Google settles with Epic Games with offer to lower its app store commissions

The Google logo is displayed at their offices, Nov. 1, 2018, in London. . (AP Photo/Alastair Grant, File)

SAN FRANCISCO (AP) — Google will lower the lucrative fees imposed on its Android app store and offer a way for rival options to gain its stamp of approval, ending a bruising legal battle that led to one of several rulings condemning its tactics as an illegal monopoly.

The proposed changes filed Wednesday with a federal court in San Francisco mark the latest twist in a case that began in August 2020 when video game maker Epic Games filed an antitrust case seeking make it easier for alternative payment options to compete against Google’s Play Store system, which charges 15 per cent to 30 per cent commissions on a wide variety of in-app transactions.

Google’s concessions come five months after the U.S. Supreme Court refused to hear an appeal of the company’s attempt to overturn a federal judge’s order requiring a far more extensive overhaul of the Play Store following a 2023 trial that culminated in a jury declaring the setup an illegal monopoly.

Backed into a legal corner, Google is now prepared to decrease its baseline commissions for subscriptions and e-commerce transactions into the 10 per cent to 20 per cent range while creating a new option that would charge 5 per cent for payment processing.

App developers could still choose to rely on another payment processing system besides Google’s and consumers will be able to download apps from alternative stores that go through a certification process. Although not required, alternative app stores that go through the Google’s registration process are less likely to provoke warnings about security risks.

U.S. James Donato still must approve the proposed changes as an alternative to a more dramatic shakeup that he ordered in October 2024. Google is seeking an April 9 hearing before the judge to answer any questions about the revisions, which are being backed by Epic Games CEO Tim Sweeney, whose North Carolina company is best known for making the Fortnite video game.

“Epic has been advocating for open platforms for a long time and this really brings Android up to the status of a truly open platform,” Sweeney told The Associated Press during an interview that also included Sameer Samat, the Google executive in charge of Android.

“We think it’s really great to focus more energy and time on building than on quarreling,” Samat said about Google’s decision to finally strike a truce with Epic after years of acrimony.

Google is planning to extend this new Play Store template to the rest of the world, contingent on regulatory approval in other countries. The Mountain View, California, company intends to begin the rollout in the United States, the United Kingdom and the European Union, Samat said.

The lower fees are likely to dent the profits of Google’s corporate parent, Alphabet Inc., which is in a better position to weather the blow now that its market value stands at US$3.7 trillion — four times more than when Epic filed its lawsuit.

Alphabet also faces other possible setbacks with Google’s search engine being ordered to share more of its collected data after being being declared an illegal monopoly in a different case brought by the U.S. Justice Department. Parts of the technology powering Google’s digital ad network also were deemed an abusive monopoly last year in yet another federal lawsuit. A federal judge in Virginia is weighing whether to order a breakup in order to restore competition in that case.

Epic’s 2020 attack against Google’s Play Store coincided with a similar crusade against Apple’s iPhone app store that still remains entangled in some legal disputes about how alternative payment systems can be managed.

Sweeney isn’t optimistic about reaching a deal with Apple that mirrors the Google concessions because the cases played out differently. In the Apple lawsuit, a federal judge concluded that the iPhone app store isn’t a monopoly but still ordered changes designed to make it easier for consumers to navigate to alternative payment options — a shift that Epic argues still hasn’t occurred.

For now, Sweeney intends to savor the outcome of the Play Store case set to the soundtrack of a classic tune by the Rolling Stones.

“As the song says, ‘You can’t always get what you want, but if you try, you can often get what you need,’ ” Sweeney said. “And what we need is competition.”

Michael Liedtke, The Associated Press