Videogames developer Epic Games recently achieved a milestone victory in an antitrust case against Google. This decision has cast doubt on the app-store model adopted by major tech companies like Google-parent Alphabet and Apple. It also poses a significant challenge for other Big Tech peers who are seeking to displace them.
Following the jury’s verdict that Google maintains a monopoly in its app store’s distribution and payments market, Alphabet shares experienced a 1% decrease in premarket trading on Tuesday. The judge will determine the remedies to be awarded to Epic in the coming year. Initially, Epic stated that it was not seeking monetary damages or favorable treatment from Google. Instead, it aimed to compel Google to open up its Android ecosystem. However, Google has expressed its intention to contest the decision.
In light of this outcome, the main question that arises is whether Epic Games’ triumph will enhance the pressure on Apple to reconsider its own policy of claiming up to a 30% share of app revenue generated through its App Store.
Independent analyst Richard Windsor, who publishes Radio Free Mobile, argues, “The net result is that there is going to be some ongoing pressure on the traditional 30% / 70% split of revenue, and I think that it will gradually erode over time.”
This ruling marks a significant turning point in the app-store landscape and may shape the future relationship between developers and major tech companies moving forward.
Apple Faces Antitrust Lawsuit
In the technology world, Apple recently found itself embroiled in an antitrust lawsuit filed by Epic. However, in a ruling that took place in 2021 and was subsequently upheld by an appeals court this year, the iPhone giant emerged largely victorious.
While Apple has yet to comment on the potential impact of the recent Google decision on its own business, it will undoubtedly be following the situation closely. As a result, Apple shares have experienced a slight dip of 0.2% in premarket trading.
The Rise of Competing App Stores
The judgment against Google could potentially serve as an incentive for other companies to start their own app stores within a more open market environment. However, it is worth noting that these ventures may not be as lucrative as they currently are under the prevailing revenue-sharing model.
Microsoft, for one, has ambitious plans to launch its own app store specifically for games on both iPhones and Android smartphones. According to The Financial Times, this initiative is expected to materialize in the coming year. Such a development further highlights the changing tides in the technology sector.
Uncertain Outcomes for the Technology Sector
While a more fragmented market may bring about benefits for individual companies, it remains unclear whether this trend will have a positive overall impact on the technology sector.
In a research note, Oppenheimer analyst Martin Yang expressed skepticism regarding the potential outcomes of a ruling against Google. He stated that it is unlikely to result in significant improvements in bookings or margins for mobile game publishers and the broader ecosystem around mobile app marketing.
In conclusion, the recent antitrust verdict against Google presents both opportunities and challenges for various players in the industry. Ultimately, only time will tell how this landscape will evolve and shape the future of technology.
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