For more than five years, I’ve been following the blow-by-blow battle in one of the biggest legal brawls in tech.
Epic Games, the maker of hit game Fortnite, squaring off against Google, the giant behind Android. It’s been rough and tumble - and very entertaining.
And just when I thought we were settling in for years of appeals… Boom! It’s over.
But not in the way I, or most commentators, expected. It’s turned into something completely different.
Today, I’m revealing what’s just happened.
How it will lead to better products and lower prices for three billion consumers.
Help publishers who make apps and sell subscriptions in the Play Store, and
Put Apple on notice that it’s now an outlier with its high anticompetitive pricing.
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Headlines
There’s a lot going on, so let’s kick off.
🚨 AdExchanger reports Google and the US Justice Department have filed updated papers ahead of the ad tech antitrust ruling.
It’s the last chance for both sides to sway judge Leonie Brinkema. At stake is the future of the US$750 billion digital advertising market.
Google’s final argument is that f*cking with it will break the web, and it’s happy to make some (minor) changes, so this is all a waste of time and energy.
The DoJ - backed by a slew of publishers - argue it must happen because Google’s a three-times illegal monopoly and can’t be trusted. They want GAM and AdX sold off.
Google lost its app store antitrust trial (see today’s lead story), it also lost the search trial but walked away with a soft penalty, but this is the biggie. Expect a decision before the end of the year.
In other news:
The UK’s largest parenting site launches a child-safe smartphone - LinkedIn
Apple closing in on a $1 billion-a-year deal to use Google for Siri - Bloomberg
Pinterest crashes 18 per cent as it loses ad ground to its rivals - Reuters
Snap signs a $400 million deal with bad boy Perplexity for chat AI - Bloomberg
Amazon sues to stop Perplexity using AI agents to buy stuff - Bloomberg
New York Post says Facebook is censoring its BLM investigation - New York Post
Getty largely loses a landmark UK lawsuit over an AI image generator - Reuters
Anthropic says its revenue will rise to $70 billion by 2028 - TechCrunch
Rocketship Reddit launches its pro toolset for publishers - Press Gazette
Spotify says it now has 500k video podcasts, and 400 million viewers - TechCrunch
NY Mayor candidate adds Big Tech’s favourite nemesis to his team - Bloomberg
Reuters also reports that global investors are sweating on whether AI is a bubble. More than half think it is, yet global markets are booming. WDYT?
Kill your commute
🫣 Watch: A Redditor has used AI to bring a prehistoric zoo to life. It’s roarsome 🦖
📖 Read: Just WTF are we now in the chaos of rules and regulations in the AI era?
📻 Listen: How a cold-blooded murder in Africa could unravel Meta’s algorithm.
🤯 Did you know
Google Gemini can create professional presentations from a prompt and some uploaded docs. Yeah, I was doubtful too, so I uploaded Reddit’s financials and its shareholder update, said go, and…
Wow, that’s just saved about a year of work! WDYT?
The Big Story: The Epic truce
The opening lines to Faithless’ club anthem God is a DJ contains these words: “It’s in minor keys, solutions and remedies. Enemies becoming friends, when bitterness ends.”
I’m not sure whether Google’s Sundar Pichai and/or Epic Games’ combative CEO Tim Sweeney are fans of progressive trance house, but they seem to be feeling the love.
The two have been fighting through the courts for years, running up massive legal bills.
Google wanted to protect the massive margins in its app store business. Epic wanted to tear them down and sell its own stuff without paying Google’s tax.
Google then lost the case. It appealed, and then lost that too, and in a few weeks, a judge is due to tell them both what the penalties will be.
At least that was the plan until this week, when the two warriors downed weapons and had a very acid house love in.
But no-one has surrendered here. Not by a long shot. What’s actually happened is kind of wild.
They’ve called a truce so they can co-author the new rules of the road for the entire Android ecosystem.
Today, I’m breaking down what exactly is in this surprise peace treaty using the court papers both parties just filed.
And explaining what it means for publishers selling apps and subscriptions, and for price-conscious consumers.
Long term and global
Both parties are framing this as a win for everyone.
After Epic won its big case in December 2023, the court basically handed down a set of rules, and the bickering started.
This new settlement ends that. It urges the court to scrap that confusing court order and create a new plan.
