Epic Games has scored a major victory against Apple and Google in the Australian Federal Court after the tech giants’ respective app markets were found to be anti-competitive.
The landmark decision by Judge Jonathan Beach was five years in the making and outlined in a 2000-page document which ruled mostly against the tech companies and found their huge market power reduced competition.
The ruling will also see Epic Games – the developer behind the popular Fortnite game – receive compensation that could run into hundreds of millions of dollars.
Fortnite is played by more than 600 million people around the world and has helped Epic Games’s valuation exceed $34bn.
Epic Games began their legal action against Apple and Google in 2020 following the removal of Fortnite from Apple App Store and Google’s Play Store after it created its own system for in-app payment.
The game developer took these actions to sidestep the 30 per cent commission Apple and Google charged for every in-app purchase made within Fortnite for items like weapons and costumes.
Judge Beach’s ruling found Apple and Google’s dominance and policies reduced competition and gave developers no other choice on how to conduct their business.
Apple and Google’s counterargument that these measure were in place not just for huge profits but for the safety and security of their platforms.
Another factor that went against Apple and Google was the fact that physical goods and services purchase through apps like food, clothing, electronics and transport did not attract the same high commissions.
Judge Beach also found Apple “substantially lessened competition” by banning apps being available through other channels other than the App Store.
After the decision Epic Games took to social media and announced: “The Epic Games Store and Fortnite will come to iOS in Australia!
“An Australian court just found that Apple and Google abuse their control over app distribution and in-app payments to limit competition.
“There are 2,000+ pages of findings that we’ll need to dig into to fully understand the details. This is a WIN for developers and consumers in Australia!”
Google’s releases a statement which read: “The court today recognised the stark difference between Android’s open platform and Apple’s closed system, affirming that Android gives Australian consumers and developers significantly more choice and flexibility, including through multiple app distribution options beyond Google Play.
“We welcome the court’s rejection of Epic’s demands that we distribute app stores from within the Google Play store, and Epic’s attacks on other critical security protections that users rely on.
“However, we disagree with the court’s characterisation of our billing policies and practices, as well as its findings regarding some of our historical partnerships, which were all shaped in a fiercely competitive mobile landscape on behalf of users and developers.
“We will review the full decision when we receive it and assess our next steps.”
Australia’s peak consumer communications body, Australian Communications Consumer Action Network, welcomed the Federal Court ruling.
“This decision sends a strong message to the digital giants that Australian consumers and small businesses need to be protected from abuses of market power by digital platforms that own and control these app stores,” ACCAN CEO Carol Bennett said.
“While this is a big step forward, we call on the Australian government to advance the digital competition reforms currently being consulted on by Treasury as a priority so that the ACCC can regulate the conduct of these platforms and consumers and small businesses can avoid bearing the significant costs of ongoing anti-competitive behaviour.
“If Australia is serious about addressing poor productivity, we need to be serious about addressing anti-competitive conduct and a lack of competition in digital services markets – which are integral to the success of innovative Australian businesses.
“We need genuine digital competition law reform in Australia to prevent these harms from happening in the first place, rather than requiring regulators, consumers and small businesses to pick up the pieces and seek redress after these platforms abuse their market power.”
“Australian consumers and small businesses deserve to reap the benefits of real competition in these markets.”
