Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 1 of 89

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Paul J. Riehle (SBN 115199)
paul.riehle@faegredrinker.com
FAEGRE DRINKER BIDDLE & REATH LLPFour Embarcadero Center
San Francisco, California 94111
Telephone: (415) 591-7500
Facsimile: (415) 591-7510

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Christine A. Varney (pro hac vice pending)cvarney@cravath.com
Katherine B. Forrest (pro hac vice pending)
kforrest@cravath.com
Gary A. Bornstein (pro hac vice pending)gbornstein@cravath.com
Timothy G. Cameron (pro hac vice)tcameron@cravath.com
Yonatan Even (pro hac vice pending)yeven@cravath.com
Lauren A. Moskowitz (pro hac vice)lmoskowitz@cravath.com
Justin C. Clarke (pro hac vice)jcclarke@cravath.com
M. Brent Byars (pro hac vice pending)mbyars@cravath.com
CRAVATH, SWAINE & MOORE LLP
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Facsimile: (212) 474-3700

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Attorneys for Plaintiff Epic Games, Inc.

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UNITED STATES DISTRICT COURT18

NORTHERN DISTRICT OF CALIFORNIA

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EPIC GAMES, INC., a Maryland
Corporation,

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Plaintiff,v.
GOOGLE LLC; GOOGLE IRELAND
LIMITED; GOOGLE COMMERCE
LIMITED; GOOGLE ASIA PACIFIC
PTE. LIMITED; and GOOGLEPAYMENT CORP.,

Case No. ___________________
3:20-CV-05671-JD

FIRST AMENDED COMPLAINT
FOR INJUNCTIVE RELIEF

Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 2 of 89

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Defendants.

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TABLE OF CONTENTSPRELIMINARY STATEMENT ..................................................................................... 1
PARTIES.................................................................................................................... 1013
JURISDICTION AND VENUE ................................................................................ 1115
INTRADISTRICT ASSIGNMENT .......................................................................... 1317
RELEVANT FACTS ................................................................................................. 1317
I.

Google Dominates the Merchant Market for Mobile Operating Systems. ..... 1317
A.

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The Merchant Market for Mobile Operating Systems .......................... 1417

9i.

Product Market Definition .......................................................... 1417

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ii.

Geographic Market Definition .................................................... 1619

B.

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II.

Google’s Monopoly Power in the Merchant Market for Mobile OSs .. 1620

Google Unlawfully Maintains a Monopoly in the Android Mobile App

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Distribution Market. ........................................................................................ 1923

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A.

The Android App Distribution Market ................................................. 2025

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i.

Product Market Definition .......................................................... 2025

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ii.

Geographic Market Definition .................................................... 2226

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B.

Google’s Monopoly Power in the Android App Distribution Market .. 2227

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C.

Google’s Anti-Competitive Conduct Concerning the Android App

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Distribution Market ............................................................................... 2633

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Google’s Conduct Toward OEMs 26 and Mobile Network
Operators ....................................................................................... 33

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ii.

Google’s Conduct Toward App Distributors and Developers.... 2847

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iii.

Google’s Conduct Toward Consumers ....................................... 3050

D.

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III.

Anti-Competitive Effects in the Android App Distribution Market ..... 3555

Google Unlawfully Acquired and Maintains a Monopoly in the Android In-

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App Payment Processing Market. ................................................................... 3657

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A.

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The Android In-App Payment Processing Market ................................ 3757
i.

Product Market Definition .......................................................... 3757

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ii.
B.

Geographic Market Definition .................................................... 3959

Google’s Monopoly Power in the Android In-App Payment
Processing Market ................................................................................. 3959

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Google’s Anti-Competitive Conduct Concerning the Android In-App
Payment Processing Market .................................................................. 4060

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Anti-Competitive Effects in the Android In-App Payment Processing
Market.................................................................................................... 4162

COUNT 1: Sherman Act § 2 (Unlawful Monopoly Maintenance in the Android
App Distribution Market) ................................................................................ 4363
COUNT 2: Sherman Act § 1 (Unreasonable restraints of trade concerning
Android App Distribution Market: OEMs) .................................................... 4464
COUNT 3: Sherman Act § 1 (Unreasonable restraints of trade concerning

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Android App Distribution Market: DDADeveloper Distribution

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Agreement) ..................................................................................................... 4566

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COUNT 4: Sherman Act § 2 (Unlawful Monopolization and Monopoly
Maintenance in the Android In-App Payment Processing Market) ............... 4667

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COUNT 5: Sherman Act § 1 (Unreasonable restraints of trade concerning

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Android In-App Payment Processing Market: Developer Distribution

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Agreement) ..................................................................................................... 4768

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COUNT 6: Sherman Act § 1 (Tying Google Play Store to Google Play Billing)... 4970

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COUNT 7: California Cartwright Act (Unreasonable restraints of trade in

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Android App Distribution Market: OEMs) .................................................... 5071
COUNT 8: California Cartwright Act (Unreasonable restraints of trade in
Android App Distribution Market: Developer Distribution Agreement) .... 5173
COUNT 9: California Cartwright Act (Unreasonable restraints of trade in

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Android In-App Payment Processing Market: Developer Distribution

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Agreement) ..................................................................................................... 5375

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COUNT 10: California Cartwright Act (Tying Google Play Store to Google Play
Billing) ............................................................................................................. 5577
COUNT 11: California Unfair Competition Law ..................................................... 5879
PRAYER FOR RELIEF ............................................................................................ 5980

Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 6 of 89

On the basis of documents produced to date by Defendants Google

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LLC, Google Ireland Limited, Google Commerce Limited, Google Asia Pacific Pte.

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Limited, and Google Payment Corp. (collectively, “Google”), it is clear that very

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carefully phrased arguments in Google’s pending motion to dismiss give a5misleading picture of the full scope of Google’s anticompetitive conduct.

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Accordingly, although Plaintiff Epic Games, Inc. (“Epic”) believes its initial

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Complaint was more than sufficient, it hereby alleges, by its undersigned counsel,

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allegesas a First Amended Complaint, with knowledge with respect to its own acts

9and on information and belief as to other matters, as follows:

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PRELIMINARY STATEMENT

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1.

In 1998, Google was founded as an exciting young company with a12unique motto: “Don’t Be Evil”. Google’s Code of Conduct explained that this13

admonishment was about “how we serve our users” and “much more than that . . . it’s

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also about doing the right thing more generally”.1 Twenty-two years later, Google has

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relegated its motto to nearly an afterthought, and is using its size to do evil upon

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competitors, innovators, customers, and users in a slew of markets it has grown to17monopolize. This case is about doing the right thing in one important area, the Android

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mobile ecosystem, where Google unlawfully maintains monopolies in multiple related

19markets and engages in unlawful restraints of trade, denying consumers the freedom

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to enjoy their mobile devices—freedom that Google always promised Android users

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would have.

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2.

Google acquired the Android mobile operating system more than a23

decade ago, promising repeatedly over time that Android would be the basis for an

24“open” ecosystem in which industry participants could freely innovate and compete

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Kate Conger, Google Removes ‘Don’t Be Evil’ Clause from Its Code of Conduct, Gizmodo (May18, 2018), https://gizmodo.com/google-removes-nearly-all-mentions-of-dont-be-evil-from1826153393.
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without unnecessary restrictions. 2 Google’s CEO, Sundar Pichai, represented in 2014

2that Android “is one of the most open systems that I’ve ever seen”.3 And Andy Rubin,

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an Android founder who is described by some as the “Father of Android”, said when he4

departed Google in 2013 that “at its core, Android has always been about openness”.4

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Since then, Google has changed its course of conduct, deliberately and systematically

6closedclosing the Android ecosystem to competition, breaking the promises it made.

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Google’s anti-competitive conduct has now been condemned by regulators the world

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over.

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3.

Epic brings claims under Sections 1 and 2 of the Sherman Act and10under California law to end Google’s unlawful monopolization and anti-competitive

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restraints in two separate markets: (1) the market for the distribution of mobile apps to12

Android users and (2) the market for payment processing paymentssolutions for digital

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content within Android mobile apps. Epic seeks to end Google’s unfair, monopolistic

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and anti-competitive actions in each of these markets, which harm device makers, app

15developers, app distributors, payment processors, and consumers.

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Epic does not seek monetary compensation from this Court for17

the injuries it has suffered. Epic likewise does not seek a side deal or favorable

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treatment from Google for itself. Instead, Epic seeks injunctive relief that would

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See, e.g., Google Blog, News and notes from Android team, The Benefits & Importance ofCompatibility, (Sept. 14, 2012), https://android.googleblog.com/2012/09/the-benefits-importance-ofcompatibility.html (“We built Android to be an open source mobile platform freely available to anyone
wishing to use it . . . . This openness allows device manufacturers to customize Android and enable
new user experiences, driving innovation and consumer choice.”); Stuart Dredge, Google’s Sundar
Pichai on wearable tech: ‘We’re just scratching the surface’, The Guardian (Mar. 9, 2014),
https://www.theguardian.com/technology/2014/mar/09/google-sundar-pichai-android-chrome-sxsw(“Android is one of the most open systems that I’ve ever seen”); Andy Rubin, Andy Rubin’s Email toAndroid Partners, The Wall Street Journal (Mar. 13, 2013), available athttps://blogs.wsj.com/digits/2013/03/13/andy-rubins-email-to-android-partners/?mod=WSJBlog (“Atits core, Android has always been about openness”).
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Stuart Dredge, Google’s Sundar Pichai on wearable tech: ‘We’re just scratching the surface’, The
Guardian (Mar. 9, 2014), https://www.theguardian.com/technology/2014/mar/09/google-sundarpichai-android-chrome-sxsw.
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Andy Rubin, Andy Rubin’s Email to Android Partners, The Wall Street Journal (Mar. 13, 2013),
available at https://blogs.wsj.com/digits/2013/03/13/andy-rubins-email-to-androidpartners/?mod=WSJBlog.
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delivermake good on Google’s broken promise: an open, competitive Android

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ecosystem for all users and industry participants. Such injunctive relief is sorely

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needed.

45.

Google has eliminated competition in the distribution of Android

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apps using myriad contractual and technical barriers. Google’s actions force app

6developers and consumers into Google’s own monopolized “app store”—”—the Google

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Play Store. Google has thus installed itself as an unavoidable middleman for app

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developers who wish to reach Android users and vice versa. Google uses this monopoly

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power to impose a tax that siphons monopoly profits for itself every time an app

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developer transacts with a consumer for the sale of an app or in-app digital content.

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And Google further siphons off all user data exchanged in such transactions, to benefit

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its own app designs and advertising business.
6.

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The conduct described below shows that Google’s persistent

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monopoly is the result of deliberate efforts by Google to achieve and maintain it.

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Not content with the contractual and technical barriers it has carefully constructed16

to eliminate competition, Google uses its size, influence, power, and money to17induce third parties into anticompetitive agreements that further entrench its

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monopolies. For example, Google has gone so far as to share its monopoly profits

19with business partners to secure their agreement to fence out competition, has

20developed a series of internal projects to address the “contagion” it perceived from

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efforts by Epic and others to offer consumers and developers competitive

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alternatives, and has even contemplated buying some or all of Epic to squelch this23

threat.

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6. If not for Google’s anti-competitive behavior, the Android

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ecosystem could live up to Google’s promise of open competition, providing Android

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users and developers with competing app stores that offer more innovation, significantly

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lower prices, and a choice of payment processors. Such an open system is not hard to28

imagine. Two decades ago, through the actions of courts and regulators, Microsoft wasFirst Amended Complaint for Injunctive Relief

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forced to open up the Windows for PC ecosystem. As a result, PC users have multiple

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options for downloading software untoonto their computers, either directly from3developers’ websites or from several competing stores. No single entity controls

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thethat ecosystem or imposes a tax on all transactions. And Google, as the developer of5software such as the Chrome browser, is a direct beneficiary of this competitive

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landscape. Android users and developers likewise deserve free and fair competition.
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8.

7. In today’s world, virtually all consumers and businesses stayconnected, informed, and entertained through smart mobile computing devices such as
smartphones and tablets. Mobile applications (“apps”) are innovative software productsthat greatly contribute to those devices’ value. Consumers the world over use smart
mobile devices and mobile apps to video chat with friends, pay bills, stay current with
the news, listen to music, watch videos, play games, and more.
9.

8. Epic develops and distributes entertainment apps, social

networking and utility applications for personal computers, gaming consoles, andsmart mobile devices. The most popular game Epic currently makes is Fortnite, which
has connectedEpic operates a store for the distribution of personal computer apps,
which it would have expanded to distribute Android apps but for Google’s
conduct. Epic also develops and licenses Unreal Engine, a powerful software suite
available to third-party developers that allows them to create and distribute threedimensional and immersive digital content and apps, including Android apps,
movies, and other three-dimensional environments. Google’s practices have
impacted each of Epic’s lines of business.

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First Amended Complaint for Injunctive Relief

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10.

App Development: Epic develops multiple applications,2

including Fortnite, Fall Guys and Rocket League, the social networking app

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Houseparty, and apps that support Epic’s Unreal Engine, such as Live Link Face,

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which enables users to capture facial animation with their mobile phones.

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11.

Fortnite is a massive virtual world where hundreds of millions of

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people in a colorful virtual world where theyconnect, meet, play, talk, compete, dance,17

or attend concerts and evencultural events. Fortnite Battle Royale offers users

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competitive gameplay as well as the opportunity to mingle, watch movies, attend

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concerts or participate in cultural events with friends and other cultural eventsusers.

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Fortnite Creative Mode allows users to design and build their own experiences

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within the Fortnite universe.

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9. Fortnite is free for everyone to download and playexperience,

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including by playing games, attending events, socializing with friends or creating24

new content. To generate revenue, Epic offers users various in-app purchases of25

content for use within the app, such as digital avatars, costumes, dances, concert or26

movie-themed items, or other cosmetic enhancements.

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1b.

10. In the first year after Fortnite was released in 2017, the gameit

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attracted over 125 million playersusers; in the years since, Fortnite has topped 350400

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million playersusers and has become a global cultural phenomenon.

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App Distribution: Epic operates an online app store, the Epic

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Games Store, which it launched in 2018. Titles available on the Epic Games Store

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include popular gaming apps (e.g., the Grand Theft Auto franchise) and non-17

gaming apps (e.g., Spotify, iHeartRadio). The Epic Games Store also distributes at

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least one third-party app store, itch.io. It offers developers an 88/12 revenue share

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arrangement for all revenues from the sale of a developer’s games through the20

Epic Games Store. For in-app purchases, the Epic Games Store provides

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developers the choice of using the developer’s own payment processor (at no fee) or

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Epic’s own payment solution, Epic Direct Payment (for a fee equal to a 12% share23

of sales revenue).

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Unreal Engine: First launched in 1998, Epic’s Unreal Engine is a25

powerful, three dimensional environment graphics engine used to build digital

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three-dimensional environments for multiple uses including architecture projects,

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film & television production, medical training, and more. Unreal Engine is used to28
First Amended Complaint for Injunctive Relief

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1create software applications on all major platforms (PC, Mac, Android, iOS, major

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gaming consoles and more) and for use in films, television and other fields.

3a.

The Unreal Engine’s source code is free to use. For developers

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who use Unreal Engine to develop and sell their games or other projects

5commercially, Epic typically collects a 5% royalty after the developer reaches $1

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million in gross sales. Alternatively, developers can negotiate custom or royalty-

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free licenses with Epic.

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Unreal Engine powers some of the world’s most popular digital

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games, including (in addition to Fortnite) PlayerUnknown’s Battlegrounds (known

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as “PUBG”), ARK, Gears of War, Borderlands, and Batman: Arkham City.

11c.

The Unreal Engine is also used far beyond the realm of video

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games. Unreal Engine received its first Emmy in 2018 for its contribution to13

televised broadcasts such as the 2018 Winter Olympics, Super Bowl LII, and14

numerous e-sports tournaments. Since 2016, Unreal Engine has been used in more

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than 100 film and television productions. For example, The Mandalorian—

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Disney’s television series in the Star Wars franchise—was filmed on a stage set

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within a huge oval LED display. The exteriors and interiors—virtually every

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background and set—were created in Unreal Engine and displayed in real time

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behind the actors. Similarly, the popular HBO series Westworld turned to Unreal

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Engine to develop many of its visual effects. Car makers, including Audi and Ford,

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have used Unreal Engine for a variety of uses including automotive design and22

engineering, as well as developing digital showrooms in which customers can23

configure their vehicles with high-fidelity visuals. In aviation, Gulfstream

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visualizes its jets for its employees and clients. Unreal Engine has even helped25

brain surgeons train for and perform some of the most intricate and challenging

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aspects of brain surgeries by allowing for detailed real-time digital anatomy

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simulations. In total, Unreal Engine boasts a community of 11 million users.

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1d.

As noted above, utility apps designed for use with Unreal Engine2

are available in the Google Play Store, including, Unreal Match 3 and Action RPG

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Game Sample, both of which help developers learn how to use Unreal Engine to4

develop their own mobile games.

514.

11. Similar to a PC or a Mac personal computer, smart mobile

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devices use an “operating system” or “OS” to provide core device functionality and to7

enable the operation of compatible programs. As with PCs, the commercial viability of

8an OS for mobile devices (a “mobile OS”) depends on the availability of a large number

9of compatible apps that cater to the preferences and needs of users.

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15.

12. Google controls the most ubiquitous OS used in mobile devices,11

the Android OS. Android OS is used by billions of users the world over, and boasts

12nearly 3 million compatible apps.

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13. Android is the only commercially viable OS that is widely

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available to license by companies that design and sell smart mobile devices, known as15

original equipment manufacturers (“OEMs”). Accordingly, when OEMs select a

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mobile OS to install on their devices, they have only one option: Google’s Android OS.

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Google therefore has monopoly power in the market for mobile operating systems that18

are available for licenselicensing by OEMs (the Merchant Market for Mobile Operating

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Systems (infra Part I)).

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17.

14. Google has not been satisfied with its control of the Android OS.

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Notwithstanding its promises to make Android devices open to competition, Google has

22erecteddeliberately changed its course of conduct, erecting contractual and23

technological barriers that foreclose competing ways of distributing apps to Android

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users, ensuring that the Google Play Store accounts for nearly all the downloads of apps

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from app stores on Android devices. Google thus maintains a monopoly over the26market for distributing mobile apps to Android users, referred to herein as the “Android

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App Distribution Market” (infra Part II).

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118.

