Google, and How the Antitrust Sausage Gets Made
Google, and How the Antitrust Sausage Gets Made
The beginning of the end for app store monopolies?
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The old saying goes that nobody wants to see how laws or sausages are made. Well, I’m going to very much ignore that today (for laws, not sausages, don’t worry), because an important verdict in an antitrust case against Google has big implications for the sort of law we’re going to see in the tech industry — and hopefully, across antitrust policy more generally — in the coming years.
Below, I’m going to detail how we got here, and what I think comes next.
On Monday, a California jury ruled after just three hours of deliberation that Google violated both state and federal antitrust law via its monopolization of app stores on Android devices. This is the first time since “Big Tech” became the vernacular that a big tech firm lost an antitrust case in court.
The case was brought by Epic Games, the makers of Fortnite, which has been in a long-running antitrust dispute with both Apple and Google. It revolved around Google tying access to its app store — the place where cell phone users can purchase and download apps — to certain developers using Google’s in-app billing system, which allowed Google to collect 15-30 percent of every transaction.
Yes, every time to pay for a music subscription, fitness app, news app, or dating app, Google takes a huge chunk of the money. This is a charge that’s distinct from the fee every developer pays to be listed in the store, and was applied only to some app developers deemed to be selling “digital goods.”
The jury found that Google’s requirement that some developers be forced to make those payments was illegally tied to app store access. Google was also found guilty of paying off competitors to not make their own, competing app stores, allowing Google to maintain its monopoly power.
This is a big deal: While in other cases, including a similar one Epic filed against Apple, judges have not found fault with big tech’s practices, here, a jury found across the board that Google’s tactics are anti-competitive and harmed Epic’s ability to do business.
I think the jury got it right, of course. As I’ve been writing about for a while, Google and Apple both have erected a tollbooth between app developers and customers, requiring certain developers to pay up to nearly a third of their revenue just for the simple ability to access the online app market. (My long piece from last year on the ins and outs of the policy questions and court cases of all this is here.) In many ways, in my experience, normal people are ahead of elites and elected leaders when it comes to corporate power and the way it affects everyday life, and that difference shone through here, with a jury going where judges and politicians hadn’t yet dared.
During the next phase of the trial, slated for January, the presiding judge will decide what sort of remedies Google needs to put in place to address its lawbreaking. Google, of course, plans to appeal, so any major changes could still be years away. But the potential for bringing an end to its monopoly over app distribution on Android devices is very real.
This issue hasn’t only been fought in the courts, though. Legislators in both the federal government and many state governments across the country, from both parties, have attempted to pass bills breaking Google and Apple’s monopolies over app distribution on their respective devices. Those efforts ran into a buzzsaw of lobbying money and hesitancy from lawmakers intimidated by the idea of shaping the rules big tech has to follow.
As Pluribus News reported, in Arizona alone, “To beat back the bill, Apple hired nine of the state’s top lobbyists, including Gov. Doug Ducey’s (R) former chief of staff. Then, in the space of only a month and a half, the computer behemoth hired scores of lobbyists in at least half the states to do the same thing, including a whopping 25 in Florida alone”
Indeed, it came as a big surprise when, after passing the state House and being scheduled for a Senate hearing, that Arizona bill simply vanished into the ether, never to be heard about again. In other states, I saw a similar swarm of lobbyists every time one of these bills got any sort of positive, public hearing or press.
Google also systematically offered sweetheart deals to the powerful corporations arrayed against it in order to remove them from the public policy arena. For example, Spotify and Match Group were two of the larger corporations fighting for fairer rules in the Google app store — because they had the resources for both a legal fight and a PR campaign should Google would retaliate against them.
Google bought them off by allowing them to bypass the very payments that were at issue, applying to the largest app developers rules that didn’t help the small ones who needed it most. Epic apparently eschewed just such a payout itself to continue the case.
That flow of money resulted in none of the legislative efforts getting across the finish line. But now that a jury has agreed that there’s really an issue with Google’s power over the app economy, those bills could certainly be back on the table.
Case in point: Minnesota Democratic Sen. Amy Klobuchar said in a statement after the verdict, “Google effectively has a 30 percent app store tax on small businesses and innovators that bring new products and services to our smartphones. Our fight for fairer competition and rules of the road for mobile app stores and other online marketplaces is gaining momentum. Now, we must take the next step in Congress to finally update our consumer laws for the digital age.”
Google and Apple have successfully played federal and state leaders off against each other in this debate, blocking action at the federal level and telling Congress it should wait until courts have ruled to pass new policy, while telling state lawmakers that it should really leave things to Congress.
Does that change now, depending on what the judge decides Google needs to do to remedy its illegal power? Maybe! Depending on what the judge does, I wouldn’t be surprised to see legislation proposed to both firm up the freedom developers should have, and a counter-campaign from the tech firms to immunize themselves from the law again.
This case certainly showed, at a minimum, that big tech is not invincible and that normal people understand the power it wields. As my colleague Katherine Van Dyck said, this “is a crack or a hole in the dam that has been used to wall off those companies’ monopoly power.” And it may make judges in other upcoming antitrust cases involving Google more comfortable with reining in the corporation’s power, since they won’t be the first.
There’s a lot more to come, but we’re definitely at the beginning of something here.
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— Pat Garofalo