The big news last week was that a jury in San Francisco had found Google guilty on all counts of antitrust violations stemming from its dispute with Epic Games, maker of the bestselling Fortnite, which had lodged a number of complaints related to how Google runs its Play store, an Android app market with a revenue of about $48bn (£38bn) a year.
Why is this interesting? Isn’t it just another case of two tech companies squabbling in a US court? Well, in the first place, something very rare happened – a tech giant actually lost a big case in a US court. Second, the case was decided by a jury, not (as often happens in such cases) by a judge. Third, it showed that venerable antitrust (ie anti-monopoly) laws such as the Sherman Act still work.
All this stems from the launch of the smartphone in 2007. Given that these devices were proper computers, they could run small programs – apps (for “applications”) created by software developers. Accordingly, Apple set up the App Store, from which iPhone users could buy apps made by third-party developers. Only apps that had been approved by Apple were admitted to the store, and the company levied a 30% fee on all sales – and also on any in-app purchases that developers enabled. So if you wanted to buy an iPhone app, it had to come from the Apple store. And you were precluded from “sideloading” – installing an app from outside the store. It was, by any standards, a cosy – and increasingly lucrative – monopoly.
Not to be outdone in the monopoly stakes, Google, having launched the Android operating system for non-Apple smartphones, opened its own app store in 2008. It was called the Android Market, renamed Google Play in 2012, and, like Apple’s store, it took a 30% cut on app sales, but did allow sideloading on to Android phones – albeit via a fiddly process.
In 2020, Tim Sweeney, the founder of Epic Games, began encouraging players of Fortnite to pay Epic directly for purchases of in-game items, rather than using systems developed by Google and Apple. Both tech giants promptly kicked Fortnite out of their app stores.
Sweeney then sued both for, as one expert put it, “monopolising the on-ramp to the phone”. He lost the Apple case, appealed, and it is now with the supreme court. But last week, he won in San Francisco. How come?
The tempting answer is that the Apple case was originally decided by a judge, whereas the Google one involved a 10-person jury. Was this because ordinary citizens are much less enamoured of tech giants than they once were?
Well, they may be; after all, they are normal human beings. But a more plausible explanation is that they were convinced by the evidence. The jury agreed that Google had monopoly power in the Android app distribution market and in in-app billing, that it behaved anticompetitively in those markets in a way that injured Epic. They also decided Google had an illegal tie between the Google Play app store and the Google Play billing payment services, and that the company’s distribution agreement was anticompetitive, as were its deals with game developers under something known as Project Hug.
Project Hug was one of the delicious snippets to emerge from the case via the legal discovery process. It seems that in 2019, Google became worried that Epic and other companies might themselves set up Android app stores, and perhaps even persuade phone manufacturers such as Samsung to install those stores on its phones. Google Play’s finance team reckoned that if that happened, the company could face revenue losses somewhere between $350m and £1.4bn by 2022.
So they came up with Project Hug – “a hug-developers-close-and-show-love plan”, or “a surge plan to throw extra love/promotion to top developers and games”. In practical terms, Epic’s legal complaint argued, that translated into spending “hundreds of millions of dollars on secret deals with over 20 top developers” that the company had deemed most at risk of falling to Epic’s “contagion”.
And it seems that hugging was at least a partial success. At any rate, Google paid $360m to Activision Blizzard, a leading video game company which, to date, has not opened an app store of its own. There may have been no rocket scientists on that San Francisco jury, but its members were clearly able to figure out what that kind of corporate behaviour means. Good on them. Hopefully there will be more where that came from.
What I’ve been reading
Welcome, overlords
Gideon Lewis-Kraus has written an excellent review-essay, Maybe We Already Have Runaway Machines, n the New Yorker about David Runciman’s new book on states and corporations.
Antisocial media
What the Algorithm Does to Young Girls is a bracingly realistic essay by Freya India on the toxicity of Instagram, on the Persuasion site.
I spy AI
Bruce Schneier has written an insightful blogpost on his site schneier.com about what happens when surveillance capitalism meets AI.
