Google Appeal of Epic App Win Eyed by Skeptical Court

A federal appeals court panel in San Francisco appeared skeptical of Alphabet Inc.’s argument that its competition with Apple Inc. in smartphones is sufficient to justify overturning a jury verdict that declared an illegal monopoly for Android apps.

“Even if Google does vigorously compete with Apple, that doesn’t mean Google can create its own ecosystem where it acts as a monopolist through the Google Play Store,” US Circuit Judge Gabriel P. Sanchez said Monday during a court hearing.

In 2023, a jury ruled in favor of Fortnite game maker Epic Games Inc., which accused Alphabet of setting restrictive Google Play Store policies and making payments to phone manufacturers and popular app developers to exclusively use its app store. But Google lawyers argued Epic lost a similar case against Apple’s app policies, when a different judge ruled its actions didn’t violate antitrust laws.

The appeals court “can’t pretend that didn’t happen,” Google lawyer Jessica Lynn Ellsworth told the panel. She said Epic should be bound by the appeals court’s 2023 ruling in the apple case, which upheld a 2021 trial court decision.

But the other two judges on the 9th Circuit Court of Appeals panel didn’t seem to agree.

There are “clear factual differences between the Android world and the Apple world and all of your arguments sort of brush that aside,” said Circuit Judge Danielle J. Forrest.

“The short answer is that the Apple operating system and Apple universe is different,” Circuit Judge Margaret McKeown said.

Google wants the appeals court to overturn an order by US District Judge James Donato following the jury verdict that the company lift restrictions that prevent developers from setting up rival marketplaces and billing systems. That injunction has been on hold since last year while Google appeals.

In 2020, the most recent year data is available, Google’s app store brought in more than $14 billion in revenue from the company’s 15% to 30% share of most digital purchases.

Google also argued that a jury shouldn’t have been allowed to hear the case and Donato should have himself decided the antitrust issues, a legal argument that Epic’s lawyer Gary Bornstein said was flawed.

Forrest said if the panel decides the case should not have gone to a jury, it wasn’t clear whether Donato would have decided the same way.

“There’s not a constitutional right to a bench trial,” Bornstein said. Sending the case back to Donato would unfairly delay restoring competition in the market for “the homework assignment of writing the opinion,” he said.

The US Justice Department defended Donato’s ruling.

Google’s arguments on the injunction, “if adopted, could prevent future courts from doing their duty under the law,” said David Lawrence, a lawyer for the department. The trial court “found what we think is very reasonable means of opening up competition,” he said.

The Epic case was Google’s first antitrust loss in the US. In another lawsuit brought by the Justice Department and state attorneys general, a DC federal judge ruled that the company illegally monopolized the online search and search advertising markets.

A Virginia federal judge has yet to rule in a third antitrust lawsuit, also filed by the Justice Department and states, challenging the company’s dominance over the tools used to buy, sell and serve the display advertising show on websites.