The big news last week was that a jury in San Francisco found Google guilty of all antitrust violations stemming from its dispute with Epic Games, maker of best-selling games. FortniteThe company has filed a series of complaints about how Google manages its Play store, an Android app marketplace that generates around $48bn (£38bn) in revenue a year.
Why is this interesting? Isn’t this just another example of two tech companies fighting in US court? In the first place, something very rare happened; actually a technology giant loss Big case in US court. Second, the case was decided by a jury, not a judge (as is often the case in such cases). Third, it showed that respected antitrust (i.e., anti-monopoly) laws, such as the Sherman Act, still apply.
All this is due to the fact that the smartphone was released in 2007. Given that these devices were proper computers, they were capable of running small programs created by software developers, that is, applications (for “applications”). Accordingly, Apple established the App Store, where iPhone users can purchase applications made by third-party developers. Only Apple-approved apps were accepted into the store, and the company took a 30% fee from all sales, as well as all developer-enabled in-app purchases. So if you wanted to buy an iPhone app, it had to come from the Apple Store. And you’re also prevented from “sideloading” an app from outside the store. This was by all accounts a comfortable and increasingly lucrative monopoly.
Was the decision due to ordinary citizens being much less enamored with tech giants than before?
Google, which launched the Android operating system for smartphones other than Apple, opened its own application store in 2008 in order not to be left behind in the monopoly race. It was called Android Market, renamed Google Play in 2012, and like Apple’s store, caused a 30% cut in app sales, but allowed sideloading to Android phones, albeit through a difficult process.
In 2020, Tim Sweeney, the founder of Epic Games, started encouraging players. Fortnite Paying Epic directly instead of using systems developed by Google and Apple to purchase in-game items. Both technology giants took action immediately Fortnite They’re out of app stores.
Sweeney later sued both for, as one expert put it, “a monopoly on access to the phone.” Apple lost its case, appealed, and the case is now in the supreme court. But he won last week in San Francisco. How come?
The tempting answer is that the Apple case was initially decided by one judge, while the Google case was decided by a 10-person jury. Was it because ordinary citizens were less enamored with tech giants than before?
It could be; After all, they are normal people. 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-app billing and acted anticompetitively in those markets to the detriment of Epic. They also ruled that there was an illegal tie between Google’s Google Play app store and Google Play bill 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 slices of litigation that emerged through the legal discovery process. Google apparently started worrying in 2019 that Epic and other companies might set up Android app stores themselves, and perhaps even persuade phone makers like Samsung to install them on their phones. Google Play’s finance team has calculated that if this happens, the company could face revenue losses of between $350 million and £1.4 billion by 2022.
So they came up with Project Hug: “a plan to give hugs and love to developers” or “a surge plan to give extra love/promotion to top developers and games.” In practical terms, Epic’s legal complaint argued, this meant the company spent “hundreds of millions of dollars on secret agreements with more than 20 top developers” whom Epic deemed most exposed to “contamination.”
Apparently the hug was at least a partial success. In any case, Google paid $360 million to Activision Blizzard, a leading video game company that has never opened its own app store. There may have been no rocket scientists on the San Francisco jury, but the jurors clearly understood what such corporate behavior meant. I treated them well. I hope there’s more where this came from.
What was I reading
Welcome gentlemen
Gideon Lewis-Kraus wrote an excellent review: Maybe We Already Have Bootleg Machines. New Yorker About David Runciman’s new book on states and corporations.
antisocial media
What the Algorithm is Doing to Young Girls is a refreshingly realistic essay by Freya India on the site Persuasion on the toxicity of Instagram.
I’m spying on artificial intelligence
Bruce Schneier wrote an insightful blog post on his site schneier.com about what happens when surveillance capitalism meets artificial intelligence.