San Francisco:

A US judge on Monday ordered Google to open its Android smartphone operating system to rival app stores, in a fresh legal setback for the tech giant.

The order is the result of Google’s defeat in an antitrust case brought by Fortnite-maker Epic Games, where a California jury decided that Google wields illegal monopoly power through its Android Play store.

The San Francisco jury in December took just a few hours to decide against Google, finding that the company had embarked on various illegal strategies to maintain its app store monopoly on Android phones.

The order, which Google is appealing, follows a similar setback in August when a different judge found that Google’s world-leading search engine was also an illegal monopoly.

Google is also facing an antitrust lawsuit in a third federal case in Virginia over its dominance of online advertising.

Under the Epic Games order, for the next three years Google will be prohibited from engaging in several practices that were deemed anticompetitive by the jury in the landmark case.

These prohibitions include revenue sharing with potential competitors and requirements that developers launch apps exclusively on the Play Store.

The judge has also ordered the creation of a three-person Technical Committee to oversee the implementation of the changes and resolve any disputes that may arise.

This injunction represents a significant challenge to Google’s dominance in the Android app ecosystem and could reshape the mobile app landscape in the coming years.

Epic Games CEO Tim Sweeney urged companies to seize this opportunity “to build a vibrant and competitive Android ecosystem with such critical mass that Google can’t stop it.”

He also underlined that the changes would only be applicable in the US, but pledged that “the legal and regulatory battle will continue around the world.”

– Google appeals –

Google said it would appeal the injunction and also demand that it be set aside pending the outcome of its continued legal challenge.

The judge said the order was effective November 1, with some provisions given until July 1 to be implemented.

“We will keep advocating for what is best for developers, device manufacturers and the billions of Android users around the world,” said Lee-Anne Mulholland, the company’s regulatory affairs vice president.

Phones running on the Android operating system have about a 70 percent share of the world’s smartphone market.

Smartphone companies can install the Android app for free under the condition that the Play app store remains on the home page and that other Google offers are pre-installed.

The jury found that Google worked illegally to make sure that the Google Play app store was the only conduit for making payments to third party apps such as Fortnite and other games.

A sizable chunk of app store revenue comes from video games, and Epic Games has long sought to have payments for its mobile games, such as Fortnite, take place outside the Google or Apple app stores that take commissions as high as 30 percent.

Epic mostly lost a similar case against Apple, where a different US judge largely ruled in favor of the iPhone-maker.

Apple and Google regularly argue that their app shop commissions are industry-standard, and that they pay for benefits such as reach, transaction security and ferreting out malware.

Google also argued that the arrangement with smartphone makers helped Android-run devices better compete against Apple’s iPhone.

But the trial exposed that Google rakes in tens of billions of dollars of revenue through the app store.

In order to preserve its one-stop-shop for apps, Google paid smartphone makers a cut of its revenue in return for the Play store remaining the exclusive gateway.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Washington:

A U.S. judge on Wednesday said he was planning to issue an order forcing Alphabet’s Google to give Android users more ways to download apps, but would not micromanage the tech giant’s business, following a jury verdict last year for “Fortnite” maker Epic Games.

U.S. District Judge James Donato in San Francisco heard from technology experts and lawyers for Epic and Google about proposed reforms in the blockbuster antitrust case.

Donato showed impatience for Google’s protests about the costs and difficulty of implementing many of Epic’s proposals, and signaled he would issue a ruling that would maximize users’ and developers’ flexibility to download and distribute apps outside the Play store.

“You’re going to end up paying something to make the world right after having been found to be a monopolist,” Donato said.

He said his injunction will be about three pages long and will ensure Google knows what the “rules of the road are.”

Donato said he will rule in the coming weeks and set up a three-person compliance and technical committee to implement and monitor the injunction.

“Google foreclosed competition for years and years and years. We’re opening the gate now and letting competitors come in,” Donato said.

Google declined to comment, and Epic did not immediately respond to a request for one.

Epic’s lawsuit accused Google of monopolizing how consumers access apps on Android devices and how they pay for in-app transactions.

The Cary, North Carolina-based company persuaded a jury in December 2023 that Google unlawfully stifled competition through its controls over app distribution and payments.

Epic has asked Donato to require Google to make it easier for Android users to download apps from third-party app stores, such as Epic’s, and from other internet sources. It also wants the court to forbid Google from automatically installing its Play store on Android devices.

Google has denied harming competition, and it told Donato that Epic’s proposals “would make it nearly impossible” for the Alphabet unit to compete and harm consumer privacy and security.

Google lawyer Glenn Pomerantz told Donato on Wednesday that Google should not be forced to distribute its rivals’ app stores. “Competition will be worse if you impose a duty that you have to deal with your competitor,” Pomerantz said.

Epic’s lawyer Gary Bornstein urged the court to direct Google to act quickly to implement his injunction.

Google faces another threat to its business practices in a separate government lawsuit in Washington, D.C. challenging the company’s dominant search engine.

Last week, U.S. District Judge Amit Mehta ruled for the U.S. Justice Department and said Google had illegally monopolized web search, spending billions to become the internet’s default search engine. Google has denied the claims.

Mehta has set a Sept. 6 hearing to discuss a timeline for the court to impose remedies on Google in that case.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

San Francisco:

Apple’s lucrative deal with Google could be under threat after a U.S. judge ruled that the Alphabet-owned search giant was operating an illegal monopoly.

A potential remedy for Google to avoid antitrust actions could involve terminating the agreement, which makes its search engine a default on Apple devices, Wall Street analysts said on Tuesday.

Google pays Apple $20 billion annually, or about 36% of what it earns from search advertising made through the Safari browser, for the privilege, according to Morgan Stanley analysts.

If the deal is undone, the iPhone maker could take a 4-6% hit to its profit, the analysts estimated.

The pact runs until at least September 2026 and Apple has the right to unilaterally extend it for another two years, according to media reports in May that cited a document filed by the Department of Justice in the antitrust case.

“The most likely outcome now is the judge rules Google must no longer pay for default placement or that companies like Apple must proactively prompt users to select their search engine rather than setting a default and allowing consumers to make changes in settings if they wish,” Evercore ISI analysts said.

Apple’s shares were trading flat on Tuesday, underperforming a recovery in the broader market after Monday’s global selloff. Alphabet was little changed, after falling 4.5% in the previous session.

“The message here is that if you’ve got a dominant market position with a product, you’d better avoid the use of exclusive agreements and make sure any agreement you make gives the buyer free choice to substitute away,” said Herbert Hovenkamp, a professor of law at the University of Pennsylvania.

To be sure, the “remedy” phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, the District of Columbia Circuit and the U.S. Supreme Court. The legal wrangling could play out into 2026.

AI TILT

Still, if the tie-up is scrapped, Apple will have several options including offering customers alternatives such as Microsoft Bing to customers, or potentially a new search product powered by OpenAI.

Analysts agree that the ruling will speed up Apple’s move towards AI-powered search services. It recently announced that it would bring OpenAI’s ChatGPT chatbot to its devices.

In a shift away from exclusive deals that would help Apple ward off regulatory scrutiny, the company has said it is also in talks with Google to add the Gemini chatbot and plans to add other AI models as well.

Apple is also revamping Siri with AI technology, giving it more control to handle tasks that had proven tricky in the past such as writing emails and interacting with messages.

While those efforts are expected to make little money in the coming years, they could help capitalize on the new technology.

“Apple could see this as a temporary setback, especially since it earns a lot from the Google search deal, but it is also an opportunity for them to pivot to AI solutions for search,” said Gadjo Sevilla, analyst at Emarketer.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)