Google has been found guilty of antitrust violations regarding its Play mobile app store in a unanimous decision by a San Francisco jury, marking a “potential turning point” for video game producers, analysts at Jefferies wrote.
The case, brought by Epic Games in 2020, accused the Alphabet Inc (NASDAQ:GOOG)-owned company of implementing restrictive practices that stifled competition in the mobile app market.
Epic, developer of the wildly popular game Fortnite, alleged Google prevented smartphone companies, wireless carriers and app developers from offering viable alternatives to the Google Play store.
“We see this as a potential turning point for media companies who have been unable to process their own payments for virtual goods and subscription services, as well as cloud gaming innovation, which has been unable to launch on mobile devices due to platform issues,” the analysts wrote. “We say potential as we expect appeals to be filed and the Supreme Court decision to be the next catalyst.”
Epic also sued Apple Inc (NASDAQ:AAPL), but judges thus far have ruled in Apple's favor. Notably, the Google case was heard by a jury, while the Apple case was not.
Also, “Google was giving some developers sweetheart deals, while Apple's same 30% take rate was evenly applied, arguing Google was attempting to steer traffic away from rival app stores on Android,” the analysts noted. “Meanwhile, Apple simply does not allow any rival app stores whatsoever.”
Mobile app companies currently pay roughly 30% of the money consumers spend to Apple and Google for payment processing, customer service, security, and hosting, the analysts noted.
If that rate shrinks, it could mean higher margins for those companies and make it easier for games to be played across different platforms. That would likely benefit companies like Take-Two Interactive Software Inc (NASDAQ:TTWO) and Electronic Arts Inc. (NASDAQ:EA), while hurting Google and Apple.