(Bloomberg) — Alphabet Inc. used a “bribe and block” strategy to thwart competition against its Google Play app marketplace, hurting developers and raising prices for consumers, Epic Games Inc. said as it began its courtroom battle with the technology giant.
Epic, which makes the popular Fortnite game, is looking to upend Google Play policies in an antitrust trial over whether Google has monopolized the Android app distribution and payment market. The case threatens billions of dollars in revenue generated by the store.
At opening statements on Monday, Epic’s attorney Gary Bornstein told jurors that Google pays off competitors, including those who want to set up their own app stores to directly deal with users, and blocks them from competing with its own marketplace and payment system.
Google’s anticompetitive acts are leading to “higher prices, lower quality and less choice for everyone, all while Google makes billions and billions in profits — more than what it would make in a competitive market,” Bornstein said. In 2021, the Google Play store made more than $12 billion in operating profit and had an almost 71% profit margin, he said.
Bornstein also told jurors that Google lets some companies that sell physical goods like Starbucks Corp. choose their own payment systems, but app developers have no choice but to use Google Play’s billing and payment system.
‘Google Competes’
Glenn Pomerantz, an attorney representing Google, shot back, saying “Google cannot be a monopolist because Google competes” with app stores of rivals including Apple Inc. Popular apps like Clubhouse and Chat GPT launched exclusively on the Apple App Store and Google has to fight to win developers, Pomerantz told jurors.
“Bribe is a pretty strong word,” the attorney said. “These agreements had nothing to do with bribes,” and are instead “part of Google’s efforts to get the support of app developers.”
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None of the developer deals or incentive offers that Epic pointed out — including those made to Activision Blizzard Inc. before it was acquired by Microsoft Corp. and Tencent Holdings Ltd.’s Riot Games — have exclusivity clauses or conditions tied to third-party stores, according to Pomerantz.
The trial is scheduled to run until early December and is expected to feature testimony from Alphabet Chief Executive Officer Sundar Pichai and Epic CEO Tim Sweeney.
Epic CEO in Court
Sweeney, dressed in a gray suit, sat in the public seating area on the first day of trial. He stood up and acknowledged jurors with a bow when Bornstein pointed to the chief executive and told them he founded Epic while still in college.
The Google Play antitrust fight kicked off when Epic sued Google in 2020. Alphabet claimed in a countersuit that the game maker breached its contract and acted in bad faith when it tried to set up its own app store in 2020 as an end-run around the Google Play billing system.
Epic is the only stakeholder still suing Alphabet after the Mountain View, California-based company recently reached settlements with consumers, state attorneys general and Match Group Inc., all of whom had targeted Google Play in complaints. Epic largely lost a similar challenge two years ago to Apple over its app store.
Epic said in its complaint that Google agreed in January 2020 to pay Activision $360 million over three years after the game publisher discussed launching its own app store. Activision has denied that Google made such an offer.
The case is In Re Google Play Store Antitrust Litigation, 21-md-02981, US District Court, Northern District of California (San Francisco).
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–With assistance from Julia Love and Cecilia D’Anastasio.