15. For example, through a series of revenue-sharing and2

licensing agreements with OEMs, Google bundles the Google Play Store with a set of3other Google services that Android OEMs must have on their devices (such as Gmail,4

Google Search, Google Maps, and YouTube) and conditions the licensing of those5services on an OEM’s agreement to pre-install the Google Play Store and to6

prominently display it. Google then interferes with OEMs’ ability to make third-party

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app stores or apps available on the devices they make, including through its so-called

8“Anti-Fragmentation Agreements” (“AFAs”) that foreclose OEMs from modifying

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Android to offer fast and simple (or “frictionless”) downloading of apps in the10same way they are offered through Google Play. These restrictions effectively

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foreclose competing app stores—and even single apps—from what could be a primary12

distribution channel. Google’s documents show that it pushes OEMs into making

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Google Play the exclusive app store on the OEMs’ devices through a series of

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coercive carrots and sticks, including by offering significant financial incentives to15

those that do so, and withholding those benefits from those that do not. Google’s

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documents further show that Google has erected these contractual barriers to

17competition for Android app distribution in the recognition that Google stands to18

lose billions of dollars if Android app distribution were opened to competition and19competing Android app stores, including an “Epic Store”, were allowed to “gain20

full traction”.

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16. Epic’s experience with one OEM, OnePlus, is illustrative. Epic

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struck a deal with OnePlus to make Epic games available on its phones through an Epic

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Games app. The Epic Games app would have allowed users to seamlessly install and24

update Epic games, including Fortnite, without obstacles imposed by Google’s Android

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OS. But Google forced OnePlus to renege on the deal, citing Google’s “particular[]26

concern” about Epic having the ability to install and update mobile games while

27“bypassing the Google Play Store”.

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20.

17. Another OEM, LG, told Epic that its contract with Google did

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not allow it to enable the direct distribution of apps, and that the OEM could not offer

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any functionality that would install and update Epic gamesapps except through the4

Google Play Store.

521.

18. Google also enforces anti-competitive restrictions against app

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developers and distributors. Specifically, Google contractually prohibits app

7developers and would-be distributors from offering on the Google Play Store any app

8that could be used to download other apps, i.e., any app that could compete with the9

Google Play Store in app distribution. And Google further requires app developers to

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distribute their apps through the Google Play Store if they wish to advertise theirthose

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apps through valuable advertising channels controlled by Google, such as ad placements

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on Google Search or on YouTube that are specially optimized to advertise mobile apps.

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22.

19. Finally, Google stifles or blocks consumers’ ability to download

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app stores and apps directly from developers’ websites. As anyone who has tried to15

download directly on an Android device knows, it is significantly different than the16

simple process available on a personal computer: directly downloading Fortnite on an

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Android device can involve a dozen steps, requiring the user to change default settings18and bravely click through multiple dire warnings. Accordingly, leading Google Play19

executives have acknowledged that directly downloading Fortnite from a source

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other than Google Play is “an awful experience”, and developers like Epic should

21“worry that most will not go through the 15+ steps”. And even if a persistent user

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manages to install a competing app store, Google preventshas prevented such stores

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from competing on equal footing with the Google Play Store by blockingrestricting

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them from offering basic functions, such as automatic updating of apps in the

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background, which is available for apps downloaded from the Google Play Store.

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20. Google engages in these anticompetitive acts to eliminate

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consumer choice and competition in mobile app distribution. Google has no legitimate

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justification for these restrictions. Google therefore has brokenchanged its
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promisescourse of conduct, breaking its promise that Android would be an “open”

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ecosystem in which other participants could participate fairly.

324.

21. But Google does not stop at app distribution. Google also

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imposes anti-competitive restrictions in the separate Market for Android In-appApp

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Payment Processing (infra Part III).

625.

22. App developers who sell digital content for consumption within

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the app itselfapps require seamless payment processing toolssolutions to execute8purchases. App developers, including Epic, may develop suchhave developed payment

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processing toolssolutions internally or. Others may use a host of payment processing

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toolssolutions offered by multiple competing third parties.

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23. Google, however, ties distribution through its Google Play Store

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with developers’ exclusive use of Google’s own payment processing toolsolution,

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called Google Play Billing, to process in-app purchases of digital content. Indeed, app

14developers that distribute through the Google Play Store are even prohibited from15

offering Android users the choice of additional payment processing options alongside

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Google’s for digital content. And because Google has a monopoly in the Android App

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Distribution Market, app developers cannot practically avoid this anti-competitive tie by

18electing app distribution through an alternative channel.

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27.

24. The result is that in every in-app transaction for digital content, it

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is Google, not the app developer, that collects the payment in the first instance. Google

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then taxes the transaction at up to an exorbitant 30% rate, remitting the remaining 70%

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to the developer who actually made the sale. This 30% commission is often ten times

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higher than the price typically paid for the use of other electronic payment solutions.

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28.

25. Moreover, through this tie, Google inserts itself as an

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intermediary between each seller and each buyer for every purchase of digital content

26

within the Android ecosystem, collecting for itself the personal information of users,

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which Google then uses to give an anti-competitive edge to its own advertising services

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and mobile app development business.
First Amended Complaint for Injunctive Relief

11Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 17 of 89

29.

1

26. But for Google’s monopolisticanticompetitive conduct, has

2substantially foreclosed competing stores could offerfrom offering consumers and3developers choice in distribution and payment processing. Indeed, Epic, which

4

distributes gaming apps through its own store to users of personal computers, would

5

open a store to compete with Google’s and offer developers more innovation, better

6

security, and more choice, including for in-app payment processing. App developers

7

would not have to pay Google’s supra-competitive tax of 30%, as the price of

8

distribution and payment processing alike would be set by market forces rather than by

9

Google’s fiat. Developers could address any payment-related issues (such as refunds)

10

directly with their own customers, rather than through Google. And users and11developers, jointly, would get to decide whether users’ data should be utilized for other12

purposes.

1330.

27. Google’s anti-competitive conduct has injured Epic, both as an

14

app developer and as a potential competitor in app distribution and payment processing.

15

Epic has repeatedly approached Google and asked to negotiate relief that would stop

16

Google’s unlawful and anti-competitive restrictions on app developers and consumers.

17

But Google would not budge.

18
19
20
21
22
23
24
25
26
27
28
First Amended Complaint for Injunctive Relief

12Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 18 of 89

131.

28. Because of Google’s refusal to stop its ongoing anti-competitive2

and unlawful conduct, on August 13, 2020, Epic began providing Fortnite playersusers

3

the choice of using Epic’s own direct payment tool as an alternative to Google’s

4

overpriced Billingbilling tool, sharing with playersusers who chose to use Epic’s

5

payment tool the resulting savings.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

32.

29. In retribution, Google removed Fortnite from Google Play Storelistings, preventing new playersusers from obtaining the game. Google also prevented
Android users who acquired Fortnite from the Google Play Store from obtaining app
updates they will needneeded to continue playing with their friends and family.
33.

30. Epic has publicly advocated for years that Google cease the anti-

competitive conduct addressed in this First Amended Complaint. Google refused tochange its industry-impacting conduct. Instead, Google offered to placate Epic byoffering it preferential terms on side deals, such as YouTube sponsorships and cloudservices, if Epic agreed to distribute Fortnite in the Google Play Store and acceded toGoogle’s 30% tax. Google has reached at least one preferential dealdeals withanothermajor mobile game developer,app developers, such as Activision Blizzard,
and Epic believes that Google is using similaras part of an initiative Google originallyFirst Amended Complaint for Injunctive Relief

13Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 19 of 89

1

called Project Hug and now refers to as the Apps and Games Velocity Programs.

2

These deals with other companies to allow Google to keep its monopolistic behavior

3

publicly unchallenged. But Epic is not interested in any side deals that might benefit

4

Epic alone while leaving Google’s anti-competitive restraints intact; instead, Epic is

5

focused on opening up the Android ecosystem for the benefit of all developers and6

consumers.

7

34.

31. Accordingly, Epic seeks injunctive relief in court. Google’s

8

conduct has caused and continues to cause Epic financial harm, but Epic is not bringing

9

this case to recover these damages; Epic is not seeking any monetary relief, but rather

10

only an order enjoining Google from continuing to impose its anti-competitive conduct

11

on the Android ecosystem.
PARTIES

12
13

35.

32. Plaintiff Epic Games, Inc. is a Maryland corporation with its

14

principal place of business in Cary, North Carolina. Epic’s mission is “to create fun

15games we want to play and to build the art and tools needed to bring those games to16life”. Epic was founded in 1991 by a college student named Tim Sweeney. Mr.

17

Sweeney ran Epic out of his parents’ basement and distributed, by mail, Epic’s first18

commercial personal computer software, a game named ZZT. Since then, Epic has

19developed several popular entertainment software products that can be playedused on

20

an array of platforms—such as personal computers, gaming consoles, and smart mobile

21

devices. Epic also creates and distributes the Unreal Engine, a powerful software suite

22

that allows competing game developers and others to create realistic three-dimensional

23

content, including video games, architectural recreations, television shows, and movies.

24

An Epic subsidiary also develops and distributes the popular Houseparty app, which25

enables video chatting and social gaming on smart mobile devices and personal

26

computers. Worldwide, approximately 400 million users have signed up to playuse

27

Epic games’s apps and services, and each day 30 to 40 million individuals log into an

28
First Amended Complaint for Injunctive Relief

14Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 20 of 89

1

Epic gameapp, such as Fortnite, Rocket League, Houseparty, or the Epic Games

2

Store.
36.

3

33. Defendant Google LLC is a Delaware limited liability company

4with its principal place of business in Mountain View, California. Google LLC is the5

primary operating subsidiary of the publicly traded holding company Alphabet Inc. The

6sole member of Google LLC is XXVI Holdings, Inc., a Delaware corporation with its

7

principal place of business in Mountain View, California. Google LLC contracts with8

all app developers that distribute their apps through the Google Play Store and is9

therefore a party to the anti-competitive contractual restrictions at issue in this10Complaint.

11

37.

34. Defendant Google Ireland Limited (“Google Ireland”) is a12

limited company organized under the laws of Ireland with its principal place of business13

in Dublin, Ireland, and a subsidiary of Google LLC. Google Ireland contracts with all

14

app developers that distribute their apps through the Google Play Store and is therefore

15

a party to the anti-competitive contractual restrictions at issue in this Complaint.

16

38.

35. Defendant Google Commerce Limited (“Google Commerce”) is17

a limited company organized under the laws of Ireland with its principal place of18

business in Dublin, Ireland, and a subsidiary of Google LLC. Google Commerce

19

contracts with all app developers that distribute their apps through the Google Play

20Store and is therefore a party to the anti-competitive contractual restrictions at issue in21

this Complaint.

22

39.

36. Defendant Google Asia Pacific Pte. Limited (“Google Asia

23

Pacific”) is a private limited company organized under the laws of Singapore with its

24

principal place of business in Mapletree Business City, Singapore, and a subsidiary of25

Google LLC. Google Asia Pacific contracts with all app developers that distribute their26

apps through the Google Play Store and is therefore a party to the anti-competitive27

contractual restrictions at issue in this Complaint.

28
First Amended Complaint for Injunctive Relief

15Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 21 of 89

140.

37. Defendant Google Payment Corp. (“Google Payment”) is a2

Delaware corporation with its principal place of business in Mountain View, California,

3

and a subsidiary of Google LLC. Google Payment provides in-app payment processing

4

services to Android app developers and Android users and collects a 30% commission

5

on many types of processed payments, including payments for apps sold through the6

Google Play Store and in-app purchases made within such apps.
JURISDICTION AND VENUE

7
8

41.

38. This Court has subject-matter jurisdiction over Epic’s federal

9antitrust claims pursuant to the Clayton Antitrust Act, 15 U.S.C. § 26, and 28 U.S.C. §§101331 and 1337. The Court has supplemental jurisdiction over Epic’s state law claims

11

pursuant to 28 U.S.C. § 1367. The Court also has subject-matter jurisdiction over the12

state-law claims pursuant to 28 U.S.C. § 1332 based on the diversity of citizenships of

13

Plaintiff, on the one hand, and of Defendants, on the other, and the amount in

14

controversy exceeding $75,000.

15

42.

39. This Court has personal jurisdiction over the Defendants.

16

Google LLC and Google Payment are headquartered in this District. All Defendants

17

have engaged in sufficient minimum contacts with the United States and have18

purposefully availed themselves of the benefits and protections of United States and19

California law, such that the exercise of jurisdiction over them would comport with due

20

process requirements. Further, the Defendants have consented to the exercise of21

personal jurisdiction by this Court.

22

43.

40. Each of the Defendants except Google Payment is party to a

23

Google Play Developer Distribution Agreement (the “DDA”) with Epic. Section 16.8

24of the DDA provides that the parties “agree to submit to the exclusive jurisdiction of the25federal or state courts located within the county of Santa Clara, California, to resolve

26

any legal matter arising from or relating to this Agreement”. Section 16.8 further

27

provides that “[a]ll claims arising out of or relating to this Agreement or Your28

relationship with Google under this Agreement will be governed by the laws of the StateFirst Amended Complaint for Injunctive Relief

16Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 22 of 89

1

of California, excluding California’s conflict of laws provisions.” The claims addressed2in this Complaint relate to the DDA or to Epic’s relationship with Google under the3

DDA, or in the alternative such claims arise out of the same nucleus of operative facts

4

as other claims as to which the Court may exercise personal jurisdiction over each5

Defendant, so that the exercise of pendent personal jurisdiction would be proper.

6

44.

41. Google Payment is party to a Google Payments—Terms of

7Service—Seller Agreement with Epic. Section 11.3 of that Agreement provides that8“[t]he exclusive venue for any dispute related to this Agreement will be the state or

9federal courts located in Santa Clara County, California, and each party consents to10

personal jurisdiction in these courts.” Section 11.3 further provides that “The laws of

11

California, excluding California’s choice of law rules, and applicable federal United

12

States laws will govern this Agreement.” The dispute between Google Payment and13

Epic relates to the parties’ Agreement, or in the alternative Epic’s claims arise out of the

14

same nucleus of operative facts as other claims as to which the Court may exercise

15

personal jurisdiction over Google Payment, so that the exercise of pendent personal

16

jurisdiction would be proper.

17

45.

42. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)18

because Google LLC and Google Payment maintain their principal places of business in

19

the State of California and in this District, because a substantial part of the events or20

omissions giving rise to Epic’s claims occurred in this District, and because, pursuant to21

28 U.S.C. § 1391(c)(3), any Defendants not resident in the United States may be sued in22

any judicial district and their joinder with others shall be disregarded in determining

23

proper venue. In the alternative, personal jurisdiction and venue also may be deemed

24

proper under Section 12 of the Clayton Antitrust Act, 15 U.S.C. § 22, because

25

Defendants may be found in or transact business in this District.

26
27
28
First Amended Complaint for Injunctive Relief

17Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 23 of 89

INTRADISTRICT ASSIGNMENT

1
46.

2

43. Pursuant to Civil Local Rule 3-2(c), this antitrust case shall not3

be assigned to a particular Division of this District, but shall be assigned on a District-4

wide basis.
RELEVANT FACTS

5
6

I.

Google Dominates the Merchant Market for Mobile Operating Systems.
47.

7

44. To understand how Google effectively monopolizes the Android

8

App Distribution and Android In-App Payment Processing Markets, as described below

9in Parts II and III, it is helpful to understand the background of smart mobile devices

10and how Google effectively dominates the related Merchant Market for Mobile

11

Operating Systems through its control over the Android operating system.

12A.

The Merchant Market for Mobile Operating Systems

13

i.

14

48.

Product Market Definition
45. Smart mobile devices are handheld, portable electronic devices

15

that can connect wirelessly to the internet and are capable of multi-purpose computing

16

functions, including, among other things, Internet browsing, using social media,

17

streaming video, listening to music, or playing games. Smart mobile devices include

18

smartphones and tablet computers. Many consumers may only have a smart mobile

19

device and no other computer. Such consumers are particularly hard-hit by Google’s

20

unlawful conduct in mobile-related markets.

21

49.

46. Like laptop and desktop personal computers, mobile devices

22

require an operating system —or “OS” ”—that enables multi-purpose computing

23

functionality. A mobile OS, just like the OS of any computer, is a piece of software that24

provides basic functionality to users of mobile devices such as button controls, touch25

commands, motion commands, and the basic “graphical user interface”, which includes

26“icons” and other visual elements representing actions that the user can take. A mobile

27

OS also manages the basic operations of a smart mobile device, such as cellular or WiFi

28

connectivity, GPS positioning, camera and video recording, speech recognition, andFirst Amended Complaint for Injunctive Relief

18Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 24 of 89

1other features. In addition, a mobile OS permits the installation and operation of mobile

2

apps that are compatible with the particular OS and facilitates their use of the device’s

3

OS-managed core functionality.

450.

47. To ensure that every user can access the basic functions of a5

mobile device “out of the box”, that is at the time he/she purchases the device, an OEM

6must pre-install an OS on each device prior to its sale. This is similar to a personal

7

computer that comes pre-installed with Microsoft Windows for PC or Apple’s macOS8

for a Mac computer. OEMs design mobile devices to ensure the device’s compatibility

9with a particular OS the OEM chooses for a particular model of mobile device, so that10

the device may utilize the capabilities of that OS. For OEMs, the process of

11

implementing a mobile OS requires significant time and investment, making switching12

to another mobile OS difficult, expensive, and time-consuming.
51.

13

48. The vast majority of OEMs do not develop their own OS and

14

must choose an OS that can be licensed for installation on smart mobile devices they15

design. There is therefore a relevant Merchant Market for Mobile OSs comprising16

mobile OSs that OEMs can license for installation on the smart mobile devices they17

manufacture. The market does not include proprietary OSs that are not available for18

licensing, such as Apple’s mobile OS, called iOS. Historically, the Merchant Market

19

for Mobile OSs has included the Android OS, acquired and further developed by

20

Google; the Tizen mobile OS, a partially open-source mobile OS that is developed by

21

the Linux Foundation and Samsung; and the Windows Phone OS developed by22

Microsoft.

23

52.

49. Some consumers continue to use cellular phones that do not have24

multi-purpose, computing functions. These simple phones resemble older “flip25

phones”, for example; they are not part of the smart mobile device category. These

26

phones do not support mobile apps such as Fortnite or Houseparty and are instead

27

typically limited to basic cellular functionality like voice calls and texting. The simple

28

operating systems on these phones, to the extent they exist, cannot support the wide
First Amended Complaint for Injunctive Relief

19Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 25 of 89

1array of features supplied by the OSs on smart mobile devices and are not part of the2

Merchant Market for Mobile OSs defined herein.

3

53.

50. To the extent that electronic devices other than smart mobile

4

devices use operating systems, those OSs are not compatible with mobile devices, and5

therefore are not included in the Merchant Market for Mobile OSs defined herein. For

6example, computing devices that are not handheld and portable, that are not capable of7

multi-purpose computing functions and/or that lack cellular connectivity—such as

8

desktop computers, laptops, or gaming consoles—are not considered to be “smart

9

mobile devices”. Gaming devices like Sony’s PlayStation 4 (“PS4”) and Microsoft’s

10Xbox are physically difficult to transport, require a stable WiFi or wired connection to

11

operate smoothly, and require an external screen for the user to engage in game play.

