Just when we thought Epic v. Google might be over, just one Supreme Court rejection away from a complete victory for Epic, both sides have agreed to settle Tuesday evening. And if Judge James Donato, who ordered Google to crack open Android for third-party stores, agrees to the changes, it might turn Epic’s victory into a lasting global one.
Previously, Judge Donato agreed to some of Epic’s biggest demands. He issued a permanent injunction that will force Google to carry rival app stores within its own Google Play Store, and give those rival stores access to the full catalog of Google Play apps, to restore competition to the Android marketplace. The injunction also forced Google to stop requiring developers to use Google Play Billing, after a jury found the company had illegally tied its app store to its payments system.
But those changes only applied to the United States, only lasted for three years, and didn’t change how much Google would charge in app store fees.
Now, Google is agreeing to reduce its standard fee to 20 percent or 9 percent, depending on the kind of transaction. It’s agreeing to create a new program in the very next version of Android where alternative app stores can register with Google and (theoretically) become first-class citizens that users can easily install. And it appears to be agreeing to offer “Registered App Stores” and lower fees around the world, not just in the US, through June 2032 — six and a half years from now.
“If approved, this would resolve our litigations,” wrote Google Android president Sameer Samat on Tuesday evening, introducing the news:
Exciting news! Together with Epic Games we have filed a proposed set of changes to Android and Google Play that focus on expanding developer choice and flexibility, lowering fees, and encouraging more competition all while keeping users safe. If approved, this would resolve our litigations. We look forward to discussing further with the Judge on Thursday.
And here’s Epic CEO Tim Sweeney agreeing that this would “settle our disputes”:
Google has made an awesome proposal, subject to court approval, to open up Android in the US Epic v Google case and settle our disputes. It genuinely doubles down on Android’s original vision as an open platform to streamline competing store installs globally, reduce service fees for developers on Google Play, and enable third-party in-app and web payments. This is a comprehensive solution, which stands in contrast to Apple’s model of blocking all competing stores and leaving payments as the only vector for competition. The public filings are live.
The details of how, when, and where Google would charge its fees are complicated, and they seem to be somewhat tailored to the needs of a game developer like Epic Games. Google can charge 20 percent for an in-app purchase provides “more than a de minimis gameplay advantage,” for example, or 9 percent if the purchase does not. And while 9 percent sounds like it’s also the cap for apps and in-app subscriptions sold through Google Play, period, the proposal notes that that amount doesn’t include Google’s cut for Play Billing if you buy it through that payment system.
That cut will be 5 percent, Google spokesperson Dan Jackson tells The Verge, confirming that “ This new proposed model introduces a new, lower fee structure for developers in the US and separates the service fee from fees for using Google Play Billing.” (For reference, Google currently charges 15 percent for subscriptions, 15 percent of the first $1M of developer revenue each year and 30 percent after that, though it also cuts special deals with some big developers.)
If you use an alternative payment system, Google might still get a cut: “the Google Play store is free to assess service fees on transactions, including when developers elect to use alternative billing mechanisms,” the proposal reads. But it sounds like that may not happen in practice: “If the user chooses to pay through an alternative billing system, the developer pays no billing fee to Google,” Jackson tells The Verge.
According to the document, Google would theoretically even be able to get its cut when you click out to an app developer’s website and pay for the app there, as long as it happens within 24 hours.
Speaking of Google’s Play Billing, it sounds like Epic is now fine with Google continuing to force developers to provide it in their apps. Instead, “Alternative payment options shall be shown side-by-side along with Google Play Billing,” though developers would be able to set their own prices and even offer lower prices if you pick alternate billing instead.
If Judge Donato approves the settlement and these revisions, it sounds like it could also resolve one of Epic’s biggest arguments against the big app stores since day one: the friction and “scare screens” that Epic alleged keep users from sideloading alternative app stores.
“Starting with a version of the next major Android release through June 30, 2032, Google will modify future versions of the Android operating system so that a user can install a Registered App Store from a website by clicking on a single store install screen using neutral language. This will also grant the permission to the store to install apps,” the proposal reads.
The proposed modified injunction keeps many of Epic’s other wins in place, including ones that are already in effect today: it has to stop sharing money or perks with phonemakers, carriers, and app developers in exchange for Google Play exclusivity or preinstallation, and let developers communicate with their customers about pricing outside the Play Store.
Google and Epic say they will discuss this proposal with the judge on Thursday, November 6th. We’ll let you know what we hear. If approved and the fees truly are meaningfully lower, I wonder if the lower fees might ripple across the industry, changing Apple and Sony and Microsoft and Nintendo and Valve’s stance on them too.
Here’s the full proposed modified injunction:
And here’s Epic and Google’s legal argument for the modifications:
One quote that seems pertinent:
The Proposed Modified Injunction, and the Settlement it enables, also address a limitation of the Catalog Access and Third-Party Store Distribution remedies arising from the territorial scope of the Existing Injunction. In Epic’s view, because the Existing Injunction applied only to the United States, even when those remedies were in full bloom, third-party app stores would still face challenges in building the scale necessary to compete vigorously with the Google Play store, with its global footprint. If the Court adopts the Modified Injunction and the Settlement goes into effect, however, the Registered App Store program will result in changes to the Android operating system worldwide, thereby strengthening competition across Android, including in the United States.
