Character actors from the Epic Games Fortnite video game dance during the E3 Electronic Entertainment Expo in Los Angeles on June 12, 2019.
Kyle Grillot | Bloomberg | Getty Images
A U.S. judge issued a permanent injunction on Monday that will force Google to offer alternatives to its Google Play store for downloading apps on Android phones.
Google will also be restricted from paying fees or sharing revenue with companies in exchange for them choosing not to compete with Google’s app store. Alphabet stock took a leg lower on the news and was down more than 2% Monday.
The ruling from Judge James Donato in California is the most significant outcome of Epic Games’ antitrust lawsuit against Google, which kicked off in 2020. The Fortnite maker accused Google of anti-competitive practices, including paying hardware companies and Android phone makers to not develop competing app stores.
The decision could lead to developers getting a bigger share of the market, as both Google and Apple’s app stores typically take between 15% and 30% of total sales for high-grossing apps. The new restrictions on Google Play may allow developers to keep more revenue by bypassing Google’s rules or fees.
According to the filing, starting in November, for three years, Google will not be able to:
Pay companies to launch apps exclusively or first on Google Play
Pay companies so they do not compete with Google Play
Pay companies to preinstall Google Play on new devices
Require app makers to use Google Play Billing, or prohibit app makers from telling their users about cheaper online goods on their website (Google Play takes between 15% and 30% of in-app purchases as a fee from large app makers)
Google will also have to permit competing Android app stores to access Google Play’s catalog of apps
Google will have to carry third-party Android app stores on its Google Play app store.
Epic Games and Google will also form a three-person committee that will review technical issues related to Google’s compliance, according to the filing.
Epic Games publishes titles such as Fortnite, which are monetized through in-app purchases of character costumes and other so-called “skins,” and challenged Google and Apple’s contractual control of mobile app distribution in 2020 offering less-expensive purchases of Fortnite’s in-game currency, violating app store rules and kicking off the lawsuits.
Epic Games prevailed over Google late last year, and Monday’s filing details the changes Google has to make. Epic Games mostly lost in a very similar suit against Apple and its control of the App Store. Google’s trial was decided by a jury. Apple’s trial was decided by a judge.
During the Google trial, Epic Games focused on whether Google locked up the app store market through deals with handset makers, and whether it scared users away from using Android’s sideloading functionality, which allows Android users to install apps from the web, through security warnings.
Epic Games CEO Tim Sweeney previously said Google’s corporate culture contributed to Epic’s win because Google officials often wrote down or documented business practices in emails or communications that came out during the trial.
Google said in a blog post that it will ask the court to pause the pending changes, and will appeal the court’s decision.
An Epic Games representative did not immediately respond to CNBC’s request for comment.