12

Thus, even for games, if a gamer owns, for example, a dedicated, non-portable gaming

13

console such as a PS4, which connects to and enables gaming via his/her TV, he/she

14

willwould not consider that PS4 a reasonable substitute for a mobile device like a15smartphone (and therefore would not consider the OS for the PS4 a reasonable

16

substitute for a mobile OS), nor would he/she consider the version of any game17

created for his/her PS4 to substitute for the mobile app version of such a game. That is18

because the portability (and typically for smartphones the cellular connectivity) of the19mobile devices enable the consumer to play mobile games away from home or20

anywhere in the home. Indeed, for this reason, game developers often distribute21

multiple versions of a gamean app, each of which is programmed for compatibility with22

a particular type of device and its operating system.

23

ii.

Geographic Market Definition

24

54.

51. OEMs license mobile OSs for installation on mobile devices

25

globally, excluding China. Google’s operations in China are limited, and it does not

26

make available many of its products for mobile devices sold within China. This is27

based in part on legal and regulatory barriers to the distribution of mobile OS-related

28

software imposed by China. Further, while Google contractually requires OEMs
First Amended Complaint for Injunctive Relief

20Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 26 of 89

1licensing Android outside of China not to sell any devices with competing Android-2

compatible mobile OSs, it imposes no such restriction on devices sold within China.

3

Because the OEMs that sell Android mobile devices both within and outside China have4committed to this contractual restriction, such OEMs must sell, outside of China,

5devices with Google’s Android OS. The geographic scope of the relevant Merchant6Market for Mobile OSs is therefore worldwide, excluding China.
B.

7

Google’s Monopoly Power in the Merchant Market for Mobile OSs
55.

8

52. Google has monopoly power in the Merchant Market for Mobile

9

OSs through its Android OS. As determined by the European Commission during the10

course of its investigation of Android, the Android OS, licensed to OEMs in relevant

11

respects by Google, is installed on over 95% of all mobile devices sold by OEMs

12

utilizing a merchant mobile OS. Indeed, Android OS is installed on nearly 75% of all

13

smart mobile devices sold by all OEMs, including even those OEMs that use a14

proprietary mobile OS they developed exclusively for their own use (such as Apple’s

15

iOS).

16

56.

53. A mobile ecosystem typically develops around one or morea

17

mobile OSsOS, such as the Android OS. The “Android ecosystem” is a system of18

mobile products (such as devices, apps and accessories) designed to be inter-dependent

19

and compatible with each other and the Android OS. Ecosystem participants include an

20array of participating stakeholders, such as Google, OEMs that make Android-

21

compatible devices, developers of Android-compatible apps, Android app distribution

22

platforms, including app stores, the makers of ancillary hardware such as headphones or23

speakers, cellular carriers, and others.

24

57.

54. Mobile ecosystems benefit from substantial network effects—

25

that is, the more developers that design useful apps for a specific mobile OS, the more

26

consumers will be drawn to use the relevant OS for which those apps are designed; the27

more consumers that use an OS, the more developers want to develop even more apps

28

for that OS. As determined in United States v. Microsoft, Inc Corp., No87 F. 98First Amended Complaint for Injunctive Relief

21Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 27 of 89

11232Supp. 2d 30 (D.D.C. 2000), new entrants into an operating system market thus

2

face an “applications barrier to entry”. An applications barrier to entry arises because a3

new operating system will be desirable to consumers only if a broad array of software

4

applications can run on it, but software developers will find it profitable to create

5

applications that run on an operating system only if there is a large existing base of6

users.
58.

7

55. To overcome this challenge and to attract app developers and8

users, Google has continuously represented that Android is an “open” ecosystem and9that any ecosystem participant could create Android-compatible products without

10

unnecessary restrictions. Indeed, Google LLC’s CEO, Sundar Pichai, represented in

112014 that Android “is one of the most open systems that I’ve ever seen”.5 And Andy

12

Rubin, an Android founder who is described by some as the “Father of Android”, said

13

when he departed Google in 2013 that “at its core, Android has always been about

14

openness”.6
59.

15

56. But the current reality is quite different. Despite these claims of

16

openness, Google has now effectively closed the Android ecosystem through its tight17

control of the Android OS. And, as the dominant OS licensor, Google now benefits

18

from these substantial network effects which makes participation on its platform a

19“must-have” market for developers.
60.

20

57. As further described below, Google uses the Android OS to21

restrict whichthe apps and app stores OEMs are permitted to pre-install on the devices

22

they make and to impose deterrents to the direct distribution of competing app stores

23

and apps to Android users, all at the expense of competition in the Android ecosystem.

24
25
26
27
28

5

Stuart Dredge, Google’s Sundar Pichai on wearable tech: ‘We’re just scratching the surface’, The
Guardian (Mar. 9, 2014), https://www.theguardian.com/technology/2014/mar/09/google-sundarpichai-android-chrome-sxsw.
6
Andy Rubin, Andy Rubin’s Email to Android Partners, The Wall Street Journal (Mar. 13, 2013),
available at https://blogs.wsj.com/digits/2013/03/13/andy-rubins-email-to-androidpartners/?mod=WSJBlog.
First Amended Complaint for Injunctive Relief

22Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 28 of 89

61.

1

58. Because of Google’s monopoly power in the Merchant Market

2for Mobile OSs, OEMs, developers and users cannot avoid such effects by choosing

3

another mobile OS. OEMs such as ZTE and Nokia have stated that other non-4

proprietary OSs are poor substitutes for the Android OS and are not a reasonable

5

alternative to licensing the Android OS. One important reason is that other mobile OSs

6presently do not support many high-quality and successful mobile apps, which

7

consumers find essential or valuable when choosing a mobile device. These8

circumstances have biased consumers against the purchase of mobile devices with non-9

proprietary mobile OSs other than Android OS. OEMs thus have no choice but to agree

10

to Google’s demands because it is critical that they be able to offer a popular mobile OS11

and corresponding ecosystem to consumers who are choosing which mobile device to

12purchase.

13

62.

The Android OS was designed to be, and advertised as, “open14source”, in that OEMs and others may use portions of the OS without a license

15

from Google, or even create customized versions of the OS for their own purposes,

16

called Android “forks”. But in reality, the Android OS is “open source” in name17

only. Google has entered into so-called Anti-Fragmentation Agreements (“AFAs”)

18

with Android mobile OEMs that have prevented them from creating Android

19

forks for mobile devices and which prevent OEMs from modifying Android to20

offer competing app stores without restrictions. Among other things, the AFAs

21

prohibit OEMs from taking “any actions that may cause or result in the22

fragmentation of Android”, which is determined in Google’s “sole discretion”.

23

Further, Android OEMs agree only to distribute “Android Compatible Devices”,

24

meaning that they may not ship any devices running an Android fork. Android

25

Compatible Devices also must comply with the “Android Compatibility Definition”

26

document and pass the “Android Compatibility Test Suite”, both of which are27

maintained by Google. Among other things, the Android Compatibility Definition

28

document requires OEMs to prompt users explicitly for permission to allow direct
First Amended Complaint for Injunctive Relief

23Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 29 of 89

1

downloading of apps outside Google Play. The AFAs also prohibit Android OEMs

2

from distributing certain software on devices that are not Android Compatible

3

Devices, and bar OEMs from distributing, creating or promoting “a third-party

4

software development kit (SDK) derived from Android or derived from Android

5

Compatible Devices”.
63.

6More recently, after the European Commission began

7

investigating Google’s Android-related practices, including the AFAs, Google

8transitioned to a new form of agreement with Android OEMs called the Android

9

Compatibility Commitment (“ACC”). But the ACC terms are only marginally less10

restrictive than the AFA terms in that they allow OEMs to manufacture non-11

Android Compatible Devices on behalf of a third party and that are marketed

12

under a third-party brand. However, they still substantially foreclose OEMs from

13

distributing and marketing their own devices, including Android forks. Entering

14

into an AFA or ACC is a precondition to an OEM being able to enter into a Mobile

15

Application Distribution Agreement (“MADA”) and Revenue Sharing Agreement

16(“RSA”), which are described below. As a result, all or almost all commercially17

significant mobile Android OEMs are bound by an AFA or ACC, which helps

18

Google ensure that mobile OEMs do not develop an Android fork that could

19

compete with Google’s own version of the Android OS or provide features that20

would support third-party app stores that compete with Google Play.
64.

21

Google’s conduct described herein creates a further barrier to22entry into the Merchant Market for Mobile OSs by, among other things,

23

restricting the ability of OEMs to support alternatives to Google’s version of24

Android and making it more difficult for consumers to switch to other mobile OSs.

25
26
27
28

II.

Google Unlawfully Maintains a Monopoly in the Android Mobile App
Distribution Market.
65.

59. Mobile apps make mobile devices more useful and valuable

because they add functionality to the mobile device that caters to the specific interests ofFirst Amended Complaint for Injunctive Relief

24Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 30 of 89

1each mobile device user. For example, they facilitate video chats with friends and2family, banking online, shopping, job hunting, photo editing, reading digital news3sources, editing documents, or playing a game like Fortnite Battle Royale. Many4

workers use their smart mobile device to check work schedules, access company email,5

or use other employer software while outside the workplace. For many consumers, a6

smartphone or tablet is the only way to access these functions, because the consumer

7

does not own a personal computer or because the consumer can only access the Internet

8

using a cellular connection. But even when a consumer can perform the same or similar

9functions on a personal computer, the ability to access apps “on the go” using a10

handheld, portable device remains valuable and, important, and distinct.

11

66.

60. Whereas some apps may be pre-installed by OEMs, OEMs

12

cannot anticipate all the various apps a specific consumer may desire to use. Moreover,13

many consumers have different preferences as to which apps they want, and it would be

14

undesirable for OEMs to load the devices they sell with unwanted apps that take up

15

valuable space on the mobile device. And many apps that consumers may ultimately

16

use on their device will be developed after they buy the device. Accordingly,

17

consumers who seek to add new functionalities to a mobile device and customize the18device for their own use need to obtain and install mobile apps themselves after

19

purchasing their device. Currently, on Android devices, this is done most often through20

the Google Play Store, Google’s own “app store”. The Google Play Store is a digital

21

portal set up by Google and through which mobile apps can be browsed, searched for,22

purchased (if necessary), and downloaded by a consumer. App stores such as the23

Google Play Store, alongside several other ways by which apps can be distributed to the24hundreds of millions of consumers using Android-based mobile devices,

25

compriseconstitute the Android App Distribution Market, defined below.

26

67.

61. Through various anti-competitive acts and unlawful restraints on

27competition, Google has substantially foreclosed competition and maintained a28monopoly in the Android Mobile App Distribution market, causing ongoing harm toFirst Amended Complaint for Injunctive Relief

25Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 31 of 89

1competition and injury to OEMs, app distributors, app developers, and consumers.

2

Google’s restraints of trade belie representations Google currently makes to developers

3

that “as an open platform, Android is about choice” and that app developers “can4

distribute [their] Android apps to users in any way [they] want, using any distribution

5

approach or combination of approaches that meets [their] needs”, including by allowing

6

users to directly download apps “from a website” or even by “emailing them directly to

7consumers”.7

8

A.

The Android App Distribution Market

9

i.

10

68.

Product Market Definition
62. There is a relevant market for the distribution of apps compatible

11

with the Android OS to users of mobile devices (the “Android App Distribution

12

Market”). This Market is comprised ofincludes all the channels by which mobile apps

13

may be distributed to the hundreds of millions of users of mobile devices running the14

Android OS. The Market primarily includes Google’s dominant Google Play Store,

15

with smaller stores, such as Samsung’s Galaxy Store and Aptoide, trailing far behind.

16

Nominally only, the direct downloading of apps without using an app store (which

17

Google pejoratively describes as “sideloading”) is also within this market.
69.

18

63. App stores allow consumers to easily browse, search for, access

19

reviews on, purchase (if necessary), download, and install mobile apps, using the mobile

20

device itself and an Internet connection. OEMs find it commercially unreasonable to21

ship a smart mobile device to a consumer without at least one app store installed, as a22

consumer’s ability to obtain new mobile apps is an important part of the value provided

23

by smart mobile devices.
70.

24

64. App stores selling mobile apps are currently OS-specific,

25

meaning they distribute only apps that are compatible with the specific mobile OS on

26

which the app store is used. A consumer who has a mobile device running the Android

27
28

7

Google Play Developers Page, Alternative distribution optionsDistribution Options,
https://developer.android.com/distribute/marketing-tools/alternative-distribution (last accessed June
7July 20, 20202021).
First Amended Complaint for Injunctive Relief

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1

OS cannot use apps created for a different mobile operating system. An owner of an2Android OS device will use an Android compatible app store, and such app stores

3

distribute only Android-compatible mobile apps. That consumer may not substitute an

4

Android app store with, for example, Apple’s App Store, as that app store is not5

available on Android devices, is not compatible with the Android OS, and does not offer

6

apps that are compatible with the Android OS. Non-Android mobile app distribution

7

platforms—such as the Windows Mobile Store used on Microsoft’s Windows Mobile

8

OS or the Apple App Store used on Apple iOS devices—cannot substitute for Android-

9

specific app distribution platforms, and they are therefore not part of the Android App

10Distribution Market defined herein.

11

71.

65. Likewise, stores distributing personal computer or gaming

12

console software are not currently compatible with the Android OS and do not offer

13

Android-compatible apps: the Epic Games Store distributes software compatible with14

personal computers, the Microsoft Store for Xbox distributes software compatible with

15

the Xbox game consoles, and the PlayStation Store distributes software compatible with16

the PlayStation game consoles. A user cannot download mobile apps for use on his/her17

Android device by using such non-Android OS, non-mobile software distribution

18

platforms. They therefore are not part of the Android App Distribution Market.

19

72.

66. The same is true even when an app or game, like Fortnite, is20

available for different types of platforms running different operating systems, because

21

only the OS-compatible version of that software can run on a specific type of device or

22computer. Accordingly, as a commercial reality, an app developer that wishes to23

distribute mobile apps for Android mobile devices must develop an Android-specific24version of the app and avail itself of the Android App Distribution Market.

25

73.

67. In the alternative only, the Android App Distribution Market is a26

relevant, economically distinct sub-market of a hypothetical broader antitrust market for27

the distribution of mobile apps to users of all mobile devices, whether Android or

28

Apple’s iOS.
First Amended Complaint for Injunctive Relief27Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 33 of 89

1ii.

Geographic Market Definition

274.

68. The geographic scope of the Android App Distribution Market is3

worldwide, excluding China. Outside of China, app distribution channels, including app

4stores, are developed and distributed on a global basis; OEMs, in turn, make app stores,

5such as the Google Play Store, available on Android devices on a worldwide basis

6(except in China). China is excluded from the relevant market because legal and7

regulatory barriers prevent the operation of many global app stores, including the

8

Google Play Store, within China. Additionally, app stores prevalent in China are not9available, or have little presence, outside of China.

10

B.

11
12
13

Google’s Monopoly Power in the Android App Distribution Market
75.

69. Google has monopoly power in the Android App Distribution

76.

70. Google’s monopoly power can be demonstrated by, among otherMarket.

14

things, Google’s massive market share in terms of apps downloaded. The European

15

Commission determined that, within the Market, more than 90% of Android app

16

downloads through app stores have been done through the Google Play Store. Indeed,17

although app stores for merchant mobile OSs other than Android are not included in the18

Android App Distribution Market, the European Commission found that the only such

19

app store with any appreciable presence was the Windows Mobile Store, which was

20

compatible with the Windows Mobile OS. The Commission determined that even if the21

Windows Mobile Store share was included in the market, the Google Play Store would

22

still have had a market share greater than 90%. Google admits as much. A 201723

internal Google report confirmed that “[the Google] Play Store dominates in all

24

countries”, including the United States. Google has recognized that in one quarter

25(June to September 2016), app installations through channels other than Google

26

Play (including direct downloads and competing app stores) amounted to a mere

27

4.4% of Android app downloads in the United States.

28
First Amended Complaint for Injunctive Relief

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177.

71. Other existing Android mobile app stores do not discipline

2

Google’s exercise of monopoly power in the Android App Distribution Market. No

3other app store is able to reach nearly as many Android users as the Google Play Store.

4

According to the European Commission, the Google Play Store is pre-installed by

5

OEMs on practically all Android mobile devices sold outside of China. As a result, no6other Android app store comes close to that number of pre-installed users. With the7

exception of app stores designed for and installed only on mobile devices sold by those8

respective OEMs, such as Samsung Galaxy Apps and the LG Electronics App Store, no9other Android app store is pre-installed on more than 10% of Android devices, and10

many have no appreciable market penetration at all. Aptoide, for example, is an

11

Android app store that claims to be the largest “independent” app store outside of China,

12

but it comes pre-installed on no more than 5% of Android mobile devices.

13

78.

72. Because of Google’s success in maintaining its monopoly in

14

Android app distribution, there is no viable substitute to distributing Android apps

15

through the Google Play Store. As a result, the Google Play Store offers over 3 million

16

apps, including all of the most popular Android apps, compared to just 700,000 apps

17

offered by Aptoide, the Android app store with the next largest listing. The Google Play

18

Store thereby benefits from ongoing network effects based on the large number of19participating app developers and users. The large number of apps attracts large numbers

20of users, who value access to a broad range of apps, and the large number of users

21

attract app developers who wish to access more Android users. Android OEMs too find22

it commercially unreasonable to make and sell phones without the Google Play Store,

23

and they view other app stores as poor substitutes for the Google Play Store because of24

the lower number and lesser quality of apps they offer.

25

79.

73. As further proof of its monopoly power, Google imposes a supra-

26

competitive commission of 30% on the price of apps purchased through the Google Play

27

Store, which is a far higher commission than would exist under competitive conditions.

28
First Amended Complaint for Injunctive Relief

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180.

74. Furthermore, Google’s monopoly power in app distribution is not2

constrained by competition at the smart mobile device level because. Before a3

consumer can even consider purchasing an app, she must purchase a device on

4which to install and run apps. There are currently only two smartphone operating5

systems with significant market share, each at the core of a separate, differentiated6

ecosystem of devices, accessories, apps and services: Apple’s iOS and Google’s

7

Android OS. When a consumer wishes to purchase a smartphone, the first choice8

she must make therefore is which operating system she wants the device to run and9which mobile ecosystem she wants to participate in. Android device users face10

significant switching costs and lock-in to the Android ecosystems that serves to protect

11

Google’s monopoly power, and consumers are unable to account for Google’s

12

anticompetitive conduct when they purchase a smart mobile device.

