A recent antitrust case ruling in favor of videogame developer Epic Games has put the app-store model of companies like Google and Apple under scrutiny. This landmark decision has far-reaching implications not only for Google's parent company Alphabet but also for other Big Tech giants looking to challenge their dominance.
As a consequence of the jury's decision that Google maintains a monopoly in its app store's distribution and payments market, Alphabet shares saw a 1% decline during premarket trading on Tuesday. The case was brought forth by Epic, the developer behind the popular game Fortnite.
Next year, a judge will determine what remedies are awarded to Epic. While Epic stated in its lawsuit that it did not seek monetary damages or preferential treatment from Google, it did express the desire for Google to open up its Android ecosystem. Google has announced its intent to contest the decision.
The immediate question at hand is whether Epic's victory will exert additional pressure on Apple to reconsider its own policy of claiming up to 30% of app revenue in its App Store.
Independent analyst Richard Windsor, who operates Radio Free Mobile, predicts that the outcome will inevitably result in ongoing pressure to reassess the traditional revenue split of 30% for developers and 70% for platforms. Over time, this standard may gradually erode.
Apple Faces Antitrust Lawsuit: Epic Battle
In recent years, Apple found itself in the midst of an antitrust lawsuit brought by Epic. However, the tech giant ultimately emerged victorious as a judge ruled in their favor in 2021. The ruling was later upheld by an appeals court this year, solidifying Apple's position.
Apple has yet to respond to inquiries regarding the potential implications of the recent Google decision on its own business. As a result, Apple shares experienced a slight decline of 0.2% in premarket trading.
Cracking Open the Door for App Store Competition
The recent judgment against Google may serve as a catalyst, encouraging other companies to venture into establishing their own app stores within a more open market environment. However, it is worth noting that such a move might not reap the same level of financial success as the current revenue-sharing model.
Microsoft, for instance, intends to launch a new app store for games on both iPhones and Android smartphones sometime next year. The Financial Times reported earlier this year that Microsoft's head of gaming revealed this plan in an interview.
A Fragmented Market: Boon or Bane?
The potential emergence of a more fragmented market raises questions about its impact on the technology sector as a whole. While it remains unclear whether a fragmented market will benefit or hinder the industry, Oppenheimer analyst Martin Yang warned that an unfavorable ruling against Google could complicate the path to improved bookings and margins for mobile game publishers and the overall ecosystem surrounding mobile app marketing.