The first fix is making it way easier for other app stores - like Epic’s Game Store to get into three billion Android phones without having to go through Google’s Play Store.
The court’s plan was the same, but only lasted three years and was just for the US.
Google and Epic’s new deal lasts until 2032, and because it changes the Android operating system itself, the effects are basically global.
That’s huge.
And instead of forcing Google to list competitors in its own store - which was always awkward - it creates a totally new system for installing them right from the web.
Epic argued at trial that Google used scary-looking warning screens to freak people out if they tried to install apps from outside the Play Store.
Now that all goes away, and is replaced with a single neutral-looking permission screen. Users find it, approve it, and install it. Done.
But what’s really important to note is that this doesn’t wipe the slate clean. A lot of key antitrust protections from the original court order remain.
Google is still banned from paying off phone makers to block competition, or forcing developers to keep their apps exclusively on the Play Store.
Google - it seems - has come to the party.
And that has major implications for Apple which continues to fight actions across the world to cut its app store fees and open up too. Oh, to have been Tin Man Tim this week…
Lower fees
So that’s app stores, but it’s only half the deal. The other half is payments.
Google has steadfastly defended its rule that developers must use its billing system and pay a 30 per cent fee on everything.
Under this new settlement, developers get a ton more freedom.
They can offer their own payment system right alongside Google’s and
They can actually encourage users to sign by charging less than Google.
They can even show consumers both prices side by side to show who has the better offer.
Think about that. Google spent tens of millions arguing developers couldn’t even hint there was a better deal on their own website.
Now it’s OK, and that’s a level of direct price competition never before seen inside one of these huge app ecosystems.
That leads to the $48 billion question for developers: If they use their own payment system, do they still owe Google a cut?
The answer is yes, but it’s a lot lower.
Google’s argument has always been that it deserves to be paid for the platform and services the Play Store provides.
This new settlement puts a hard ceiling on how much Google can charge.
The first cap is 20 per cent for some transactions (but it doesn’t yet say which) but that’s the absolute max Google can take and a third less than now.
And that sounds bad, but wait, because there’s more coming.
For other transactions (not yet stated) the cap is much much lower, down to just nine per cent.
By sitting down and negotiating these, Google and Epic have avoided what would have been another long messy court fight over what a reasonable fee is.
Who falls into the nine and 20 per cent categories is still to be decided, but this is a massive concession by Google, and a giant win for Epic Games’ CEO Tim Sweeney.
Done deal?
Well, not quite.
Epic and Google are on the same page, but now they have to get the judge to sign off on it, so there are still a couple of hurdles left.
First up, there’s a court hearing on December 11 where the judge will review this whole new plan - but there’s also a second really critical condition.
Google is also settling a different case on the same issue with a bunch of US states.
The new deal only holds up if the judges agree to the changes Epic and Google are suggesting.
And Judge James Donato is no friend of Google. He lambasted the search giant at the trial for deleting millions of instant messages that he wanted as evidence.
That is still headed to another trial - which will be big and which hardly anyone is covering, so keep an eye on this one.
That all means it’s still a little complicated, but will he get in the way of a mediated settlement that achieves the goal of reducing fees and increasing competition?
That feels kinda unlikely.
Peace in our time?
Umm, what’s going on here? When you step back, what this settlement is really about is creating a final, lasting peace.
It ends a five-year war.
It gets them out of fighting over how to implement rules, and
It creates a clear, stable playbook for Android that lasts almost a decade.
This all leaves a really fascinating question.
For years, the entire narrative has been about regulators and competitors dragging Big Tech into court, kicking and screaming.
But here, we have two of the biggest adversaries sitting down together and literally writing their own regulations.
Could this be the new playbook? Is this antitrust pressure doing its job? Is this how Big Tech is tamed, through negotiated peace instead of endless war?
I’m often accused of optimism. Sorry haters, that’s just me, but it’s a huge question. Honestly, only time will tell.
🗓️ Coming up
Tonight: Join me and Rod Sims, the architect of Australia’s ground-breaking news media bargaining code, as we explore the future of Big Tech in a special Scotch & Watch session before a live audience at Bookoccino in Avalon Beach, Sydney, tonight at 7pm. 🥃🥃🥃
And join me on Monday for another special edition when
and I are joined by Substack founder Hamish McKenzie to hear his plans for publishers
For now, this is the future checking out. See you later 👋