13

81.

75. First, consumers are deterred from leaving the Android

14

ecosystem due to the difficulty and costs of switching. Consumers choose a smartphone15

based in part on the OS that comes pre-installed on that device and the ecosystem in

16

which the device participates (in addition to a bundle of other features, such as price,

17

battery life, design, storage space, and the range of available apps and accessories).

18

Once a consumer has selected a smartphone, the consumer cannot replace the mobile

19

OS that comes pre-installed on it with an alternative mobile OS. Rather, a consumer

20

who wishes to change the OS must purchase a new smartphone entirely, which is an21

investment that most consumers do not make more often than every two or three22

years. Many Android phones are cheaper than non-Android (i.e., Apple) phones;23

for those users, a comparably-priced non-Android alternative simply isn’t

24

available. In addition, mobile OSs have different designs, controls, and functions that25

consumers must learn to navigate. Over time, consumers who use Android devices

26

learn to operate efficiently on the Android OS. For example, the Android OS layout

27

differs from iOS in a wide range of functions, including key features such as searching28

and installing “widgets” on the phone, organizing and searching the phone’s digitalFirst Amended Complaint for Injunctive Relief

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1

content, configuring control center settings, and organizing photos. The cost of learning2

to use a different mobile OS is part of consumers’ switching costs.

382.

76. Second, switching from Android devices may also result in a4

significant loss of personal and financial investment that consumers put into the5

Android ecosystem. Because apps, in-app content and many other products are6

designed for or are only compatible with a particular mobile OS, switching to a new7

mobile OS may mean losing access to such products or to data. Even if versions of such8

apps and products are available within the new ecosystem chosen by the consumer, the9consumer would have to go through the process of downloading them again onto the10

new devices and may have to purchase them anew. As a result, the consumer may be

11

forced to abandon his or her investment in at least some of those apps, along with any

12purchased in-app content and consumer-generated data on those apps. Because apps

13

and device functionalities may not synchronize or operate efficiently across

14

operating systems, existing Android users also face costs associated with “mixing

15

and matching” different operating systems if they attempt to purchase a non-16

Android device. Whether across a consumer’s own set of personal devices (e.g., a17phone and a tablet), or across the consumer’s family or business, “mixing and18

matching” operating systems can significantly diminish the utility of applications,19

which raises an additional and significant barrier to switching.

20

83.

77. Third, consumers are not able to avoid the switching costs and21

lock-in to the Android OS ecosystem by acquiring more information prior to the22purchase of the Android device. The vast majority of mobile device consumers have no23

reason to inquire, and therefore do not know about, Google’s anticompetitive24

contractual restraints and policies. Furthermore, these consumers rationally do not give

25

much weight to Google’s anticompetitive conduct and anticompetitive fees when

26

deciding whether to switch frompurchase an Android device. Consumers consider

27

many features when deciding which smartphone or tablet to purchase, including design,

28

brand, processing power, battery life, functionality, and cellular plan. These features areFirst Amended Complaint for Injunctive Relief

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1

likely to play a substantially larger role in a consumer’s decision as to which smart

2

mobile device to purchase than Google’s anticompetitive conduct in the relevant

3markets, particularly given that a consumer may consider the direct monetary cost of4

Google’s conduct to be small relative to the price of smart mobile devices, if the5

consumer is even aware of the conduct or assigns it such a cost at all. For example,

6

over time a typical Android user may make multiple small purchases of paid apps and7

in-app digital content—accumulating to $100 or less annually—but may spend several

8

hundreds of dollars at once to purchase an Android smart mobile device.

984.

78. Consumers are also unable to determine the “lifecycle price” of10devices—i.e., to accurately assess at the point of purchase how much they will end up

11

spending in total (including on the device and all apps and in-app purchases) for the12

duration of their ownership of the device. Consumers cannot know in advance of

13purchasing a device all of the apps or in-app content that they may want to purchase14

during the usable lifetime of the device. Consumers’ circumstances may change.

15

Consumers may develop new interests. They may learn about new apps or in-app

16

content that becomes available only after purchasing a device. New apps and in-app

17

content will continue to be developed and marketed after a consumer purchases a18

smartphone or tablet. All of these factors may influence the amount of consumers’ app

19

and in-app purchases. Because they cannot know or predict all such factors when

20

purchasing mobile devices, consumers are unable to calculate the lifecycle prices of the21

devices. This prevents consumers from effectively taking Google’s anticompetitive

22

conduct into account when making mobile device purchasing decisions.

23

85.

79. Because consumers face substantial switching costs and lock-in

24

to the Android OS, developers can only gain access to these users by also participating

25

in the Android ecosystem. Thus, developers face an even greater cost in not26

participating in the Android ecosystem—loss of access to hundreds of millions of27

Android OS users.

28
First Amended Complaint for Injunctive Relief

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186.

Google’s anticompetitive restraints and policies serve to2maintain and increase the switching costs described above. For example, by

3

restricting the manner in which consumers can discover, download and install app

4stores that compete with the Google Play Store and by restricting the functionality

5of such competing stores (see paragraphs 122-141 below), Google blocks the6

emergence of competing multiplatform app stores that could lower switching costs

7

by cataloguing or tracking a user’s apps and purchases across different OSs.

8

These various restrictions that increase switching costs impede the adoption of

9competing OSs, and thereby help perpetuate and strengthen Google’s monopoly.

10

87.

Moreover, the close relationship that Google maintains with

11

Apple further reduces Google’s incentive to compete, innovate, and invest in app

12

distribution because Google benefits by cooperating with its “competitor” Apple.

13

As Google’s founder and former CEO Larry Page once told Apple CEO Steve Jobs

14

during a private meeting in 2010 about a “partnership” between Android and iOS:

15

“there will always be places we compete, and places where we cooperate”. For

16

example, for over 15 years, Google has maintained an agreement with Apple17

whereby Google pays Apple a significant percentage of revenue derived from18

searches run on iOS devices—an estimated $8-12 billion per year in recent years,

19

according to the U.S. Department of Justice—in exchange for Apple making

20

Google Search the default search engine on the Safari browser, Siri voice

21

command searches, and other search access points on Apple’s devices. Default

22

status on Apple devices is valuable to Google because Google search advertising is23

Google’s main revenue source. And, through its agreements with Apple, Google24

ensures that its own search (and therefore search advertising) will be used on

25

virtually all mobile devices, whether iOS or Android, as most consumers are26

unlikely to change these settings on their phone and will become Google Search

27

users by default. Because Android and iOS account for over 99% of smartphone28

OSs installed on mobile devices, Google’s agreement with Apple guarantees thatFirst Amended Complaint for Injunctive Relief

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1

Google will generate revenue from virtually all smartphone OS users, regardless of2

whether they choose to purchase iOS or Android devices.
88.

3

Because Google reaps considerable profits from iOS users

4through its search arrangements with Apple, Google is not incentivized to compete

5

more with Apple at the smartphone OS level and expend more resources attracting

6

users from iOS to Android than it currently does. If it did not profit significantly

7

from searches on iOS devices, Google might be more incentivized to, among other8

things, differentiate its Android platform from Apple with respect to the9commissions it charges on app transactions. If Android competed with iOS on app

10transactions, the market competition would make Android apps cheaper for users

11

and attract developers to launch their apps first (or even only) on Android.

12

Instead, Google and Apple are cozy duopolists, offering virtually the same terms to13developers and changing those terms in tandem (if at all). After a meeting

14

involving senior executives of Google and Apple, notes of the meeting were15

exchanged between the two companies. The notes reflect: “Our vision is that we

16

work as if we are one company”.
C.
Google’s Anti-Competitive Conduct Concerning the Android App
Distribution Market

17
18

89.

80. Google has willfully and unlawfully maintained its monopoly in

19

the Android App Distribution Market through a series of related anti-competitive acts

20

that have substantially foreclosed competing ways of distributing apps to Android

21

users.

22i.

Google’s Conduct Toward OEMs and Mobile Network Operators

23

90.

81. Google imposes anti-competitive constraints on Android OEMs24

based on their need for access to a viable Android app store and other important services

25

provided by Google.

26

91.

82. First, Google conditions OEMs’ licensing of the Google Play

27

Store, as well as other essential Google services and the Android trademark, on OEMs’

28

agreements to provide the Google Play Store with preferential treatment compared toFirst Amended Complaint for Injunctive Relief

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1any other competing app store. Specifically, to access the Google Play Store, Android

2

OEMs (which, as noted above, compriseinclude virtually all OEMs that obtain an OS

3on the merchant market) have signed a Mobile Application Distribution Agreement

4(“MADA”) with Google. A MADA confers a license to a bundle of products

5comprising proprietary Google apps, Google-supplied services necessary for

6functioning of mobile apps, and the Android trademark. Through its MADAs with

7

Android OEMs, Google requires OEMs to locate the Google Play Store on the “home8

screen”8 of each mobile device. Android OEMs must further pre-install up to 30

9Google mandatory apps and must locate these apps on the home screen or on the next

10

screen, occupying valuable space on each user’s mobile device that otherwise could be

11

occupied by competing app stores and other services. These requirements ensure that12

the Google Play Store is the most visible app store any user encounters and place any

13other app store at a significant disadvantage.
92.

14

83. Absent this restraint, OEMs could pre-install and prominently

15

display alternative app stores to the purchasers of some or all of their mobile devices,

16

allowing competing app stores the ability to vie for prominent placement on Android

17

devices, increased exposure to consumers and, as a result, increased ability to attract app

18

developers to their store. As an app distributor, Epic could and would negotiate with

19

OEMs to offer consumers more choice with a prominently displayed app store

20

containing Fortnite and other games, allowing Epic to reach more mobile users. This

21

would increase the distribution opportunities for Epic’s own apps, as well as a22

variety of apps developed by third parties.
93.

23

Second, Google’s AFA and ACC compatibility standards require

24

OEMs to implement Google’s restrictions and foreclose OEMs from modifying

25

Android to offer frictionless direct downloading of apps outside Google Play.

26
27
28

8

The default “home screen” is the default display, prior to any changes made by users, that appears
without scrolling when the device is in active idle mode (i.e., is not turned off or in sleep mode).
First Amended Complaint for Injunctive Relief

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94.

1

84. SecondThird, Google interferes with OEMsforecloses

2

developers’ ability to effectively distribute Android app stores and apps directly to3consumers outside the Google Play Store, including by entering “exclusivity”

4agreements with certain OEMs ensuring that Google Play is the only app store that5

may be pre-installed on the devices the OEMs sell.
95.

6

As Google’s own documents recognize, pre-installation of apps

7

and app stores by an OEM presents a unique and particularly important

8

opportunity for competing app distributors and app developers to reach Android

9

users outside Google Play, especially new distributors seeking a foothold in

10

Android app distribution. An OEMs’ pre-installation of an icon corresponding to an

11

app or app store on the device provides users of those devices convenient, trusted

12

access to apps or app stores, without requiring consumers to seek out and acquire

13

such apps or app stores on their own. Some OEMs may choose toeven compete for

14

device buyers by offering mobile devices that provide such easy access to additional

15

mobiledesirable apps and app stores and apps. For example, as described below,

16

Epic invested substantial resources in optimizing a special, state-of-the-art version

17of Fortnite for OnePlus, an Android OEM may pre-install an icon corresponding to an

18

app store or app on the device before it is sold to consumers. Even when an OEM

19would want to make mobile apps available to consumers in this way, Google imposes

20

unjustified and pretextual warnings about the security of installing the app, even though21

the consumer is choosing to install the app in full awareness of its source. , in exchange

22

for OnePlus’s agreement to enable a “one-touch” installation of Fortnite on its

23

devices—only for that agreement to be blocked by Google’s anti-competitive

24

conduct.

25

96.

Fearful that Epic and others would successfully begin

26

distributing competing app stores in this way, Google designed and undertook27

coercive steps to foreclose this possibility. Specifically, Google has since 201928

entered agreements with certain OEMs restricting the OEMs from pre-installingFirst Amended Complaint for Injunctive Relief

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1other app stores on most or all of the new Android devices they sell. Pursuant to2these exclusivity agreements, Google agrees to share with OEMs monopoly profits

3

Google earns from its Search business (and in some cases, profits from the Play

4Store itself), in exchange for these OEMs’ agreement not to pre-install alternative

5

app stores. As described below, Google reached these agreements after specifically

6

recognizing the competitive threat to its monopoly that Epic and other potential

7

Android app distributors posed and Google intentionally designed these8

agreements to lock in Google’s monopoly power in “high monetizing” geographies.

997.

In 2018, Epic decided to launch Fortnite on Android—but not on

10

Google Play. Epic developed and made available a Fortnite Launcher app (which

11

later became Epic Games Launcher) that could be directly downloaded from its

12

website and then used to install Fortnite (and, later, other Epic apps) on Android

13

devices. Epic also entered into a Collaboration Agreement with Samsung pursuant

14

to which Samsung would make available Fortnite to users of Samsung devices via

15

the Samsung Galaxy Store. Historically, Samsung’s app store had performed

16

poorly—Google estimated that users spent only 3% of the time on the Samsung

17

Galaxy Store that they spent on the Google Play Store. But Epic’s partnership18with Samsung and determination to bypass Google Play for distribution of Fortnite

19

struck fear into senior Google executives, not only because it meant the loss of 30%

20

of revenues that would be generated by the Android version of one of the most21

popular apps in the world, but also because Epic was paving the way for other22

Android app developers to distribute their apps without relying on Google Play.

23

98.

In particular, documents that Google’s Finance Director for

24

Platforms and Ecosystems prepared for the CFO of Alphabet around the time of25

Fortnite’s launch on Android showed that Google feared what it termed a26“contagion risk” resulting from more and more app developers forgoing Google

27

Play. Google feared that the “contagion” would spread in this way: first, inspired

28

by Epic’s example, “[p]owerful developers” such as “Blizzard, Valve, Sony,First Amended Complaint for Injunctive Relief

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1

Nintendo”—creators of some of the most popular and profitable entertainment—

2

would be “able to go on their own”, bypassing Play by directly distributing their3

own apps. Then, other “[m]ajor developers”, including Electronic Arts, King,

4Supercell and Ubisoft, will choose to “co-launch off Play”, collaborating to forego

5

Google’s distribution services as well. And finally, Google even identified a risk

6

that “[a]ll remaining titles [will] co-launch off Play”. Google calculated the total

7

at-risk revenue from the threatened loss of market share in Android app

8

distribution to be $3.6B, with the probability-weighted loss “conservative[ly]”9estimated at $550M through 2021. Google also recognized that the “[r]ecent

10Fortnite + Samsung partnership further amplifies risk & urgency of problem”

11

facing its monopoly position in Android app distribution. Google was determined12

not to let this happen.

13

99.

The first step Google took to prevent this “contagion” was its

14

decision to offer Epic a special deal to launch Fortnite on Google Play. In July

15

2018, senior Google executives held a special, irregular “off-cycle” meeting of its

16

Business Council, comprised of some of the Google’s highest ranking executives

17

including Alphabet’s CFO. At this meeting, the Google Play team sought approval

18

for a “[c]ustom, cross-PA [cross–product area] partnership with Epic Games19

worth up to $208M (incremental cost to Google of $147M) over 3 years”. The

20

notes from this meeting indicate that Google believed Epic was choosing to

21

distribute Fortnite off Google Play “to express frustration [about] closed

22

ecosystems (iOS, consoles) through use of [direct downloading] on Android to23

distribute via their website” and that such an action would “threaten Play revenue

24($130M) and [the] broader business model”. The rationale for the deal also

25

included the “[h]igh risk of contagion”, with “up to $310M in revenue at risk”.

26

When one Google executive asked for “the exact Play store rev share if we can get

27

to the deal with them”, a Director of Finance responded that “[t]he key premise of28

this proposal is that we would protect the rev share terms and hold them at theFirst Amended Complaint for Injunctive Relief

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1

70/30 split in line with our current business model to ensure we don’t establish a2

precedent that puts at risk our broader ecosystem”. He represented to the3Business Council that the additional revenue share to Epic was roughly 5%,4meaning, after accounting for the special benefits Google had determined to offer,

5

Google would receive an effective discounted revenue share of 25% rather than the6standard 30% share. The Business Council approved the offer to Epic.

7

100. As part of these efforts, senior Google Play managers began

8reaching out to Epic. One manager contacted Epic’s Vice President and Co-

9Founder to gauge Epic’s interest in a special deal and, among other things,

10

discussed “the experience of getting Fortnite on Android” via direct downloading.

11

The manager’s call notes state that she viewed direct downloading Fortnite as

12“frankly abysmal” and “an awful experience”, and that Epic should “worry that13

most will not go through the 15+ steps”.

14101. Google recognized that Epic might not accept its offer. “As a15potential alternative”, a senior Google executive proposed that Google “consider

16

approaching Tencent”, a company that owns a minority stake in Epic, “to either

17(a) buy Epic shares from Tencent to get more control over Epic”, or “(b) join up

18

with Tencent to buy 100% of Epic”. Another senior Google executive suggested

19that if Epic chose not to launch Fortnite on Google Play, Google could “lock down

20

Play/Android and [not] allow sideloading (or make it very hard to sideload (policy

21

position or even architecture) - difficult move in the face of the EC decision but we22

have good privacy/security arguments about why sideloading is dangerous to the23user)”.

24

102.

Epic rejected Google’s special deal, opting instead to distribute25

Fortnite for Android via Epic’s website and through a partnership with the large

26

Android OEM, Samsung. In the immediate wake of that decision, to discourage

27

consumers from direct downloading Fortnite, the Google Play security team began

28

collecting “exciting” statistics on “fake apps caught by [Google Play Protect] fromFirst Amended Complaint for Injunctive Relief

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1

off-Play downloads” that it shared not with Epic or users, but rather with a Google

2

Communications Manager for use in “coverage” by journalists of Epic’s decision3

to launch Fortnite off Google Play.

