Epic v. Google: A Horse of a Different Color

On December 11, 2023, the jury in the Epic Games, Inc. v. Google LLC et al antitrust litigation handed Epic a significant victory after less than four hours of deliberation, finding that Google wielded unlawful monopoly power within the Android app distribution and in-app billing services. This victory arrives just a few months after Epic lost its appeal before the Ninth Circuit in the parallel antitrust case of Epic Games, Inc. v. Apple Inc., in which Epic failed to prove that Apple’s app platform was an unlawful monopoly (see our blog posts on the original district court decision here, and our follow-up on the appellate decision here).

One may ask, given the similarity in Epic’s claims against these two platforms, why was there such a night-and-day difference in outcome here, and what are some key takeaways going forward?

Difference 1: Jury vs. Bench Trial

As an initial point, one key difference between the Apple and Google cases was the presence of a jury. In Apple, the parties agreed to a bench trial – that is, the judge served as the trier of fact as well as the interpreter of relevant law. In Google, however, Epic sought a trial by jury. In a trial by jury, the judge is tasked with determining the applicable law, provides that law to the jury in the form of instructions, and the jury then applies that law to the facts of the case to reach a verdict. A jury offers a diversity of perspectives and opinions that a single judge cannot provide, but also can inject a degree of uncertainty as to how the facts will be weighed and interpreted.

We cannot know the strategic decisions the parties faced when deciding whether to seek a jury or bench trial, nor can we speculate on what difference the presence of a jury would have made in the Apple case. But we do know the Google jury determined the questions placed before them – namely, defining the relevant product market and geographic area (see below) and whether Google operated as an unlawful monopoly power within those – based on the facts and evidence specific to this case, and that their determinations resulted in a significantly different outcome here.

Difference 2: Relevant Market Definitions

Before determining whether Google was operating an unlawful monopoly, the jury first had to define the relevant market. As we explained back in 2021, defining the relevant market is the first step in addressing the question of whether a party holds market share power (which is acceptable) or monopoly power (which is not). Both here and in Apple, Epic argued for a relatively narrow relevant market definition, limiting the scope to the Apple App Store in Apple and the Android app distribution and payment environments in Google. The platforms instead argued that the relevant market was broader, including other app platforms on rival mobile devices.

If a business occupies a narrow market, they may require relatively little market presence to effectively wield monopoly power within it. But in a much broader market, a business with that same amount of market presence might only be deemed to have market share power. To make a fishy comparison, a moderately-sized fish is much more prominent in a small pond than in a big lake.

In Apple, the court determined that the relevant market was global “digital mobile gaming transactions,” excluding China, which meant it broadly included both the App Store and Google Play, among other platforms (a very big lake). In this case, however, the jury determined that the relevant market was just Android app distribution and Android in-app billing services for digital goods and services transactions globally, excluding China (a comparatively smaller pond). This limited the market to only Android platform services (which are owned by Google) and excluded other platforms like Apple from the equation entirely.

With the relevant market decided to narrowly include only the Android platform services, a subsequent finding that Google held monopoly power within those services became far likelier (big fish, small pond). Despite Google’s arguments that it competed with the Apple App Store and that Epic was asking the jury to “pretend that the iPhone just doesn’t exist,” the jury appears to have taken a more sophisticated and practical approach to the nature of mobile devices and app lock-in—in other words, the jury may not have “ignored” the iPhone, but instead acknowledged that from the user’s perspective the Apple App Store can be generally irrelevant to the Google Play Store and visa-versa. Because of this narrow definition of the relevant market, the jury found that Google “willfully acquired or maintained monopoly power by engaging in anticompetitive conduct” in the defined relevant market.

Difference 3: Specific Evidence

Another significant difference between Apple and Google is in the evidence presented to the jury – or in some cases, the absence of such evidence – that could have influenced their ultimate verdict.

First, Epic argued that numerous Google agreements unreasonably restrained trade in the relevant market, including its agreements with alleged competitors and game distributors under “Project Hug” and the Games Velocity Program, and specific agreements with equipment manufacturers. These reportedly secret deals with developers and manufacturers, revealed in internal Google documents produced during trial and despite Google executive testimony to the contrary, may have appeared made to prevent rival app stores from gaining traction in the Android market.

Additionally, the jury was presented with evidence that internal communications at Google were deleted prior to trial, allegedly to prevent their use during litigation. These tactics resulted in very public rebukes by Judge Donato, who instructed the jury that they could infer that these deleted messages contained information that would have been damaging to Google if presented at trial.

Evidence suggesting secret arrangements with would-be rivals and manufacturers coupled with a permissive inference regarding potentially damaging internal communications could have painted the picture of Google as a shady backroom dealer engaging in anticompetitive business practices and further efforts to cover up these actions. Establishing this image before the jury entered deliberations may have steered them towards their ultimate decision.

What’s Next?

With the seemingly irreconcilable Apple and Google decisions now in hand, the logical question is: what happens next?

In the near term, the district court will be tasked with determining the appropriate remedy in this case. The jury was not asked to decide on any matters of relief, and in fact Epic has not specifically requested financial damages as part of this action, instead seeking some sort of equitable relief such as permitting Epic and other developers to introduce and manage their own app stores and billing systems within the Android ecosystem. Judge Donato will be tasked with crafting the ultimate relief here, but we will not know what that will end up looking like until January 2024 at the earliest.

Also, Google has indicated that they intend to challenge the verdict. At the district court, a party can seek a new trial on the grounds that “the verdict is against the weight of the evidence” or seek to overturn the jury’s verdict as a matter of law on the grounds that “no reasonable jury would have a legally sufficient evidentiary basis to reach the conclusion they did.”  Both of these requests face a relatively high bar.  If unsuccessful at the district court level, Google may also appeal the decision to the Ninth Circuit, where they will have to surmount similar high burdens to achieve relief.

In the longer term, it seems more likely than ever that Epic will be headed to the Supreme Court. Apple and Google present such similar facts and arguments, but have reached such starkly different outcomes, and the stakes are so high for the entire mobile app ecosystem, that the parties may be incentivized to seek definitive guidance from the Supreme Court to resolve any perceived conflict. In other words, Epic’s journey is far from over.