A U.S. federal judge has ordered Google to dismantle its digital barriers protecting the Google Android app store to enhance competition. The ruling requires Google to make significant changes, such as prohibiting payments to other companies to deter them from developing their own app stores or obtaining exclusivity for Google’s app store. This mandates Google from pre-installing their app store on new devices in exchange for these agreements.
This injunction is set to stimulate competition among Android app store platforms, offering app developers a larger market share and reducing their app listing fees. Historically, Google and Apple app stores have taken a 15-30% cut from high-revenue app sales. According to Sensor Tower, consumer spending on apps totaled $124 billion last year.
Following this announcement, Alphabet (GOOGL, Financial), Google's parent company, saw its stock price fall 2.47% to $164.39. Evelyn Mitchell-Wolf, an analyst at Emarketer, noted that this ruling may lead major app developers to diminish Google's app store market share, affecting its revenue from app subscriptions and in-app purchases. Despite retaining significant influence, consumers might prefer buying apps from more affordable platforms.
This decision stems from Epic Games' lawsuit against Google's monopolistic practices. Last year, Epic accused Google of monopolizing the app store market through deals with phone manufacturers and blocking software installations from web sources via security warnings. Epic won the case.
The judge's order requires Google to allow competitor Android app stores access to its app directory and host third-party Android app stores within the Google store. Epic's CEO Tim Sweeney remarked that this injunction gives app developers, store makers, and operators three years to build a competitive Android ecosystem that Google cannot obstruct.
Additionally, court documents reveal that Epic and Google will form a three-member committee to address technical issues related to Google's compliance. Google intends to request a suspension of the injunction's enforcement, citing a need for 12-16 months to develop necessary safeguards to prevent malware from infiltrating competitor stores and infecting phones. Google plans to continue appealing the decision.