4

103. More broadly, Epic’s decision to launch Fortnite for Android off

5

Google Play motivated Google to execute a series of anticompetitive actions to limit

6

the “contagion”. Among other initiatives discussed below, Google increased its

7

focus on the nascent competitive threats posed by Epic and others who may be able8

to offer alternative app stores on Android, including by negotiating for pre-9

installation of such app stores with OEMs. In a 2019 presentation prepared by

10

Google Play’s finance team, Google estimated that the most likely scenario among11

the scenarios it considered was that Epic would strike a deal for the distribution of

12

its Epic Games Store with “1 mobile OEM” or as many as “3-5 mobile OEMs”, in

13

addition to the Collaboration Agreement it had entered with Samsung. Google

14

forecasted that Epic’s Android store would attract numerous developers who

15

would “migrate Mature Western/US titles to Epic store”, which would capture

16“50% spend in those games on those devices”. Indeed, Google recognized that17

Epic’s entry could dramatically reduce the barriers faced by new market entrants:

18“[e]very developer that follows Epic’s path & launches on the Epic store will have19

less friction & a larger addressable user base than title before it”. And even if a20

developer attracted fewer users by supporting a new market entrant rather than21

relying on Google Play, they could still earn more revenue due to the favorable

22

88/12 revenue share offered by the Epic Games Store: “[d]evelopers can afford to23

take a ~20% performance hit on Epic store (due to 88% rev share) and still break-24

even”. In the 2019 document, Google estimated that entry by Epic Games Store25

alone threatened a “[m]ost [l]ikely loss” of $350M of Google’s monopoly revenue,

26

and a “[m]ax risk” of $1.4B, by 2022; Google also identified a probability weighted

27

combined loss of $1.1B and $6B of total at-risk revenue “if other store(s)”,28First Amended Complaint for Injunctive Relief

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1

including those distributed by Samsung and Amazon, were able to “gain full2

traction”.

3

104. Recognizing the threat that preinstalled app stores could pose to4

Google Play’s dominance, Google took action to ensure that OEMs would not enter5

into partnerships with distributors like Epic. Less than a year after having been

6

found by the European Commission to have monopoly power in an Android app

7

distribution market, Google devised and executed a plan to eliminate the risk of

8

the “contagion” of competition that was threatening Google’s monopoly.

9105. Google’s anticompetitive conduct proceeded in this way: Google

10

began offering OEMs the chance to participate in its “Premier Device Program”

11

beginning in 2019. Although Google had previously offered OEMs that signed its

12

restrictive MADAs the chance to participate in an RSA, the new “Premier” tier

13

RSAs and similar agreements contain even more restrictions on OEMs. Google’s

14

own documents recognize that the “Premier” tier agreements mandate “Google

15

exclusivity and defaults for all key functions: No apps with APK install rights” on

16Premier devices, meaning that the OEM cannot install any apps with the ability to17

install other apps (in other words, app stores, or the Fortnite Launcher Epic sought18

to distribute outside of Play). Google recognized that the new Premier agreements

19

result in “Exclusivity” for Google Play on covered devices. In exchange for these20

exclusivity commitments, Google offered OEMs various forms of financial

21

incentives, including 4% of Google’s Search revenues earned on the covered

22

devices (on top of the 8% of Search revenues Google already commits to OEMs

23

who sign a non-Premier RSA and a MADA), as well as other financial incentives

24such as monthly bonuses. For certain OEMs, including LG and Motorola, Google

25

also agreed to pay between 3-6% of “Play spend” incurred on Premier devices

26

manufactured by the OEMs, structuring the deal “to increase overall appeal” and27

lock-in its monopoly power in “high monetizing [geographies]” (such as in the28

United States, where LG and Motorola sell the most popular Android mobile
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1

devices outside of Samsung devices). Google’s RSAs play a significant role in2

inducing OEMs to sign a MADA, because OEMs cannot have the benefits of an

3

RSA without being a party to a MADA.

4

106. Although the exact terms of the agreements vary, to take one

5illustrative example, Google executed a “Premier” tier RSA with OEM HMD

6

Global, which sells Nokia-branded mobile devices, effective December 1, 2019,7

through November 30, 2022.

8

107. Section 5.1 of Google’s RSA with HMD Global requires that9each “Premier Device” (i.e., those devices that comply with all restrictions

10

contained in Section 5) comply with “all requirements set forth in Attachment C

11(Premier Service Access Points)”, which mandates that the Google Play app “[i]con

12

is placed on the Default Home Screen and Google Play app is set as default

13marketplace for applications, games, books, movies, music, and all other digital

14

content (including subscriptions)”.

15

108. Moreover, under Section 5.1(d), HMD Global is required to

16comply with the “Premier Device Program Requirements Document”. Epic

17

believes based on the reference in the RSA to “restriction[s] on the installation of

18

applications with INSTALL-PACKAGE permissions set forth in Section 3.7

19(Application Preloads) of the Premier Device Program Requirements”, that this20

document is likely to contain further anticompetitive requirements. Google also

21

has published “Premier Tier Program Requirements” on its “Android Partners”

22

website—a document that appears to be related to the “Premier Device Program

23

Requirements Document” that Google has not yet produced. There, Google

24

provides again that Android OEMs releasing devices designated as “Premier”

25

must not include apps that might compete with Google Play. In Section 3.7, Google

26

commands that “[a]pplication preloads” “MUST NOT contain

27

INSTALL_PACKAGES permissions”, i.e. must not be able to install other28

applications, an essential function of an app store. Google further instructs thatFirst Amended Complaint for Injunctive Relief

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1

pre-loaded apps “MUST NOT overlap with the following Google preloads in terms

2of the applications, features or functionality: . . . Google Play”. Google also

3

expressly prohibits “[first-party] installers and [third-party] engines powering

4[first-party] installers . . . without Google’s prior review and approval”, and makes

5

clear that such installers may not “promote Alternative Services”, which includes

6

alternative app stores. Further, preloaded apps that are permitted “MUST be

7available in Google Play”, further ensuring that Android app developers cannot

8

forego Google’s app distribution services or the anti-competitive restrictions

9

Google imposes on developers.

10109. As a further restriction, Section 5.2, relating to the configuration

11of Google Play and other Google Apps, requires that HMD Global agree that it

12“will not . . . include in any manner on a Premier Device . . . any Alternative

13

Service, or any application, bookmark, product, service, icon, launcher, Hotword,

14

Gesture, or functionality that has the primary purpose of providing access to any

15

Alternative Service” nor may “introduce, promote, or suggest (including via over-16

the-air prompt) an Alternative Service to an End User”. The agreement defines

17

Alternative Service as including any “Alternative Play Service”, defined as “any18

service that is substantially similar to Google Play (as determined by Google in its

19sole discretion)”.

20

110. In addition, under Section 11.1, entitled “Shared Revenue”,

21

Google expressly conditions HMD Global’s receipt of “Shared Net Play

22

Transaction Revenue” and “Shared Net Ad Revenue” on HMD Global

23

maintaining compliance with the requirements of “Sections 3 through 5 (regarding

24

Device requirements)”.

25

111.

More recently, Google has reached agreements with OEMs in

26

the form of “Mobile Incentive Agreements” (“MIAs”). In one such agreement27

involving Motorola, Google conditioned Motorola’s receipt of “Monthly

28

Incentives” on Motorola’s promises not to “include in any manner on aFirst Amended Complaint for Injunctive Relief

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1

Foundation Tier Device . . . Any Alternative Service, or any application, service, or2functionality that has the primary purpose of providing access to any Alternative3

Service” and not “to introduce, promote or suggest (including via over-the-air

4

prompt) an Alternative Service to an End User” on such devices. The “Alternative5

Services” prohibited by Google include any “Alternative Play Service”, which is6

defined to mean “any service that is substantially similar to Google Play (as7determined by Google in its sole discretion”.

8112. Google’s efforts to foreclose competition in this way were a9resounding success. Within a matter of months after the Premier Device Program

10

began, Google recognized that the program had successfully eliminated the “risk of

11

contagion”. By May 2020, many of the world’s largest and most popular Android

12

OEMs had agreed to Google Play exclusivity for most of their new Android

13

devices. Motorola and LG—which Google had targeted for extra financial

14

incentives—both committed nearly all (98% and 95%) of their devices to the15

Premier program. The giant Chinese conglomerate BBK—which manufactures16

and sells a range of Android devices under its Oppo, Vivo and OnePlus brands,

17

among others—had designated around 70% of its new devices as “Premier”.

18

Other brands participating in the program included Xiaomi (40%), HMD (which

19

manufactures devices with the Nokia Mobile brand) (100%), Sony (50%), Sharp20(50%) and “Other” (80%). In a presentation prepared by and presented to senior

21

Google Play executives, Google noted that in the short time since the beginning of22

the program, over 200 million new devices were covered. The same presentation

23

shows that Google believed that the new RSAs successfully eliminated the “risk of24

app developer contagion”; noting that there was “no risk” under the “Current

25

Premier tier”.

26

113. 85. Epic recentlyIn the same presentation, Google recognized that27

the Premier Device Program had “impact[ed]” “Epic’s ability to preload” its apps

28

by negotiating with OEMs. Google’s Premier RSAs (and MIAs) thus intentionallyFirst Amended Complaint for Injunctive Relief

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1and directly resulted in the substantial foreclosure of an important, alternative2

method of app distribution on Android: installation by OEMs. Indeed, Epic had

3reached an agreement with OnePlus, an OEMone of the brands owned by BBK, to4

allow users of OnePlus mobile devices to seamlessly install Fortnite and other Epic

5

gamesapps by touching an Epic Games app on their devices—without encountering any

6

obstacles typically imposed by the Android OS on apps directly downloaded from7developers. In conjunction with this agreement, Epic designed a version of Fortnite for8certain OnePlus devices that delivers a state-of-the-art framerate (the frequency at which

9consecutive images appear on the device’s screen), providing an even better10

gameplayuser experience for Fortnite players. Although the original agreement

11

between Epic and OnePlus contemplated making this installation method available

12

worldwide, Google demanded that OnePlus not implement its agreement with Epic with13

the limited exception of mobile devices sold in India. OnePlus informed Epic that14

Google was “particularly concerned that the Epic Games app would have ability to15

potentially install and update multiple games with a silent install bypassing the Google

16

Play Store”.9 Further, OnePlus advised that any waiver of Google’s restriction “would

17

be rejected due to the Epic Games app serving as a potential portfolio of games and18

game updates”. As a result, OnePlus mobile device users in India can install Epic

19

gamesapps seamlessly without using the Google Play Store, while users outside India

20

cannot.
114. 86. Another OEM who participated in a Premier RSA, LG, also

21
22

told Epic that it had a contract with Google “to block side downloading off Google Play

23

Store this year”, but that the OEM could “surely” make Epic gamesapps available to24

consumers if the Google Play Store were used. Google prevented LG from pre-25

installing the Epic Games app on LG devices.

26
27
28

9

A “silent install” is an installation process free of the dire security warnings that Google triggers
when apps are directly downloaded, such as the “one touch” process on which Epic and OnePlus had
agreed.
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1115. Google’s Premier Device Program was not publicly known, and2

was not known to Epic, before Google recently began producing relevant

3

documents in this litigation. Google has sought to conceal its most restrictive

4

anticompetitive conduct by, among other things, including in the agreements

5themselves a provision restricting signatories from making “any public statement

6

regarding [the] Agreement without the other party’s prior written approval”.

7

Google then used the confidentiality it imposed on OEMs to argue, in its Motion to

8

Dismiss, that Android OEMs are not prohibited from “pre-installing alternative9

app stores”, and that Epic failed to sufficiently allege the exclusivity agreements it

10

concealed. (Dkt. 91 at 9 (“OEMs retain the ability under the MADAs to pre-install

11. . . competing app stores”); see also id. at 8 (“Plaintiffs also challenge Google’s

12agreements with OEMs, which they claim ‘discourage’—but do not claim

13

prohibit—OEMs from pre-installing alternative app stores”); id. at 15 (“Plaintiffs’

14

allegations fall short of alleging actual foreclosure or exclusivity, and Plaintiffs do

15

not allege the MADAs prohibit OEMs from pre-installing rival app stores”

16(emphasis in original)); id. at 17 (“Nor is there any allegation that MADAs prevent17

rival app stores from being pre-installed elsewhere on a device.”).) Google’s

18

representations also obscured its efforts to ensure that Google Play would retain

19

exclusivity on the default screen through other OEM agreements. (Dkt. 91 at 17

20(“There is no allegation that MADAs prevent rival app stores from also being pre-21

installed on the home screen . . .”).) The revelations in Google’s recent document

22

productions (which are thus far incomplete) make clear that the exceedingly

23

carefully phrased arguments and representations Google made in connection with24

its Motion to Dismiss are inconsistent with Google’s own documents.

25

116. 87. In the absence of this conduct, Epic could and would negotiate

26

with OEMs to make Fortnite and other Epic gamesapps directly available to consumers,

27

free from Google’s anti-competitive restraints. OEMs could then compete for the sale28

of mobile devices based in part on the set of apps offered on the OEMs’ devices. But
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1

Google substantially forecloses alternative ways of distributing Android apps other2

than through its own monopolized app store, harming competition among OEMs and3among app developers, to the detriment of consumers.

4117. Google has also historically leveraged revenue share agreements5

to discourage mobile network operators (“MNOs”) from creating competing app

6stores. Many consumers contract with an MNO to enable their devices to7communicate and access the Internet over cellular networks. Prominent MNOs in

8

the United States include AT&T Mobility, T-Mobile, and Verizon Wireless. In

92009, shortly after the launch of Android and Google Play’s predecessor, Android

10

Market, Google began discussing using revenue share agreements to address the

11“challenge” of MNOs and OEMs looking to create their own app stores. Google’s

12goal was to “[i]ncentivize partners[s] to drive developer and user communities

13

towards Android market”.

14

118. Google increased the market share of Android Market by

15

adopting revenue share agreements that split the revenue from app purchases with16

certain MNOs. Google knew at the time that “Mobile operators are not willing to

17

give up the revenue stream on content distribution . . . Will block Market if we

18

don’t share revenue”. Beginning in 2009, Google entered into revenue share

19

agreements with various MNOs that split Android Market revenue between app

20

developers, MNOs, and Google. Under these arrangements, app developers

21

typically received 70% of a given purchase, while MNOs received 20-25% and22

Google received the remaining 5-10% for its operating and transaction costs.

23

Google understood that this 20-25% revenue share for MNOs “[p]rovide[d]24

incentive for operators to distribute Android market” by “offset[ting the]25

opportunity cost” of giving up their own app distribution channels.

26

119. In its Motion to Dismiss, Google has argued that the existence of

27

Samsung’s Galaxy Store—which exists only on devices that Samsung sells—is28

somehow “fatal to Plaintiffs’ claim of actual foreclosure”. But documents
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1

discussing Google’s “Project Banyan” demonstrate how Google attempted to2negotiate a deal with Samsung that would prevent the Galaxy Store from becoming

3

a competitive threat and impose Google’s anti-competitive Google Play Billing tie

4

on apps distributed by Samsung. In April 2019, Google executives traveled to5

Korea to meet with Samsung to discuss an “app distribution” proposal. Internal

6

documents presented to Google’s Business Council reveal the details of this7

proposal. First, Google sought Samsung’s agreement that Google Play would host8

the apps and games distributed by the Galaxy Store and that Google Play would

9

provide “infrastructure support to Galaxy Store (including Play Billing)”, ensuring

10

that Google’s in-app payment solution would be used in apps distributed through11

the Galaxy Store. Because Samsung would thus “forgo store services revenue”,

12

Google planned to make annual payments to Samsung of “up to $60M, which was

13

Google’s top-end estimate of the “current . . . operating profit of [the] Galaxy

14

Store” but a small fraction of the “likely 2022 margin risk to Play”. Second, the15Business Council documents indicate that Google sought Samsung’s agreement

16

that “Play and Galaxy Store” would be the “only app stores on Default Home

17

Screen”, ensuring that Samsung could not provide convenient placement to any

18other competing app store. Google recognized that such a deal, in conjunction

19

with a developer-focused plan described below called “Project Hug”, would

20“mitigate[] risk that top game developers de-prioritize Google Play for title

21

distribution” and secure the “Play revenue / margin at risk”, which was “up to $6B

22/ $1.1B in 2022” alone. In an email exchange following Google’s visit to Samsung’s

23

headquarters in Korea, Samsung indicated that it was “willing to accept [Google’s]

24

proposal to distribute Android apps through [the Google] Play store, with

25

Samsung maintaining a front end of Galaxy store”, but asked that Google allow

26

users to choose between Samsung IAP and Google Play Billing. In internal emails

27

that followed, Google Play and Android executives noted their opposition to the28

idea of allowing Galaxy users even the option to use Samsung IAP, and one
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1

executive relayed ideas from the head of Android that in response to Samsung’s

2

request, Google could “[r]equest a revshare on [Samsung’s] hardware margin (I’m

3serious) in exchange for their own IAP”, charge Samsung “a license fee for Play in4exchange for their own IAP”, or “[o]ffer revshare or bounty for IAP on Play if

5they don’t have their own IAP platform”.

6120. Project Banyan was not Google’s first attempt to buy out

7Samsung’s app store. Google emails show that in 2011, senior Android executives

8

were “having discussions with Samsung to get them to stop distributing apps

9through Samsung App store”. Other documents reveal that in late 2013, Google

10

again met with Samsung to discuss the possibility that “Samsung Apps should no11

longer compete directly with Google Play”, that it would “only have 200 apps” that

12

would appear “for limited time” and be “boutique and complimentary [sic] to13

Google Play”, and that “Samsung Apps could link to Google Play for many

14purchases if the right infrastructure is in place”. As one Google employee

15

explained, “Samsung’s duplication of our services on Android is one of the critical

16

issues with the partnership right now. Samsung Apps relative to Google Play is

17

one of the most glaring.”

18

121. Google ultimately chose not to pursue Project Banyan as

19

authorized by the Business Council. However, the Complaint filed by 36 States

20

and the District of Columbia in State of Utah, et al. v. Google LLC, et al., alleges

21

that Google then sought “a different implementation toward the same22

anticompetitive goal” as part of a new effort, “Project Agave”. Epic does not have23

the details of any deal Google reached with Samsung as part of Project Agave

24

because Google has not yet produced many underlying documents to Epic, and25

Google has maintained redactions over the States’ relevant allegations when26

Google produced the States’ Complaint to Epic. But documents that Google has

27

produced to Epic reveal that Google sought an “[i]ndividual surgical deal[]” with

28

Samsung, in which Google would secure, among other things, “play protections”
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1

and in exchange give Samsung a “rev share on browsers and assistant”, a2

percentage “of Play rev share on IAP powered by Google”, and “Billing3

integrations for App Gallery”.

4

ii.

5

122. 88. Google imposes anti-competitive restrictions on competing app

Google’s Conduct Toward App Distributors and Developers

6

distributors and developers that further entrench its monopoly in Android App

7

Distribution.

8

123. 89. First, Google prevents app distributors from providing Android

9

users ready access to competing app stores. Specifically, even though competitive app

10

stores themselves are mobile apps that could easily be distributed through the Google

11

Play Store, Google prohibits the distribution of any competing app store through the12

Google Play Store, without any technological or other justification.

13

124. 90. Google imposes this restraint through provisions of the Google

14

Play Developer Distribution Agreement (“DDA”), which Google requires all app

15

developers to sign before they can distribute their apps through the Google Play Store.

16

Each of the Defendants, except Google Payment, is a party to the DDA.

