Google loses U.S. appeal over app store reforms in Epic Games case

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Alphabet’s Google on Thursday failed to persuade a U.S. appeals panel to overturn a jury verdict and federal court order requiring the technology company to revamp its app store Play.

The San Francisco-based 9th U.S. Circuit Court of Appeals, in a unanimous ruling, rejected claims from Google that the trial judge made legal errors in the antitrust case that unfairly benefited “Fortnite” maker Epic Games, which filed the lawsuit in 2020.

Epic accused Google of monopolizing how consumers access apps on Android devices and pay for transactions within apps. The Cary, North Carolina-based company convinced a San Francisco jury in 2023 that Google illegally stifled competition.

U.S. District Judge James Donato in San Francisco ordered Google in October to restore competition by allowing users to download rival app stores within its Play store and by making Play’s app catalog available to those competitors, among other reforms.

Donato’s order was on hold pending the outcome of the 9th Circuit appeal. The court’s decision can be appealed to the full 9th Circuit and ultimately to the U.S. Supreme Court.

In a statement, Lee-Anne Mulholland, Google’s vice president of regulatory affairs, said the appeals court’s ruling “will significantly harm user safety, limit choice, and undermine the innovation that has always been central to the Android ecosystem.”

The company said it would continue to focus on “ensuring a secure platform as we continue our appeal.”

Epic CEO Tim Sweeney said in a social media post: “Thanks to the verdict, the Epic Games Store for Android will be coming to the Google Play Store!”

Google told the appeals court that the tech company’s Play store competes with Apple’s App Store, and that Donato unfairly barred Google from making that point to contest Epic’s antitrust claims.

The tech company also argued that a jury should never have heard Epic’s lawsuit because it sought to enjoin Google’s conduct — a request normally decided by a judge — and not collect damages.

Epic has defended the verdict and court injunction, telling the 9th Circuit judges that the Android app market has been “suffering under anti-competitive behavior for the better part of a decade.”

In the trial court and in the appeal, Epic disputed arguments by Google that changes to its app business ordered by the court would harm user privacy and security.

Microsoft MSFT.O filed a brief backing Epic, as did the U.S. Justice Department and Federal Trade Commission.

Epic separately is battling Apple over a U.S. judge’s order requiring the iPhone maker to give developers greater freedom to steer consumers to make purchases outside its App Store.

Apple has appealed a ruling that said it violated a prior injunction in a lawsuit that Epic filed in 2020.

(Reporting by Mike Scarcella; Editing by David Bario, Jan Harvey, Rod Nickel)