since its launch in March 2018, until its removal from the App Store and Play Store in 2020, "Fortnite" mobile earned a total of $1.2 billion from these two major channels, with the App Store's revenue taking the lion's share. In 2020, "Fortnite" mobile's total revenue was $293 million, with nearly $283 million coming from the App Store; out of 31 million downloads, the App Store contributed approximately 20 million.

Regarding whether Epic is considering bringing "Fortnite" back to the App Store, the reporter contacted Epic for an interview, but had not received a response by the time of publication.

Disputes continue to escalate domestically as well. The reporter learned that in terms of game revenue sharing, compared to the 30% ratio commonly practiced by the App Store and Google Play, the domestic Android hardware channel's share ratio is higher. In 2014, mobile phone manufacturers such as OPPO, vivo, and Huawei established the "Hardcore Alliance," and channels represented by this alliance have long had a game revenue share ratio as high as 50%, with only some top products able to receive separate bargaining treatment.The legal battle between overseas third-party app stores and traditional channels is also playing out domestically.

TapTap, a platform operated by Xindong Company that provides mobile game downloads, is one of the competitors of Android app stores and other gaming channels. In 2023, Yiwan Network, a subsidiary of Xindong Company, sued related companies of vivo mobile phones, including manufacturers, distributors, and the vivo mobile phone system, for unfair competition. The specific actions included: setting up risk warnings when users download TapTap through the built-in browser of vivo mobile phones, and requiring users to verify their mobile phone numbers or similar actions when installing game software through TapTap. Reporters learned that there has been no follow-up to this lawsuit so far.

In 2022, the announcement of the Intermediate People's Court of Jinan City showed that Tencent Application Treasure sued vivo Network for unfair competition, including vivo using the advantages of the mobile phone's underlying system to insert pop-up windows, text, buttons, set risk detection, etc., to restrict users from normally downloading and installing the Application Treasure and downloading and installing applications through the Application Treasure. At the same time, it guided users to download or install applications in the vivo's own app store to gain more traffic and commercial benefits.

This is not the first time Tencent Application Treasure has sued vivo. According to the data of the China Judgment Document Network, as early as 2017, the Intermediate People's Court of Nanjing City, Jiangsu Province, made a civil litigation preservation ruling on Tencent Application Treasure's lawsuit against related companies of vivo, and determined that there is a possibility of构成unfair competition in the process of users downloading the Application Treasure software and downloading applications through the Application Treasure software, such as the repeated pop-up prompts and setting jump links to "vivo App Store" buttons implemented by vivo mobile phones.

In June of this year, Tencent's popular new game "Dungeon and Fighter: Origin" announced that it would no longer be available on some Android platform app stores. Reporters contacted Tencent and Huawei, vivo, OPPO and other aspects of the "Hardcore Alliance" for a response, but had not received a reply as of the time of publication.

In August 2024, the Shanghai Consumer Protection Committee stated that many consumers may encounter situations such as frequent pop-up windows allowing installation or risk warnings, long-term risk detection, jumping to recommend similar applications, requiring user authorization or password verification in safe mode, etc., when using third-party app stores to download and install Apps. The Shanghai Consumer Rights Protection Foundation believes that as system providers, manufacturers cannot use their "root permissions" to impose unreasonable restrictions on software from other channels, thereby "weaponizing" it as a competitive means; mobile phone manufacturers and third-party app merchants are both service providers, and their positions in the market should be equal, and the rights and obligations they enjoy in the process of providing services to consumers should also be the same; operators must not use technical means to force or indirectly force consumers to accept services, restricting consumer autonomy.