17125. 91. Section 4.5 of the DDA provides that developers “may not use

18

Google Play to distribute or make available any Product that has a purpose that19

facilitates the distribution of software applications and games for use on Android

20

devices outside of Google Play.” The DDA further reserves to Google the right to21

remove and disable any Android app that it determines violates this requirement. The

22

DDA is non-negotiable, and developers that seek access to Android users through the23

Google Play Store must accept Google’s standardized contract of adhesion.

24

126. 92. In the absence of these unlawful restraints, competing app

25

distributors could allow users to replace or supplement the Google Play Store on their26

devices with competing app stores, which users could easily download and install27

through the Google Play Store. App stores could compete and benefit consumers by

28

offering lower prices and innovative app store models, such as app stores that areFirst Amended Complaint for Injunctive Relief

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1

curated to specific consumers’ interests—e.g., an app store that specializes in games or2

an app store that only offers apps that increase productivity. Without Google’s unlawful3

restraints, additional app stores would provide additional platforms on which more apps

4

could be featured, and thereby, discovered by consumers. Epic has been damaged

5through its inability to provide a competing app store (as it does on personal computers)

6and by the loss of the opportunity to reach more Android users directly in the ways that

7

personal computers allow developers to reach consumers without artificial constraints.

8127. 93. Second, Google conditions app developers’ ability to effectively

9advertise their apps to Android users on being listed in the Google Play Store.

10

Specifically, Google markets an App Campaigns program that, as Google says, allows

11

app developers to “get your app into the hands of more paying users” by “streamlin[ing]12

the process for you, making it easy to promote your apps across Google’s largest

13

properties”. This includes certain ad placements on Google Search, YouTube, Discover

14

on Google Search, and the Google Display Network, andas well as with Google’s

15“search partners”, that are specially optimized for the advertising of mobile apps.

16

However, in order to access this valuable advertising space through the App Campaigns

17

program, Google requires that app developers list their app in either the Google Play

18

Store (to reach Android users) or in the Apple App Store (to reach Apple iOS users).

19This conduct further entrenches Google’s monopoly in Android App Distribution by20

coercing Android app developers to list their apps in the Google Play Store or risk

21

losing access to a great many Android users they could otherwise advertise to but for

22

Google’s restrictions.

23

128. Third, “responding to Epic’s decision to launch Fortnite

24completely off of Play and build their own store, and the likeliness of others to25

follow suit or consider launching off Play on other stores (notably Samsung)”,

26

Google launched an initiative called “Project Hug”, now referred to as the Games27

Velocity Program. As explained by Android executives in internal documents,

28

Project Hug, which was created and developed alongside Project Banyan, was “aFirst Amended Complaint for Injunctive Relief

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1

hug developers close and show love plan”, or “a surge plan to throw extra

2

love/promotion to top developers and games (including Tencent portfolio

3companies)”. As Google Play and Android executives explained to the Business4

Council in April 2019, in the same presentation that secured the approval of5

Project Banyan, Google’s plan was to spend hundreds of millions of dollars on

6

secret deals with over 20 top developers that were “most at risk . . . of attrition

7

from Play”, in order to prevent these developers from competing with Google Play8and inspiring the widespread “contagion” effect that Google feared. Google’s

9

documents reveal that a majority of the Project Hug developers were “[a]gitated or

10inquired about revenue share”, and several had “[c]onsidered [their] own

11

distribution and/or payments platforms”. Other Project Hug presentations

12

prepared for senior executives note that “Fortnite would have been substantially13

more successful had they launched on Play”, but “other developers might follow

14

Epic’s path for various reasons”. The Business Council approved Project Hug as

15part of a package with Project Banyan and, by December 2020, Google had signed

16

deals with the vast majority of the developers it targeted.

17

iii.

Google’s Conduct Toward Consumers

18

129. 94. Google directly and anti-competitively restricts the manner in19which consumers can discover, download and install mobile apps and app stores.

20

Although Google nominally allows consumers to directly download and install Android

21

apps and app stores—a process that Google pejoratively describes as “sideloading”—

22”—Google has ensured, through a series of technological impediments imposed by the23

Android OS, that direct downloading remains untenable for most consumers.

24

130. 95. But for Google’s anticompetitive acts, Android users could freely

25

download apps from developers’ websites, rather than through an app store, just as they26

might do on a personal computer. There is no reason that downloading and installing an

27

app on a mobile device should differ from downloading and installing software on a28

personal computer. Millions of personal computer users download and install softwareFirst Amended Complaint for Injunctive Relief

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1

directly every day, such as Google’s own Chrome browser or Adobe’s Acrobat Reader.

2

Personal computer users do this easily and safely.

3

131. 96. Direct downloading on Android mobile devices, however, differs

4

dramatically. Google ensures that the Android process is technically complex,

5

confusing and threatening, filled with dire warnings that scare most consumers into

6

abandoning the lengthy process. Google understands this, and staff members have7

acknowledged internally that the difficulty Google imposes on consumers who wish8

to direct download leads to a “[p]oor user experience,” in that there are “15+ steps

9

to get app [via sideloading] vs 2 steps with Play or on iOS”. For example,

10

depending on the version of Android running on a mobile device, downloading and11

installing Fortnite or any other Epic app on an Android device could take as many as

12

16 steps or more, including requiring the user to make changes to the device’s default

13

settings and manually granting various permissions while being warned that doing so is

14

dangerous. Below are the myriad steps an average Android user has to go through in

15

order to download and install Fortnite directly from Epic’s secure servers.

16
17
18
19
20
21
22
23
24
25
26
27
28

132. 97. Below are two of the intimidating messages and warnings about
the supposed danger of directly downloading and installing apps that consumers
encounter during this process.
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1
2
3
4
5
6
7
8
9
10
11
12
13
14

133. 98. As if this slog through warnings and threats were not enough to15

ensure the inferiority of direct downloading as a distribution method for Android apps,

16

Google denies downloaded apps the permissions necessary to be seamlessly updated in17

the background—instead, Google allows such updates only for apps downloaded via

18

Google Play Store. The result is that consumers in most instances must manually19

approve every update of a “sideloaded” app. In addition, depending on the OS version

20

and selected settings, such updates may require users to go through many of the steps in21

the downloading process repeatedly, again triggering many of the same warnings. This22

imposes onerous obstacles on consumers who wish to keep the most current version of23

an app on their mobile device and further drives consumers away from direct24

downloading and toward Google’s monopolized app store.

25

134. 99. Further,Google further restricts direct downloading under the26

guise of offering protection from malware, Google further restricts direct downloading.

27

When Google deems an app “harmful”, Google may prevent the installation of, prompt28

a consumer to uninstall, or forcibly remove the app from a consumer’s device. And
First Amended Complaint for Injunctive Relief

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1

direct downloading has been prevented entirely on the Android devices that are part of2

Google’s so-called Advanced Protection Program (“APP”). Consumers who have3

enrolled in APP are unable to directly download apps; their Android device can only

4

download apps distributed in the Google Play Store or in the rare instance of another5

pre-installed app store that Google has pre-approved for an OEM to offer on its devices.

6

App developers therefore cannot reach APP users unless they first agree to distribute7

their apps through the Google Play Store or through a separate Google-approved, OEM-8

offered app store, where available. Google’s invocation of security is an excuse to9further strangle an app developer’s ability to reach Android users, as shown by a10

comparison to personal computers, where users can securely purchase and download

11

new software without being limited to a single software store owned or approved by the

12user’s anti-virus software vendor.
135. 100. Direct downloading is also nominally available to competing

13
14

app distributors who seek to distribute competing Android app stores directly to

15

consumers. However, the same restrictions Google imposes on the direct downloading

16

of apps apply to the direct downloading of app stores. Indeed, Google Play Protect has

17

flagged at least one competing Android app store, Aptoide, as “harmful”, further

18

hindering consumers’ ability to access a competing app store.
136. 101. AndGoogle prohibits apps downloaded from “sideloaded” app19
20

stores, like apps directly downloaded from a developer’s website, may not befrom

21

being automatically uploadedupdated in the background.10 Thus, direct downloading22

is not a viable way for app stores to reach Android users, any more than it is a viable

23

alternative for single apps; the only difference is that the former do not have any

24alternative, ensuring the latter are forced into the Google Play Store.

25
26
27
28

10

In the latest announced, but as of yet unreleased, version of Android (which was announced
after this lawsuit was filed), Google vaguely promised to “make third-party app stores easier touse on Android 12”; however, the details of any improvements remain unclear. Sameer Samat,
Android 12 Beta: Designed for you, May 18, 2021, https://blog.google/products/android/android12-beta/.
First Amended Complaint for Injunctive Relief

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1137. Google understands that the myriad barriers it erects to direct2

downloading have the effect of protecting its app distribution monopoly and3limiting developers’ ability to distribute their apps. In an internal document titled4“Response to Epic”, a Google employee explained that the “install friction”

5

associated with direct downloading was “not only a bad experience” for users but

6that Google knew “from its data that it will drastically limit [Epic’s] reach”. The

7document goes on to explain that “[f]uture [Fortnite] updates will be challenged re:8targeting, update experience via web”; that the direct downloading approach was

9“most associated with malicious apps”, which would be “incompatible with

10

[Epic’s] brand/demographics”; and that “[t]he approach will create significant

11

user confusion, since [Google Play] will still attract [billions] of users who will12

search for Fortnite and run into deadends that aren’t clear how to resolve”.

13

138. 102. But for Google’s restrictions on direct downloading, Epic and14other app distributors and developers could try to directly distribute their stores and apps

15

to those consumers who would be open to a process outside an established app store.

16

But as explained above, Google makes direct downloading substantially and17

unnecessarily difficult, and in some cases prevents it entirely, further narrowing this18

already narrow alternative distribution channel.

19139. 103. There is no legitimate reason for Google’s conduct. Indeed, for20

decades the users of personal computers have been able to install software acquired

21

from various sources without being deterred by anything like the obstacles erected by

22

Google. NowFor many years, a user canhas been able to navigate to the Internet

23

webpage sponsored by the developer of software he/she desires, click once or twice to24download and install an application, and be up and running, often in a matter of25

minutes. The operating systems used by personal computers efficiently facilitate this26

download and installation (unlike Android), and security screening is conducted by a27

neutral security software operating in the background, allowing users to download

28

software from any source they choose (unlike Android).
First Amended Complaint for Injunctive Relief

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140. 104. Google’s anti-competitive and unjustified restrictions on

1
2

distributing apps through any means other than its own app store contradict its own

3claims that Android app developers can “us[e] any distribution approach or combination

4of approaches that meets your needs”, and that developers can even provide consumers

5“apps from a website or [by] emailing them directly to users.”1011 In reality, Google

6

specifically prevents app developers from effectively availing themselves of alternative

7

distribution channels that itGoogle touts todayas available.
141. 105. Through these anti-competitive acts, including contractual

89provisions and exclusionary obstacles, Google has willfully obtained a near-absolute

10monopoly over Android mobile app distribution. Google Play Store downloads have11

accounted for more than 90% of downloads through Android app stores, dwarfing other12

available distribution channels.
D.

13

Anti-Competitive Effects in the Android App Distribution Market
142. 106. Google’s anti-competitive conduct forecloseshas substantially1415foreclosed competition in the Android App Distribution Market, affectsaffecting a

16

substantial volume of commerce in this Market and causescausing anti-competitive17

harms to OEMs, competing mobile app distributors, mobile app developers, and18

consumers.

19

143. 107. Google’s conduct harms OEMs by forcing them to dedicate to20

the Google Play Store and other mandatory Google applications valuable space on their21

devices’ “home screen”, even if they would rather use that real estate for other purposes,

22

including to offer alternative app stores. Individually and together, these requirements

23

limit OEMs’ ability to innovate and compete with each other by offering innovative and24

more appealing (in terms of price and quality) distribution platforms for mobile apps.

25

Google’s restrictions also interfere with OEMs’ ability to compete with each other by

26
27
28

1011

Google Play Developers Page, Alternative distribution optionsDistribution Options,
https://developer.android.com/distribute/marketing-tools/alternative-distribution (last accessed June
7July 20, 20202021).
First Amended Complaint for Injunctive Relief

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1

offering Android devices with tailored combinations of pre-installed apps that would

2

appeal to particular subsets of mobile device consumers.
144. 108. Google’s conduct harms would-be competitor app distributors,

3
4such as Epic, which could otherwise innovate new models of app distribution and5provide OEMs, app developers, and consumers choice beyond Google’s own app store.

6

145. 109. Google’s anti-competitive conduct harms app developers, such7

as Epic, which are forced to agree to Google’s anti-competitive terms and conditions if

8they wish to reach many Android users, such as through advertising on Google’s

9valuable advertising properties. Google’s restrictions prevent developers from

10

experimenting with alternative app distribution models, such as providing apps directly11

to consumers, selling apps through curated app stores, creating their own competing app

12

stores, or forming business relationships with OEMs who can pre-install apps. By

13

restricting developers in such a way, Google ensures that the developer’s apps will be

14

distributed on the Google Play Store, and that Google is then able to monitor and collect15

a variety of information on the apps’ usage, which it can then use to develop and offer

16

its own competing apps that are, of course, not subject to Google’s supra-competitive

17

taxes.

18

146. 110. Both developers and consumers are harmed by Google’s supra-

19

competitive taxes of 30% on the purchase price of apps distributed through the Google

20

Play Store, which is a much higher transaction fee than would exist in a competitive21

market. Google’s supra-competitive taxes raise prices for app developers and22

consumers and reduce the output of mobile apps and related content by depriving app

23

developers incentive and capital to develop new apps and content.

24

147. 111. Consumers are further harmed because Google’s control of app

25

distribution reduces developers’ ability and incentive to distribute apps to consumers in

26

different and innovative ways—for example, through genre-specific app stores. Google,

27

byBy restraining the distribution market and eliminating the ability and incentive for28

competing app stores, Google also limits consumers’ ability to discover new apps ofFirst Amended Complaint for Injunctive Relief

58Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 64 of 89

1interest to them. More competing app stores would permit additional platforms to2

feature diverse collections of apps. Instead, consumers are left to sift through millions

3

of apps in one monopolized app store, where Google controls which apps are featured

4and which apps are identified or prioritized in user searches.
III. III. Google Unlawfully Acquired and Maintains a Monopoly in the Android
In-App Payment Processing Market.

56148. 112. By selling digital content within a mobile app rather than (or in

7

addition to) charging a price for the app itself, app developers can make an app widely

8

accessible to all users, then charge users for additional digital content or features, thus

9

still generating revenue from their investment in developing new apps and content. This10

is especially true for mobile game developers. By allowing users to play without up-

11

front costs, developers permit more players to try a game “risk free” and only pay for

12what they want to access. Fortnite, for example, is free to download and play, but

13

makes additional content available for in-app purchasing on an à la carte basis or via a

14

subscription-based Battle Pass. App developers who sell digital content rely on in-app

15

payment processing toolssolutions to process consumers’ purchases in a seamless and16

efficient manner.

17

149. 113. When selling digital content, Android app developers are18

unable to utilize the multitude of electronic payment processing solutions generally

19

available on the market to process other types of transactions. Instead, through20

contractual restrictions and its monopoly in app distribution, Google coerces developers

21

into using its own in-app payment processing solution by conditioning developers’ use

22

of Google’s dominant Google Play Store on the use of Google’s payment processor,

23

Google Play Billing, for digital content, thereby acquiring and maintaining monopoly

24

power in the Android In-App Payment Processing Market. Google thus ties its Google

25

Play Store to its own proprietary payment processing toolsolution, Google Play Billing,26

substantially foreclosing competition.

27
28
First Amended Complaint for Injunctive Relief

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1
2
3

A.

The Android In-App Payment Processing Marketi.

Product Market Definition

150. 114. There is a relevant antitrust market for thepayment processing

4of paymentssolutions for the purchase of digital content, including virtual gaming

5

products, that is consumed within Android apps (the “Android In-App Payment

6

Processing Market”). The Android In-App Payment Processing Market is comprised

7

ofincludes the payment processing solutions that Android developers could turn to and8integrate into their Android apps to process the purchase of such in-app digital content.

9151. 115. Absent Google’s unlawful conduct, app developers could

10

integrate a compatible payment processor into their apps to facilitate the purchase of in-

11

app digital content. Developers also would have the capability to develop their own in-

12

app payment processing functionality. And developers could offer users a choice

13

among multiple payment processors for each purchase, just like a website or brick-and-14

mortar store can offer a customer the option of using Visa, MasterCard, Amex, Google

15

Pay, and more.

16

152. 116. Google offers separate payment solutions for the purchase of17

digital content than it doesand for other types of purchases, even within mobile apps.

18

Google Play Billing can be used for the purchase of digital content and virtual gaming

19

products, while Google offers a separate tool, Google Pay, to facilitate the purchase of20

physical products and services within apps.

21

153. 117. It is particularly important that app developers who sell in-app

22

digital content be able to offer in-app transactions that are seamless, engrossing, quick,23

and fun. For example, a gamer who encounters a desirable “skin” within Fortnite, such24

as a Marvel superhero, may purchase it nearly instantly for a small price without leaving

25

the app. Although Fortnite does not offer content that extends gameplay or gives

26

players competitive advantages, other game developers offer such products—for

27

example, “boosts” and “extra lives”—”—that extend and enhance gameplay. It is28

critical that such purchases can be made during gameplay itself, rather than in anotherFirst Amended Complaint for Injunctive Relief

60Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 66 of 89

1manner. If a player were required to purchase game-extending extra lives outside of the2app, the player may simply stop playing instead.

3

154. 118. As another example, if a user of a mobile dating app encounters4

a particularly desirable potential dating partner, he/she can do more than “swipe right”

5

or “like” that person, but can also purchase a digital item that increases the likelihood

6

that the potential partner will notice his/her profile. If the user could not make that

7purchase quickly and seamlessly, he/she would likely abandon the purchase and may

8even stop “swiping” in the app altogether.

9155. 119. It is therefore essential that developers who offer digital content

10

be able to seamlessly integrate a payment processing solution into the app, rather than

11

requiring a consumer to go elsewhere, such as to a separate website, to process a

12transaction. Indeed, if an app user were directed to process a purchase of digital content

13

outside of a mobile app, the user might abandon the purchase or stop interacting with14

the mobile app altogether.

15

156. 120. Mobile game developers particularly value the ability to allow

16

users to make purchases that extend or enhance gameplay without disrupting or

17

delaying that gameplay or a gamer’s engagement with the mobile app. For these18

reasons, and in the alternative, there is a relevant antitrust sub-market for thepayment

19

processing of paymentssolutions for the purchase of virtual gaming products within

20

mobile Android games (the “Android Games Payment Processing Market”).

21

ii.

