If, like tens of millions of players around the world, you want to play Epic Games’ cultural touchstone Fortnite on an Android device, first you must go through the onerous task of downloading the game from Epic’s website.
Samsung (KS:005930) Galaxy and Oppo smartphone owners can use those phones’ app stores, though direct downloads are far more common.
For older gamers who recall having to leave the house, drive to a PC World, buy the CD, and install it on your computer, this doesn’t sound too bad.
But in today’s attention economy, younger generations expect to access top-tier media in just a few clicks.
Such is the allure of the Google (NASDAQ:GOOGL) Play store, through which 95% of all Android smartphone applications are downloaded without having to open a browser and type in a web address.
In return for this convenience, Google demands a 30% cut of all transactions executed through the Play Store.
Though not Google’s primary revenue stream, it’s nothing to sneeze at.
In the three months ending September 30, ‘Google Other’ revenues, where Play Store revenues are bundled with non-advertising YouTube revenues and Fitbit (NYSE:FIT), Nest and Pixel hardware sales, totalled $8.3 billion.
In the past nine months, Google Other revenues neared $24 billion.
Being essentially a tax, margins on Google Play revenues are undoubtedly high, though precise figures were not disclosed. Regardless, it is in Google’s best interest to keep this endless money glitch in full swing.
According to Monday's ruling against Google, the search giant is employing anticompetitive practices to maintain a monopoly of the market.
According to Epic, Google is “willing to pay billions of dollars to stifle alternative app stores by paying developers to abandon their own store efforts and direct distribution plans, and offering highly lucrative agreements with device manufacturers in exchange for excluding competing app stores”.
Big changes coming to the app market
But following Epic Games’ victory, Google’s stranglehold over the Android app market is in doubt.
Google’s vice president of government affairs and public policy said: “We plan to challenge the verdict. Android and Google Play provide more choice and openness than any other major mobile platform.
“The trial made clear that we compete fiercely with Apple (NASDAQ:AAPL) and its App Store, as well as app stores on Android devices and gaming consoles.
“We will continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem.”
If all else fails, Google could soon see challenger app stores flooding the market, offering lower taxes on app sales.
This could be great for consumers and developers; not so great for Google’s bottom line.
"The trial has shone a very bright light on what Google has done to impair the competition," Epic lawyer Gary Bornstein told jurors, saying that Google "systematically blocks" alternative app stores on Google Play.
That party could be over for Google when the two parties head to court in January for a resolution.
In the meantime, Epic is taking its wins.
“Today’s verdict is a win for all app developers and consumers around the world,” Epic Games wrote in a statement about the verdict. “It proves that Google’s app store practices are illegal and they abuse their monopoly to extract exorbitant fees, stifle competition and reduce innovation.”