Google was sentenced by a US judge on Monday to destroy the virtual barriers that prevented competitors from accessing its Android app store. Google had been preserving an illegal monopoly which had aided in the growth of the company’s online empire.
US District Judge James Donato’s order will force Google, a Mountain View, California-based firm, to implement a number of modifications that it had been resisting. One of those clauses is that in order for users to download Android apps from the Play Store to their phones, they must distribute the programs to competing third-party app shops.
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Additionally, competitors will be able to provide a competitive selection by having access to the countless Android apps available in the Google Play Store library according to the judge’s order.
Google has until November to implement the changes outlined in Donato’s decision. The business had previously stated that it would require 12 to 16 months to create the security measures required to lessen the possibility that countless Samsung phones along with other cellphones running the free Android software would become infected by potentially harmful software that finds its way into competitor Android app stores.
The goal of the court-mandated reform is to stop Google from stifling rivalry in the Android application market in an attempt to preserve the commission system, which has benefited one of the wealthiest businesses in the world and increased the market worth of its parent company, Alphabet Inc., to $2 trillion. In a blog post, Google stated that it would appeal the court’s ruling and ask the judge to put the impending changes on hold.
Google Faces Revenue Hit as US Judge Cracks Down on Android App Store Monopoly
Donato also decided that Google would not be allowed to split Play Store profits with anybody who delivers Android apps or is thinking about opening an Android app distributing platform or store for an amount of three years ending on November 1, 2027. Additionally, it will not be permitted to compensate developers or split revenue in order to encourage them to release an app first or solely through the Google Play Store.
Moreover, agreements with makers to preinstall the Play Store from search engine platform on a certain Android device location will not be permitted. It will also be prohibited from telling users that they may download apps elsewhere, possibly for less money, or requiring apps to utilize its billing system.
For years, this search engine platform has been charging the Play Store 15% to 30% commission on digital transactions made through Android apps, which has allowed the Play Store to generate billions of dollars in revenue every year. This pricing system is comparable to that used by Apple in its iPhone application store, which is what led video game developer Epic Games to commence antitrust litigation four years earlier in an attempt to promote competition that would help lower costs for both app developers and users.
An appeals court upheld a September 2021 judgement in which a federal judge largely sided with Apple. Despite this, a jury found in favour of Epic Games following a four-week trial that concluded last year, casting the Play Store in disgrace as an unlicensed enterprise.
In order to assist Donato in determining the necessary actions to reinstate fair competition, that triggered the holding of further hearings this year. According to Google, Epic Games was requesting drastic measures that might have cost the company up to $600 billion. Epic argued that Google could achieve parity in the market for a maximum of one million. The cost of Google’s modifications as mandated by Donato is unknown.
Even if Epic’s lawsuit against Apple for antitrust was unsuccessful, Donato’s decision may still have an impact on the iPhone app store because a different federal judge is considering whether Apple is doing enough to encourage customers to use alternative payment methods for digital transactions. the US District Court Judge Yvonne Gonzalez Rogers‘ ruling in that case mandated that Apple permit in-app access to other payment methods; however, Epic claims that the provision is being compromised by the establishment of a second commission structure that restricts user choice.
The impending Play Store reorganization may only be the first unpleasant surprise antitrust law deals this search engine platform. US Federal Judge Amit Mehta found Google’s dominating engine for searching has become an illegal monopoly in August in the largest antitrust lawsuit that the Justice Department of the United States has launched in 25 years.
The judge is now preparing to begin hearings on how to penalize search engine platform for its unethical behavior. In an attempt to avoid a fine that would harm its company even more than the Play Store modifications, search engine platform is appealing Mehta’s decision in its search engine case.
According to Evelyn Mitchell-Wolf, an analyst with Emarketer, “Google will probably take a revenue hit, assuming the ruling passes the appeals process.” “Undoubtedly, some of the biggest app developers, such as Epic Games, will begin to encroach on the market share of the Google Play Store, resulting in search engine platform losing out on its customary portion of in-app purchases and subscription fees.”
Since the Play Store operated by search engine platform was the default app store for Android for a long time, the analyst continued, “some customers might leave if they can get lower prices on their favorite apps elsewhere.” Despite this, the Google Play Shop will continue to gain brand recognition. Additionally, it’s possible that software developers would seize the chance to inform users about direct downloading.
Therefore, even among Android users who continue with the default, this big search engine platform can notice a decline in Play Store revenue, according to Mitchell-Wolf. The closing price of Alphabet’s shares on Monday was $162.98, a 2.4% decrease of $4.08.
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