Geographic Market Definition

22

157. 121. The geographic scope of the Android In-App Payment

23

Processing Market is worldwide, excluding China. Outside China, in-app payment

24

processing toolssolutions, such as Google Play Billing, are available on a worldwide

25

basis. By contrast, in-app payment processing toolssolutions available in China are not26

available outside of China, including because Google prevents the use of non-Google

27

payment processing toolssolutions for all apps distributed through the Google Play

28

Store, which as noted above dominates distribution of apps outside of China.
First Amended Complaint for Injunctive Relief

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B.

1
2

Google’s Monopoly Power in the Android In-App Payment Processing
Market158. 122. Google has monopoly power in the Android In-App Payment

3

Processing Market and, in the alternative, in the Android Games Payment Processing

4

Market.

5

159. 123. For apps distributed through the Google Play Store, Google

6

requires that the apps use only its own in-app payment processor, Google Play Billing,7

to process in-app purchases of digital content and for all purchases within Android

8

games. And because 90% or more of Android-compatible mobile app downloads

9

conducted through an app storesstore have been done through the Google Play Store,

10

Google has a monopoly in these Markets. .

11160. 124. For the vast majority of transactions, Google charges a 30%

12commission for Google Play Billing.12 This rate reflects Google’s market power, which

13

allows it to charge supra-competitive prices for payment processing within the market.

14

Indeed, the cost of alternative electronic payment processing toolssolutions, which

15

Google does not permit to be used for the purchase of in-app digital content or within

16

Android games, can be one tenth of the 30% cost of Google Play Billing.

17
18

Electronic Payment Processing Tool

19

Solution

20

PayPal2.9%

21Stripe

2.9%

Square2.6%-3.5%

Braintree

2.9%

22
23
24

Base U.S. Rate13

25
26
27
28

12

Seven months after this lawsuit was filed, Google instituted a new policy reducing the PlayStore commission to 15% for a developer’s first $1 million in annual revenue. Sameer Samat,
Boosting Developer Success on Google Play, Android Developers Blog (Mar. 16, 2021),
https://android-developers.googleblog.com/2021/03/boosting-dev-success.html.
13
The base U.S. rates in these examples include an additional fixed fee per transaction of$0.30 or less in addition to the listed percentage.
First Amended Complaint for Injunctive Relief

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1
2

C.

Google’s Anti-Competitive Conduct Concerning the Android In-App
Payment Processing Market
161. 125. Through provisions of the DDA that Google imposes on all3

developers who seek to access Android users, Google unlawfully ties its Google Play

4Store, through which it has a monopoly in the Android App Distribution Market, to its

5

own in-app payment processing toolsolution, Google Play Billing. Section 3.2 of the6

DDA requires that Android app developers enter into a separate agreement with

7

Google’s payment processor, Defendant Google Payment, in order to receive payment

8for apps and in-app digital content.

9162. 126. Further, Google’s Developer Program Policies, compliance10with which Section 4.1 of the DDA makes obligatory, require in relevant part that:11•

Developers offering products within a game downloaded on Google

12

Play or providing access to game content“Play-distributed apps must use [Google Play13

In-app Billing] as the method of payment if they require or accept payment for access14

to features or services, including any app functionality, digital content or goods”.

15•

Developers offering products within anotherany category of app

16

downloaded on Google Play must use Google Play In-app Billing as the method of17

payment, except for the following cases:

18
19
20

o
o

Payment is solelyprimarily for physical products or services,
Payment is for digital content that may be consumed outside of theapp itself (e.g., songs that can be played on other music players).

21

127.

22

163. Google’s unlawful restraints in the DDA prevent app developers

23

from integrating alternative, even multiple, payment processing solutions into their24

mobile apps, depriving app developers and consumers alike a choice of competing25

payment processors. For example, Epic offers its own in-app payment processing

26

toolsolution that it could integrate, alongside Google’s and others, into Epic mobile

27

gamesapps. Epic consumers could then choose to process their payment using

28
First Amended Complaint for Injunctive Relief

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1

Google’s toolsolution, Epic’s toolsolution, or another toolsolution altogether. These2

restraints result in a substantial foreclosure of competition.

3

164. 128. In December of 2019, Epic submitted a build of Fortnite to4

Google Play that enabled users to make in-app purchases through Epic’s own payment

5

processor. Upon review of the submission, Google Play rejected the application, citing6

its violation of Google’s Payments policy as well as an unrelated issue raised by

7

Google. In January 2020, Epic again submitted a Fortnite build that resolved the8unrelated issue but againstill enabled users to use Epic’s own payment processor.

9

Google again rejected Epic’s submission.

10165. 129. Epic was prevented from offering Fortnite on the Google Play

11

Store, and therefore unable to reach many Android users, until it submitted a new

12version of Fortnite that only offered Google Play Billing. Google has damaged Epic by

13

foreclosing it from the Android in-app payment processing market.

14166. 130. Google has no legitimate justifications for its tie. If it were15

concerned, for example, about the security of its users’ payment information, then it

16

would not permit alternative payment processing for certain transactions made on

17

Android phones for physical products or digital content consumed outside an app. But

18

Google does allow alternative payment processing toolssolutions in that context, with19

no diminution in security.
D.
Anti-Competitive Effects in the Android In-App Payment Processing
Market20
21

167. 131. Google’s conduct harms competition in the Android In-appApp

22

Payment Processing Market (and, in the alternative, in the Android Games Payment

23

Processing Market) and injures app developers, consumers, and competing in-app

24

payment processors. Google’s conduct substantially forecloses competition.

25

168. 132. Google’s conduct harms would-be competitor in-app payment

26

processors, who would otherwise have the ability to innovate and offer consumers

27

alternative payment processing toolssolutions that offer better functionality, lower

28

prices, and better security. For example, in the absence of Google’s Developer ProgramFirst Amended Complaint for Injunctive Relief

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1

Policies, Epic could offer consumers a choice of in-app payment processor for each2purchase made by the consumer, including a choice of Epic’s own payment processor at3

a lower cost and with better customer service.

4

169. 133. Google also harms app developers and consumers by inserting

5

itself as a mandatory middleman in every in-app transaction. When Google acts as

6

payment processor, Epic is unable to provide users comprehensive customer service

7

relating to in-app payments without Google’s involvement. Google has little incentive

8

to compete through improved customer service because Google faces no competition9and consumers often blame Epic for payment-related problems. In addition, Google is10

able to obtain information concerning Epic’s transactions with its own customers, which

11

itGoogle could use to give its ads and Search businesses an anti-competitive edge, even

12

when Epic and its own customers would prefer not to share their information with

13

Google. In these ways and in others, Google directly harms app developers’

14

relationships with the users of their apps.

15

170. 134. Finally, Google raises app developers’ costs and consumer

16

prices through its supra-competitive 30% tax on in-app purchases, a price it could not17

maintain if it had not foreclosed competition for such transactions. The resulting

18

increase in prices for in-app content likely deters some consumers from making

19purchases and deprives app developers of resources they could use to develop new apps20

and content. The supra-competitive tax rate also reduces developers’ incentive to invest

21

in and create additional apps and related in-app content.
COUNT 1: Sherman Act § 2(Unlawful Monopoly Maintenance in the
Android App Distribution Market)(against all Defendants except Google Payment)

22
23
24
25
26
27
28

171. 135. Epic restates, re-alleges, and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
172. 136. Google’s conduct violates Section 2 of the Sherman Act, which
prohibits the “monopoliz[ation of] any part of the trade or commerce among the several
States, or with foreign nations”. 15 U.S.C. § 2.
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173. 137. The Android App Distribution Market is a valid antitrust

1
2

market.
174. 138. Google holds monopoly power in the Android App Distribution

3
4

Market.
175. 139. Google has unlawfully maintained monopoly power in the

5
6

Android App Distribution Market through the anti-competitive acts described herein,

7

including conditioning the licensing of the Google Play Store, as well as other essential

8

Google services and the Android trademark, on OEMs’ agreement to provide the9Google Play Store with preferential treatment,. Google has done this by incentivizing

10

OEMs to enter agreements that prevent alternative app stores from being installed

11

on the default Home Screen of Android devices and coercing OEMS into making

12

the Google Play Store exclusive on their devices, by restricting OEMs from13

offering frictionless downloading of apps outside of Google Play through14

compatibility standards in the AFA and ACC, by imposing technical restrictions and15

obstacles on both OEMs and developers, which prevent the distribution of Android apps

16

through means other than the Google Play Store, and by conditioning app developers’

17ability to effectively advertise their apps to Android users on being listed in the Google

18

Play Store.

19
20

176. 140. Google’s conduct affects a substantial volume of interstate aswell as foreign commerce.

21177. 141. Google’s conduct has substantial anti-competitive effects,

22

including increased prices and costs, reduced innovation and quality of service, and23

lowered output.

24

178. 142. As a potential competing app distributor and as an app

25

developer, Epic has been harmed by Defendants’ anti-competitive conduct in a manner

26that the antitrust laws were intended to prevent. Epic has suffered and continues to27

suffer damages and irreparable injury, and such damages and injury will not abate until

28

an injunction ending Google’s anti-competitive conduct issues.
First Amended Complaint for Injunctive Relief

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COUNT 2: Sherman Act § 1(Unreasonable restraints of trade concerning
Android App Distribution Market: OEMs)(against all Defendants except Google Payment)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

179. 143. Epic restates, re-alleges and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
180. 144. Defendants’ conduct violates Section 1 of the Sherman Act,
which prohibits “[e]very contract, combination in the form of trust or otherwise, orconspiracy, in restraint of trade or commerce among the several States, or with foreign
nations”.
15 U.S.C. § 1.
181. 145. Google has entered into agreements with OEMs that
unreasonably restrict competition in the Android App Distribution Market. These
include MADAs with OEMs that condition their access to the Google Play Store andother “must have” Google services on the OEM offering the Google Play Store as theprimary and often the only viable app store on Android mobile devices.
182. These agreements also include exclusivity agreements thatprevent OEMs from pre-installing alternative app stores on a substantial portionof new Android devices, including devices that are sold in markets with the largest
monetization opportunities. Google also has entered agreements that prevent
alternative app stores from being installed on the default Home Screen of Android
devices.
183. Through the AFA and ACC compatibility standards, Google
restricts OEMs from offering frictionless downloading of apps outside of GooglePlay.
184. 146. These agreements serve no legitimate or pro-competitive
purpose that could justify their anti-competitive effects, and thus unreasonably restrain
and substantially foreclose competition in the Android App Distribution Market.
185. 147. Google’s conduct affects a substantial volume of interstate aswell as foreign commerce.
First Amended Complaint for Injunctive Relief

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1

186. 148. Google’s conduct has substantial anti-competitive effects,

2

including increased prices and costs, reduced innovation and quality of service, and3lowered output.
187. 149. As a potential competing app distributor and as an app

45

developer that consumes app distribution services, Epic has been harmed by

6

Defendants’ anti-competitive conduct in a manner that the antitrust laws were intended

7

to prevent. Epic has been foreclosed from the market and has suffered and continues

8

to suffer damages and irreparable injury, and such damages and injury will not abate

9

until an injunction ending Google’s anti-competitive conduct issues.
COUNT 3: Sherman Act § 1(Unreasonable restraints of trade concerning
Android App Distribution Market: DDADeveloper Distribution Agreement)(against all Defendants except Google Payment)

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

188. 150. Epic restates, re-alleges, and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
189. 151. Defendants’ conduct violates Section 1 of the Sherman Act,
which prohibits “[e]very contract, combination in the form of trust or otherwise, orconspiracy, in restraint of trade or commerce among the several States, or with foreign
nations”.
15 U.S.C. § 1.
190. 152. Google forces app developers to enter its standardized DDA,
including Developer Program Policies integrated into that Agreement, as a condition of
being distributed through Google’s app store, the Google Play Store. The relevant
provisions of these agreements unreasonably restrain and substantially foreclosecompetition in the Android App Distribution Market.
191. 153. Section 4.5 of the DDA provides that developers “may not use
Google Play to distribute or make available any Product that has a purpose thatfacilitates the distribution of software applications and games for use on Android
devices outside of Google Play”. Section 4.1 of the DDA requires that all developers“adhere” to Google’s Developer Program Policies. Under the guise of its so-called
First Amended Complaint for Injunctive Relief

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1“Malicious Behavior” Policy, Google prohibits developers from distributing apps that2

“download executable code [i.e., code that would execute an app] from a source other3

than Google Play”. The DDA further reserves to Google the right to remove and4disable any Android app that it determines violates either the DDA or its Developer

5

Program Policies and to terminate the DDA on these bases. (§§ 8.3, 10.3.) These

6

provisions prevent app developers from offering competing app stores through the7

Google Play Store, even though there is no legitimate technological or other impediment8

to distributing a competing app store through the Google Play Store.

9

192. 154. These agreements serve no legitimate or pro-competitive

10

purpose that could justify their anti-competitive effects, and thus unreasonably restrain

11

and substantially foreclose competition in the Android App Distribution Market.

1213

193. 155. Google’s conduct affects a substantial volume of interstate aswell as foreign commerce.

14

194. 156. Google’s conduct has substantial anti-competitive effects,

15

including increased prices and costs, reduced innovation and quality of service, and16

lowered output.

17

195. 157. As a potential competing app distributor and as an app

18

developer that consumes app distribution services, Epic has been harmed by

19

Defendants’ anti-competitive conduct in a manner that the antitrust laws were intended20

to prevent. Epic has been substantially foreclosed from the market and has suffered21

and continues to suffer damages and irreparable injury, and such damages and injury

22

will not abate until an injunction ending Google’s anti-competitive conduct issues.
COUNT 4: Sherman Act § 2(Unlawful Monopolization and Monopoly Maintenance in the
Android In-App Payment Processing Market)(against all Defendants)

23
24
25
26
27

196. 158. Epic restates, re-alleges, and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.

28
First Amended Complaint for Injunctive Relief

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1197. 159. Google’s conduct violates Section 2 of the Sherman Act, which2prohibits the “monopoliz[ation of] any part of the trade or commerce among the several

3

States, or with foreign nations”. 15 U.S.C. § 2.
198. 160. The Android In-App Payment Processing Market is a valid

4
5

antitrust market. In the alternative, the Android Games Payment Processing Market is a6valid antitrust market.
199. 161. Google holds monopoly power in the Android In-App Payment

7
8

Processing Market and, in the alternative, in the Android Games Payment Processing

9

Market.
200. 162. Google has unlawfully acquired monopoly power in these10
11Markets, including through the anti-competitive acts described herein. And however

12

Google initially acquired its monopoly, it has unlawfully maintained its monopoly,

13

including through the anti-competitive acts described herein.
201. 163. Google’s conduct affects a substantial volume of interstate as

14
15

well as foreign commerce.

16202. 164. Google’s conduct has substantial anti-competitive effects,

17

including increased prices and costs, reduced innovation and quality of service, and18

lowered output.
203. 165. As an app developer and as the developer of a competing in-app

19
20

payment processing toolsolution, Epic has been harmed by Defendants’ anti-

21

competitive conduct in a manner that the antitrust laws were intended to prevent. Epic22

has suffered and continues to suffer damages and irreparable injury, and such damages

23

and injury will not abate until an injunction ending Google’s anti-competitive conduct

24

issues.

25
26
27
28

COUNT 5: Sherman Act § 1(Unreasonable restraints of trade concerning
Android In-App Payment Processing Market: Developer Distribution Agreement)(against all Defendants)
204. 166. Epic restates, re-alleges, and incorporates by reference each of

the allegations set forth in the rest of this Complaint as if fully set forth herein.
First Amended Complaint for Injunctive Relief

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1205. 167. Defendants’ conduct violates Section 1 of the Sherman Act,2which prohibits “[e]very contract, combination in the form of trust or otherwise, or3

conspiracy, in restraint of trade or commerce among the several States, or with foreign

4

nations”.

5

15 U.S.C. § 1.

6

206. 168. Google, except Google Payment, forces app developers to enter7

its standardized DDA, including Developer Program Policies integrated into that

8

Agreement, as a condition of having their apps distributed through Google’s

9monopolized app store, Google Play Store. The relevant provisions of these agreements

10

unreasonably restrain and substantially foreclose competition in the Android In-App

11

Payment Processing Market.

12207. 169. Section 3.2 of the DDA requires that Android app developers

13

enter into a separate agreement with Google’s payment processor, Defendant Google

14

Payment, in order to receive payment for apps and content distributed through the15

Google Play Store. This includes payments related to in-app purchases of digital

16

content. Further, Google’s Developer Program Policies, compliance with which Section

17

4.1 of the DDA makes obligatory, require that apps distributed through the Google Play

18

Store “must use [Google Play In-app Billing, [offered by Google Payment] as the19method of payment” for such in-app purchases. While Google’s Policies exclude

20

certain types of transactions from this requirement, such as the purchase of21“solelyprimarily . . . physical products” goods and services or of “digital content that22

may be consumed outside of the app itself”, Google expressly applies its anti-

23

competitive mandate to everyall “game downloaded on Google Play” and to all

24purchased “gamePlay-distributed apps . . . if they require or accept payment for25

access to features or services, including any app functionality, digital content or26

goods”, such as purchases made withinwhich includes Fortnite.

27

208. 170. The challenged provisions serve no sufficient legitimate or pro-28

competitive purpose and unreasonably restrain and substantially foreclose competition
First Amended Complaint for Injunctive Relief

71Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 77 of 89

1

in the Android In-App Payment Processing Market and, in the alternative, the Android

2

Games Payment Processing Market.
209. 171. Defendants’ conduct affects a substantial volume of interstate as

3
4

well as foreign commerce.

5210. 172. Defendants’ conduct has substantial anti-competitive effects,

6

including increased prices and costs, reduced innovation and quality of service, and7lowered output.
211. 173. As an app developer and as the developer of a competing in-app

8
9

payment processing toolsolution, Epic has been harmed by Defendants’ anti-

10competitive conduct in a manner that the antitrust laws were intended to prevent. Epic11

has been substantially foreclosed from the market and has suffered and continues to12

suffer damages and irreparable injury, and such damages and injury will not abate until

13

an injunction ending Google’s anti-competitive conduct issues.
COUNT 6: Sherman Act § 1(Tying Google Play Store to Google Play Billing)(against all Defendants)

14
15

212. 174. Epic restates, re-alleges and incorporates by reference each of16
17

the allegations set forth in the rest of this Complaint as if fully set forth herein.

18

213. 175. Defendants’ conduct violates Section 1 of the Sherman Act,

19

which prohibits “[e]very contract, combination in the form of trust or otherwise, or20

conspiracy, in restraint of trade or commerce among the several States, or with foreign

21

nations.”

22

15 U.S.C. § 1.

23

214. 176. Google has unlawfully tied the Google Play Store to its in-app

24

payment processor, Google Play Billing, to the Google Play Store through its DDAs

25

with app developers and its Developer Program Policies.

