Epic win against Google: An inflection point in the gaming industry?

The move changes the in-app purchase ecosystem largely, and is a big win for consumers as well as publishers, say experts

by Shantanu David
Published - December 18, 2023
3 minutes To Read
Epic win against Google: An inflection point in the gaming industry?

The travails of Google continue, after a jury in the US decided that it is turning its Play Store into a monopoly, and handed Epic Games a win in the courtroom. The maker of best-selling games like Fortnite had sued both Google and Apple for allegedly running “illegal app store monopolies.”

The gaming company contended that Google held a monopoly within Android app distribution and in-app billing services markets, that Google sustained an anticompetitive edge in those markets, and due to this Epic was hurt. The jury came out in support of all these allegations.

This win marks an inflection point in the gaming industry, which has historically seen gaming developers subservient to the authority of app stores; it is also notable given that Epic Games had its lawsuit against Apple thrown out two years ago. While the penalties for the Google case are still to be decided, given that Epic Games didn’t file monetary claims, according to court testimony, Epic Games CEO Tim Sweeney said his company could save up to billions of dollars if they didn’t have to fork over money to Google.

Rohit Agarwal, Founder and Director, Alpha Zegus, says the verdict is fair. “It's something that every app with in-game purchase has faced, but EPIC voiced it out and WON! Most publishers have a free-to-play gaming model, and rely heavily on in-app purchases for their revenue. Monopoly by any platform means that a significant chunk of their revenue is shared with the platform, without the publisher having another choice.”

He adds, “This move will now let publishers drive in-app purchases directly, which would mean the cost to consumers going down, and the profit margins of publishers going up. More and more publishers will be encouraged to set up their own systems, and will be able to create cost effective packages for users to buy - thereby driving more volumes of sales. All in all, this move changes the in-app purchase ecosystem largely, and is a big win for consumers as well as publishers.”

Manish Agarwal, Founder, Kratos Studios, chimes in saying the 30% tax is a friction for gamers and reduces take home of the game publishers. “In today’s era where consumer acquisition costs are increasing, this leakage impacts game publishers' ability to improve lifetime value, impacting the customer acquisition cost ratio situation. This will directly impact their ability to invest back in growing the user base of their game. Additionally, with payment gateways charging 0.5-1% max, the platforms have less value to add otherwise and hence the 30% premium becomes unjustified. The change will benefit the entire gaming industry.”

In a statement following the Epic win, Wilson White, Google VP, Government Affairs & 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 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.”

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