Google faces second-largest U.S. antitrust trial over Play Store monopoly claims

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Alphabet Inc.’s Google (NASDAQ: ) is embroiled in the second-largest U.S. antitrust trial, brought by “Fortnite” developer Epic Games. The case, expected to be concluded before Christmas, focuses on accusations that Google monopolizes control over the distribution of Android apps through the Play Store. The trial follows a similar lawsuit against Apple Inc (NASDAQ: AAPL) earlier this year that resulted in apps being allowed to offer alternative payment options, potentially destabilizing the tech giant’s floral structure.

The lawsuit began when Epic Games accused Google of having an illegal monopoly on Android apps by increasing profits through in-app purchase commissions, which range from 15% to 30%. Google’s defense team disputes the charges, claiming the company faces stiff competition from mobile and video game console stores, including Apple’s App Store.

Epic Games claims that Google uses “bribe and block” tactics to stifle competition and complicate downloading Android apps from other stores. Google defends these tactics as security measures and as proof that the commission system is necessary to maintain the operating system that powers billions of smartphones around the world. Defense attorneys argue that Epic aims to increase profits by avoiding a payment system that diverts revenue from popular games like Fortnite.

Sundar Pichai, chief executive of Google parent Alphabet Inc., will provide testimony at the trial. Meanwhile, the U.S. Department of Justice has questioned Google’s dominance of Internet search over alleged abuses of power.

The legal challenge is part of Epic Games’ “Project Freedom,” an initiative targeting app store transaction fees. The lawsuit follows Epic’s 2021 lawsuit against Apple, accusing Google of using its control over Android and the Play Store to extract excessive profits from app developers.

Despite the accusations, Google recently settled antitrust complaints with state attorneys general and Tinder owner Match Group. However, the Play Store continues to play an important role in licensing services for Android phone manufacturers and serves as the primary entry point to the Google search engine.

Epic’s lawsuit has drawn scrutiny from regulators around the world, particularly in South Korea, home to Samsung Electronics, Google’s largest mobile partner. In response to these concerns, and as part of an effort to appease major app developers like Spotify, Google is allowing alternative payment systems in the Play Store. Despite these changes and the popularity of Epic’s Fortnite game on the platform, Alphabet reported a decline in Play Store revenue last year due to fee changes and lower spending.

More information about InvestingPro

In the ongoing antitrust trial, it’s important to understand some of InvestingPro’s key insights. Despite legal challenges, Alphabet Inc. GOOGL continues to deliver strong returns on invested capital and holds more cash than debt on its balance sheet, according to InvestingPro Tips. This financial strength has the ability to help companies overcome legal turmoil.

InvestingPro’s real-time data shows Alphabet’s strong financial performance. As of the fourth quarter of 2023, the company’s market capitalization reached a staggering $2.79 trillion, with a price-to-earnings ratio of 29.09. Revenue for the trailing 12 months ending in Q4 2023 was $383.29 billion.

Despite legal challenges to Alphabet’s dominance, the company’s financials and market position remain strong. For more insights and tips, consider exploring InvestingPro’s comprehensive resources. It provides many additional tips and indicators to help investors make informed decisions.

This article was created and translated with the help of artificial intelligence and reviewed by an editor. For more information, please see our terms and conditions.

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