26

215. 177. Google has sufficient economic power in the tying market, the27

Android App Distribution Market. With Google Play Store installed on nearly all28

Android OS devices and over 90% of downloads on Android OS devices being
First Amended Complaint for Injunctive Relief

72Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 78 of 89

1

performed by the Google Play Store, Google has overwhelming market power.

2

Google’s market power is further evidenced by its ability to extract supra-competitive3

taxes on the sale of apps through the Google Play Store.

4

216. 178. The availability of the Google Play Store for app distribution is

5

conditioned on the app developer accepting a second product, Google’s in-app payment

6

processing servicessolution. Google’s foreclosure of alternative app distribution

7

channels forces developers like Epic to use Google’s in-app payment processing

8

servicessolution, which Google has expressly made a condition of reaching Android

9

users through its dominant Google Play Store.

10

217. 179. The tying product, Android app distribution, is distinct from the11tied product, Android in-app payment processing, because app developers such as Epic

12

have alternative in-app payment processing options and would prefer to choose among

13

them independently of how an Android app is distributed. Google’s unlawful tying

14

arrangement thus ties two separate products that are in separate markets.

15

218. 180. Google’s conduct substantially forecloses competition in the16

Android In-App Payment Processing Market, and, in the alternative, in the Android

17

Games Payment Processing Market, affecting a substantial volume of commerce in18

these Markets.

19219. 181. Google has thus engaged in a per se illegal tying arrangement

20

and the Court does not need to engage in a detailed assessment of the anti-competitive21

effects of Google’s conduct or its purported justifications.

22220. 182. In the alternative only, even if Google’s conduct does not

23

constitute a per se illegal tie, a detailed analysis of Google’s tying arrangement would

24

demonstrate that this arrangement violates the rule of reason and is illegal.

25

221. 183. As an app developer which consumesuses in-app payment

26

processing servicessolutions and as the developer of a competing in-app payment

27

processing toolsolution, Epic has been harmed by Defendants’ anti-competitive conduct

28

in a manner that the antitrust laws were intended to prevent. Epic has suffered andFirst Amended Complaint for Injunctive Relief

73Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 79 of 89

1

continues to suffer damages and irreparable injury, and such damages and injury will2
4

not abate until an injunction ending Google’s anti-competitive conduct issues.
COUNT 7: California Cartwright Act(Unreasonable restraints of trade in Android App Distribution Market: OEMs)(against all Defendants except Google Payment)

5222. 184. Epic restates, re-alleges and incorporates by reference each of36

the allegations set forth in the rest of this Complaint as if fully set forth herein.

7

223. 185. Google’s acts and practices detailed above violate the8

Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, the9combination of resources by two or more persons to restrain trade or commerce or to10

prevent market competition. See §§ 16720, 16726.
224. 186. Under the Cartwright Act, a “combination” is formed when the1112anti-competitive conduct of a single firm coerces other market participants to13

involuntarily adhere to the anti-competitive scheme.
225. 187. The Android App Distribution Market is a valid antitrust

14
15

market.
226. 188. Google has executed agreements with OEMs that unreasonably

16
17

restrict competition in the Android App Distribution Market. Namely, Google has

18

entered into MADAs with OEMs that require OEMs to offer the Google Play Store as

19

the primary—and practically the only—app store on Android mobile devices. These20

agreements further prevent OEMs from offering alternative app stores on Android

21

mobile devices in any prominent visual positioning.
227. These agreements also include exclusivity agreements that22
23

prevent OEMs from pre-installing alternative app stores on a substantial portion

24of new Android devices, including devices that are sold in markets with the largest

25

monetization opportunities. Google has also entered agreements that prevent

26

alternative app stores from being installed on the default Home Screen of Android

27

devices.

28
First Amended Complaint for Injunctive Relief

74Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 80 of 89

1228. Through the AFA and ACC compatibility standards, Google

2

restricts OEMs from offering frictionless downloading of apps outside of Google

3

Play.

4

229. 189. Google’s conduct and practices have substantial anti-

5competitive effects, including increased prices and costs, reduced innovation, poorer

6

quality of customer service and lowered output.

7230. 190. Google’s conduct harms Epic which, as a direct result of

8

Google’s anti-competitive conduct, has been unreasonably restricted in its ability to9

distribute its Android applications, including Fortnite, and to market a competing app

10

store to the Google Play Store.

11

231. 191. It is appropriate to bring this action under the Cartwright Act

12

because many of the illegal agreements were made in California and purport to be

13

governed by California law, many affected consumers reside in California, Google has

14

its principal place of business in California and overt acts in furtherance of Google’s

15

anti-competitive scheme took place in California.

16232. 192. Epic has suffered and continues to suffer damages and17

irreparable injury, and such damages and injury will not abate until an injunction ending

18

Google’s anti-competitive conduct issues.
COUNT 8: California Cartwright Act(Unreasonable restraints of trade in Android App Distribution Market: Developer
Distribution Agreement)(against all Defendants except Google Payment)

19
20
21
22
23
24
25
26
27

233. 193. Epic restates, re-alleges and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
234. 194. Google’s acts and practices detailed above violate the
Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, thecombination of resources by two or more persons to restrain trade or commerce or toprevent market competition. See §§ 16720, 16726.

28
First Amended Complaint for Injunctive Relief

75Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 81 of 89

235. 195. Under the Cartwright Act, a “combination” is formed when the12anti-competitive conduct of a single firm coerces other market participants to3

involuntarily adhere to the anti-competitive scheme.
236. 196. The Android App Distribution Market is a valid antitrust

4
5

market.
237. 197. Google conditions distribution through the Google Play Store

6
7

on entering into the standardized DDA described above, including the Developer

8

Program Policies integrated therein. Through certain provisions in these agreements,

9

Google forces app developers to submit to conditions that unreasonably restrain

10competition in the Android App Distribution Market.
238. 198. Section 4.5 of the DDA provides that developers “may not use

1112

Google Play to distribute or make available any Product that has a purpose that13

facilitates the distribution of software applications and games for use on Android

14

devices outside of Google Play.” Section 4.1 of the DDA requires that all developers

15“adhere” to Google’s Developer Program Policies. Under the guise of its so-called

16“Malicious Behavior” Policy, Google prohibits developers from distributing apps that17

“download executable code [i.e., code that would execute an app] from a source other18

than Google Play.” The DDA further reserves to Google the right to remove and19disable any Android app that it determines violates either the DDA or its Developer

20

Program Policies and to terminate the DDA on these bases. (§§ 8.3, 10.3.) These

21

provisions prevent app developers from offering competing app stores through the22

Google Play Store, even though there is no legitimate technological or other impediment23

to distributing a competing app store through the Google Play Store.
239. 199. These provisions have no legitimate or pro-competitive purpose

24
25

or effect, and unreasonably restrain competition in the Android App Distribution

26

Market.

27
28
First Amended Complaint for Injunctive Relief76Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 82 of 89

1240. 200. Google’s conduct and practices have substantial anti-

2competitive effects, including increased prices and costs, reduced innovation, poorer

3

quality of customer service, and lowered output.

4241. 201. Google’s conduct harms Epic which, as a direct result of5

Google’s anti-competitive conduct, has been unreasonably restricted in its ability to6

distribute its Android applications, including Fortnite, and to market a competing app

7

store to the Google Play Store.

8

242. 202. It is appropriate to bring this action under the Cartwright Act

9because many of the illegal agreements were made in California and purport to be

10

governed by California law, many affected consumers reside in California, Google has

11

its principal place of business in California, and overt acts in furtherance of Google’s

12anti-competitive scheme took place in California.

13

243. 203. Epic has suffered and continues to suffer damages and14

irreparable injury, and such damages and injury will not abate until an injunction ending

15

Google’s anti-competitive conduct issues.
COUNT 9: California Cartwright Act(Unreasonable restraints of trade in Android In-App Payment Processing Market:
Developer Distribution Agreement)(against all Defendants)

16
17
18
19
20
21
22
23
24
25
26
27

244. 204. Epic restates, re-alleges and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
245. 205. Google’s actsactps and practices detailed above violate the
Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, thecombination of resources by two or more persons to restrain trade or commerce or toprevent market competition. See §§ 16720, 16726.
246. 206. Under the Cartwright Act, a “combination” is formed when theanti-competitive conduct of a single firm coerces other market participants to
involuntarily adhere to the anti-competitive scheme.

28
First Amended Complaint for Injunctive Relief

77Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 83 of 89

247. 207. The Android App Distribution Market and Android In-App

1
2

Payment Processing Market, and, in the alternative, the Android Games Payment

3

Processing Market, are valid antitrust markets.

4248. 208. Google has monopoly power in the Android In-App Payment

5

Processing Market and, in the alternative, in the Android Games Payment Processing

6

Market.

7249. 209. Google conditions distribution through the Google Play Store8

on entering into the standardized DDA described above, including the Developer

9

Program Policies integrated therein. Through certain provisions in these agreements,

10

Google forces app developers to submit to conditions that unreasonably restrain

11

competition in the Android In-App Payment Processing Market.

12250. 210. Section 3.2 of the DDA requires that Android app developers

13

enter into a separate agreement with Google’s payment processor, Defendant Google

14

Payment, in order to receive payment for apps and content distributed through the15

Google Play Store. This includes payments related to in-app purchases. Further,

16

Google’s Developer Program Policies, compliance with which Section 4.1 of the DDA

17makes obligatory, require that apps distributed through the Google Play Store “must use

18

Google Play In-app Billing [offered by Google Payment] as the method of payment” for19

in-app purchases. While Google’s Policies exclude certain types of transactions from20

this requirement, such as the purchase of “solelyprimarily . . . physical products” goods

21

and services or of “digital content that may be consumed outside of the app itself”,

22

Google expressly and discriminatorily applies its anti-competitive mandate to everyall

23“game downloaded on Google Play” and to all purchased “gamePlay-distributed apps

24

. . . if they require or accept payment for access to features or services, including

25

any app functionality, digital content or goods”, such as purchases made withinwhich

26

includes Fortnite.

27
28

251. 211. These provisions have no legitimate or pro-competitive purpose
or effect, and unreasonably restrain competition in the Android In-App Payment
First Amended Complaint for Injunctive Relief

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1

Processing Market, and, in the alternative, in the Android Games Payment Processing

2

Market.

3252. 212. Google’s conduct and practices have substantial anti-

4competitive effects, including increased prices and costs, reduced innovation, poorer

5

quality of customer service and lowered output.

6253. 213. Google’s conduct harms Epic which, as a direct result of7

Google’s anti-competitive conduct, has been unreasonably restricted in its ability to8

distribute and use its own in-app payment processor.

9254. 214. It is appropriate to bring this action under the Cartwright Act

10

because many of the illegal agreements were made in California and purport to be

11

governed by California law, many affected consumers reside in California, Google has

12

its principal place of business in California and overt acts in furtherance of Google’s

13

anti-competitive scheme took place in California.

14

255. 215. Epic has suffered and continues to suffer damages and15

irreparable injury, and such damages and injury will not abate until an injunction ending

16

Google’s anti-competitive conduct issues.
COUNT 10: California Cartwright Act(Tying Google Play Store to Google Play Billing)(against all Defendants)

17
18
19

256. 216. Epic restates, re-alleges and incorporates by reference each of20

the allegations set forth in the rest of this Complaint as if fully set forth herein.

21257. 217. Google’s acts and practices detailed above violate the22

Cartwright Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, the23

combination of resources by two or more persons to restrain trade or commerce, or to24

prevent market competition. See §§ 16720, 16726.

25

258. 218. Under the Cartwright Act, a “combination” is formed when the26

anti-competitive conduct of a single firm coerces other market participants to27

involuntarily adhere to the anti-competitive scheme.

28
First Amended Complaint for Injunctive Relief

79Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 85 of 89

1259. 219. The Cartwright Act also makes it “unlawful for any person to2lease or make a sale or contract for the sale of goods, merchandise, machinery, supplies,

3

commodities for use within the State, or to fix a price charged therefor, or discount4

from, or rebate upon, such price, on the condition, agreement or understanding that the5lessee or purchaser thereof shall not use or deal in the goods, merchandise, machinery,6

supplies, commodities, or services of a competitor or competitors of the lessor or seller,

7

where the effect of such lease, sale, or contract for sale or such condition, agreement or

8understanding may be to substantially lessen competition or tend to create a monopoly

9in any line of trade or commerce in any section of the State.” § 16727.

10

260. 220. As detailed above, Google has unlawfully tied its in-app

11

payment processor, Google Play Billing, to the Google Play Store through its DDAs

12

with app developers and its Developer Program Policies.

13261. 221. Google has sufficient economic power in the tying market, the14

Android App Distribution Market, to affect competition in the tied market, the Android

15

In-App Payment Distribution Market. With Google Play Store installed on nearly all

16

Android OS devices and over 90% of downloads on Android OS devices being

17

performed by the Google Play Store, Google has overwhelming market power.

18

Google’s market power is further evidenced by its ability to extract supra-competitive

19

taxes on the sale of apps through the Google Play Store.

20

262. 222. The availability of the Google Play Store for app distribution is21

conditioned on the app developer accepting a second product, Google’s in-app payment

22

processing servicessolution. Google’s substantial foreclosure of alternative app

23

distribution channels forces developers like Epic to use Google’s in-app payment

24

processing servicessolution, which Google has expressly made a condition of reaching25

Android users through its dominant Google Play Store.

26

263. 223. The tying product, Android app distribution, is separate and27

distinct from the tied product, Android in-app payment processing, because app

28

developers such as Epic have alternative in-app payment processing options and wouldFirst Amended Complaint for Injunctive Relief

80Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 86 of 891

prefer to choose among them independently of how an Android app is distributed.

2

Google’s unlawful tying arrangement thus ties two separate products that are in separate

3

markets.

4

264. 224. Google’s conduct substantially forecloses competition in the5

Android In-App Payment Processing Market and, in the alternative, in the Android

6

Games Payment Processing Market, affecting a substantial volume of commerce in7these Markets.

8265. 225. Google has thus engaged in a per se illegal tying arrangement

9and the Court does not need to engage in a detailed assessment of the anti-competitive10

effects of Google’s conduct or its purported justifications.

11266. 226. Even if Google’s conduct does not form a per se illegal tie, an

12assessment of the tying arrangement would demonstrate that it is unreasonable under the13

Cartwright Act, and therefore, illegal.

14267. 227. Google’s acts and practices detailed above unreasonably

15

restrain competition in the Android In-App Payment Processing Market and, in the16

alternative, in the Android Games Payment Processing Market.

17268. 228. Google’s conduct harms Epic which, as a direct result of18

Google’s anti-competitive conduct, is paying a supra-competitive commission rate on

19

in-app purchases processed through Google’s payment processor and has forgone

20

commission revenue it would be able to generate if its own in-app payment processor

21

were not unreasonably restricted from the market.

22269. 229. As an app developer which consumesuses in-app payment

23

processing servicessolutions and as the developer of a competing in-app payment

24

processing tool, Epic has been harmed by Defendants’ anti-competitive conduct in a25

manner that the antitrust laws were intended to prevent.

26

270. 230. It is appropriate to bring this action under the Cartwright Act

27

because many of the illegal agreements were made in California and purport to be

28

governed by California law, many affected consumers reside in California, Google has
First Amended Complaint for Injunctive Relief81Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 87 of 89

1

its principal place of business in California, and overt acts in furtherance of Google’s

2anti-competitive scheme took place in California.

3271. 231. Epic has suffered and continues to suffer damages and4

irreparable injury, and such damages and injury will not abate until an injunction ending

5

Google’s anti-competitive conduct issues.
COUNT 11: California Unfair Competition Law(against all Defendants)

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

272. 232. Epic restates, re-alleges and incorporates by reference each of
the allegations set forth in the rest of this Complaint as if fully set forth herein.
273. 233. Google’s conduct, as described above, violates California’s
Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq., which prohibits any
unlawful, unfair or fraudulent business act or practice.
274. 234. Epic has standing to bring this claim because it has sufferedinjury in fact and lost money as a result of Google’s unfair competition. Specifically, it
develops and distributes apps for the Android mobile platform, and has developed anddistributes a processor for in-app purchases, and Google’s conduct has unreasonably
restricted Epic’s ability to fairly compete in the relevant markets with these products.
275. 235. Google’s conduct violates the Sherman Act and the CartwrightAct, and thus constitutes unlawful conduct under § 17200.
276. 236. Google’s conduct is also “unfair” within the meaning of the
Unfair Competition Law.
277. 237. Google’s conduct harms Epic which, as a direct result of
Google’s anti-competitive conduct, is unreasonably prevented from freely distributing
mobile apps or its in-app payment processing tool, and forfeits a higher commission rateon the in-app purchases than it would pay absent Google’s conduct.
278. 238. Epic seeks injunctive relief under the Unfair Competition Law.

27
28First Amended Complaint for Injunctive Relief82Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 88 of 89

1

PRAYER FOR RELIEF

2

WHEREFORE, Plaintiff respectfully requests that the Court enter judgment in

3
4

favor of Epic and against Defendants:
A.

Issuing an injunction prohibiting Google’s anti-competitive and unfair

5

conduct and mandating that Google take all necessary steps to cease such

6

conduct and to restore competition;

7

B.

8
9

are unlawful and unenforceable;
C.

10
11

Awarding a declaration that the contractual restraints complained of hereinAwarding any other equitable relief necessary to prevent and remedy
Google’s anti-competitive conduct; andD.

Granting such other and further relief as the Court deems just and proper.

12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
First Amended Complaint for Injunctive Relief

83Case 3:20-cv-05671-JD Document 165-2 Filed 08/19/21 Page 89 of 89

1
2

Dated: AugustJuly 13, 202021,
2021

Respectfully submitted,

3
4
5
6
7
8

By:

/s/ Paul J. Riehle

FAEGRE DRINKER BIDDLE &REATH LLPPaul J. Riehle (SBN 115199)
paul.riehle@faegredrinker.com

10

Four Embarcadero Center
San Francisco, California 94111
Telephone: (415) 591-7500
Facsimile: (415) 591-7510

11

CRAVATH, SWAINE & MOORE LLP

12Christine A. Varney (pro hac vice pending)cvarney@cravath.com
Katherine B. Forrest (pro hac vice pending)
kforrest@cravath.com
Gary A. Bornstein (pro hac vice pending)gbornstein@cravath.com
Timothy G. Cameron (pro hac vice)tcameron@cravath.com
Yonatan Even (pro hac vice pending)yeven@cravath.com
Lauren A. Moskowitz (pro hac vice)lmoskowitz@cravath.com
Justin C. Clarke (pro hac vice)jcclarke@cravath.com
M. Brent Byars (pro hac vice pending)mbyars@cravath.com

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825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Facsimile: (212) 474-3700

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First Amended Complaint for Injunctive Relief

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