Epic Games, Inc. v. Google LLC

Background

Epic Games, Inc. distributed Fortnite through the Google Play Store for several months in 2020. Epic objected to Google’s requirement that it use Google Play Billing and pay Google a 30% fee on in-app purchases. Epic then used a covert app update to allow Fortnite users to pay through Epic’s own system. Google removed Fortnite from the Play Store, and Epic sued Google LLC and certain affiliates.

Epic’s complaint asserted claims under Sections 1 and 2 of the Sherman Act, the California Cartwright Act, and California’s Unfair Competition Law. Epic sought only injunctive relief. Google also asserted counterclaims, including a claim for breach of the Google Play Developer Distribution Agreement. The case was tried to a unanimous nine-person jury over 15 days in November and December 2023.

The jury found for Epic on its antitrust claims. It found two relevant product markets: worldwide markets, excluding China, for Android app distribution and Android in-app billing services for digital goods and services transactions. For the monopolization claim, the jury found that Google willfully acquired or maintained monopoly power through anticompetitive conduct and that Epic suffered antitrust injury. For the restraint-of-trade claim, the jury found that Google’s Developer Distribution Agreement, agreements with competitors or potential competitors through Project Hug and the Games Velocity Program, and agreements with device manufacturers—including Mobile Application Distribution Agreements and Revenue Share Agreements—unreasonably restrained trade. The jury also found that Google unlawfully tied use of the Google Play Store to use of Google Play Billing.

Google’s post-verdict motions

Google renewed its motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) and alternatively sought a new trial under Rule 59. Judgment as a matter of law is appropriate only when the evidence permits one reasonable conclusion and that conclusion contradicts the jury’s verdict. A new trial may be granted when the verdict is against the clear weight of the evidence, but not merely because the judge could have reached a different result.

Google argued that Epic was barred by the results of Epic’s earlier case against Apple from proposing Android-only markets. The court rejected that argument because the market issues and evidence in the Apple litigation were not identical to those in the Google case. The court also rejected Google’s argument that Epic had pursued an unproven single-brand aftermarket theory. It concluded that Epic had proposed different markets involving Android, which is a mobile operating system used on devices made by multiple companies, and that the evidence supported those markets.

The court also rejected Google’s challenges to the jury instructions concerning the rule-of-reason analysis. It concluded that the instructions did not improperly allow the jury to treat individually lawful conduct as unlawful in combination, did not require consideration of cross-market justifications, and did not improperly invite competitive balancing.

Evidence supporting the verdict

The court determined that substantial evidence supported the jury’s findings. Evidence supported the jury’s conclusion that out-of-app payment systems were not reasonable substitutes for in-app payment systems because they required more steps and created more friction for users. Evidence also supported the worldwide-excluding-China geographic market because Google Play and Google Play Billing were not offered in China and competitive conditions were otherwise sufficiently similar.

The court cited evidence concerning Google’s agreements with developers and device manufacturers. Project Hug and Games Velocity agreements restricted participating developers from launching apps first or exclusively on competing Android distribution platforms. Google’s agreements with device manufacturers placed Google Play on default home screens and, in some revenue-sharing tiers, barred manufacturers from installing other app stores. The court also cited evidence about anti-steering restrictions in the Developer Distribution Agreement and Google’s use of warnings and additional steps that made it more difficult for users to install competing app stores.

The court concluded that the evidence supported the jury’s finding that Google unlawfully tied Google Play Store access to use of Google Play Billing. It found evidence that the two services were separate products, that developers were required to use Google Play Billing for digital content used inside their apps, and that the jury could reject Google’s business justifications and find less restrictive alternatives.

Evidentiary rulings and jury status

Google challenged the court’s handling of attorney-client privilege markings, the exclusion of evidence about the outcome of Epic’s Apple litigation, and the permissive adverse-inference instruction concerning Google’s failure to preserve Google Chat communications. The court rejected these arguments. It concluded that the record supported allowing Epic to present evidence about misuse of privilege markings and allowing, but not requiring, the jury to draw an adverse inference from Google’s preservation failures.

Google also argued that it had not consented to a binding jury trial and had withdrawn its consent shortly before trial. The court rejected that position. It found that Google had expressly and impliedly consented to a jury trial and that its late attempt to withdraw consent would have substantially prejudiced Epic. The court held that the jury’s verdict was properly treated as binding.

Disposition

The court denied Google’s renewed motion for judgment as a matter of law and denied Google’s alternative motion for a new trial. The opinion states that Epic’s Unfair Competition Law claim, Google’s breach-of-contract counterclaim, and the request for an injunction were reserved for later court proceedings; remedy proceedings were underway when this order was issued.