Creator of Fortnite Contests Google’s Right to Claim a Portion of In-App Transactions

Google Stock 5 Creator of Fortnite Contests Google's Right to Claim a Portion of In-App Transactions

Google is facing a new legal challenge regarding its Play Store’s digital payment processing system, with Epic Games, the creator of Fortnite, alleging that the system has been unfairly inflating prices for both consumers and developers. The trial, set to take place in a San Francisco federal court, brings to light issues similar to those seen in a 2021 case against Apple’s App Store.

In that case, while Apple largely emerged victorious, there was a significant ruling that could have implications for Google as well. The judge and an appeals court ruled that Apple must allow apps to offer alternative payment options, potentially disrupting the 15% to 30% commissions that both Apple and Google collect on in-app purchases. Apple is appealing this part of the ruling to the U.S. Supreme Court, where Epic is also challenging various aspects of the case it lost.

Epic is now turning its attention to Google’s commission system, despite Android’s existing ability to support alternative app stores, such as Samsung’s. Epic contends that Google still maintains a tight grip on the Android app ecosystem and its associated payment system, alleging that it has spent hundreds of millions of dollars to stifle competition.

Much like Apple, Google defends its commissions as a means to recoup its investments in the Play Store and argues that these controls are necessary to ensure the security of the tens of millions of Android users who download apps.

The trial, presided over by U.S. District Judge James Donato, is expected to run until just before Christmas and will include testimony from Sundar Pichai, a long-time Google executive who now serves as the CEO of Alphabet Inc., Google’s parent company.

Pichai recently testified in a Washington D.C. antitrust trial focused on Google’s dominance in internet search and allegations of anticompetitive behavior. Google had initially faced multiple opponents in this trial, but it settled with state attorneys general in September and resolved a case with Match Group, the owner of Tinder and other dating services, just last week.

Match Group’s settlement resulted in Google shifting from a jury trial to a proceeding decided by the judge. The terms of the settlement with state attorneys general are expected to be disclosed during the trial with Epic.

Epic’s CEO, Tim Sweeney, criticized Google’s “user choice billing” option in a social media post and pledged to fight the company in court. Sweeney is also expected to testify during the trial.

In response, Wilson White, Google’s Vice President of Government Affairs and Public Policy, accused Epic of seeking “something for nothing.” He argued that Epic’s case against Google has even less merit than its case against Apple and criticized the game maker’s legal actions in relation to Android.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.