Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 1 of 85

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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
Christine A. Varney (pro hac vice)cvarney@cravath.com
Katherine B. Forrest (pro hac vice)kforrest@cravath.com
Gary A. Bornstein (pro hac vice)gbornstein@cravath.com
Timothy G. Cameron (pro hac vice)tcameron@cravath.com
Yonatan Even (pro hac vice)
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)
mbyars@cravath.com
CRAVATH, SWAINE & MOORE LLP
825 Eighth Avenue
New York, New York 10019
Telephone: (212) 474-1000
Facsimile: (212) 474-3700
Attorneys for Plaintiff Epic Games, Inc.
UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF CALIFORNIAEPIC GAMES, INC., a Maryland
Corporation,
Plaintiff,

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v.

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

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Defendants.

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

FIRST AMENDED COMPLAINT
FOR INJUNCTIVE RELIEF

Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 2 of 85

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TABLE OF CONTENTSPRELIMINARY STATEMENT ..................................................................................... 1
PARTIES........................................................................................................................ 13
JURISDICTION AND VENUE .................................................................................... 15
INTRADISTRICT ASSIGNMENT .............................................................................. 17
RELEVANT FACTS ..................................................................................................... 17I.

Google Dominates the Merchant Market for Mobile Operating Systems. ......... 17A.

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Product Market Definition .............................................................. 17

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Geographic Market Definition ........................................................ 19

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B.
II.

Google Unlawfully Maintains a Monopoly in the Android App DistributionA.

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Geographic Market Definition ........................................................ 26

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B.

Google’s Monopoly Power in the Android App Distribution Market ...... 27

C.

Google’s Anti-Competitive Conduct Concerning the Android App
Distribution Market ................................................................................... 33

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Google’s Conduct Toward OEMs and Mobile Network

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Operators ......................................................................................... 33

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Google’s Conduct Toward App Distributors and Developers........ 47

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Google’s Conduct Toward Consumers ........................................... 50

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The Android App Distribution Market ..................................................... 25
Product Market Definition .............................................................. 25

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Google’s Monopoly Power in the Merchant Market for Mobile OSs ...... 20

Market. ................................................................................................................. 2314

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The Merchant Market for Mobile Operating Systems .............................. 17

D.
III.

Anti-Competitive Effects in the Android App Distribution Market ......... 55

Google Unlawfully Acquired and Maintains a Monopoly in the Android InApp Payment Processing Market. ....................................................................... 57
A.

The Android In-App Payment Processing Market .................................... 57

Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 3 of 85

Product Market Definition .............................................................. 57

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Geographic Market Definition ........................................................ 59
B.

Google’s Monopoly Power in the Android In-App Payment
Processing Market ..................................................................................... 59

C.

Google’s Anti-Competitive Conduct Concerning the Android In-App
Payment Processing Market ...................................................................... 60

D.

Anti-Competitive Effects in the Android In-App Payment Processing
Market........................................................................................................ 62

COUNT 1: Sherman Act § 2 (Unlawful Monopoly Maintenance in the Android
App Distribution Market) .................................................................................... 63
COUNT 2: Sherman Act § 1 (Unreasonable restraints of trade concerning
Android App Distribution Market: OEMs) ........................................................ 64
COUNT 3: Sherman Act § 1 (Unreasonable restraints of trade concerning
Android App Distribution Market: Developer Distribution Agreement)........... 66
COUNT 4: Sherman Act § 2 (Unlawful Monopolization and Monopoly
Maintenance in the Android In-App Payment Processing Market) ................... 67

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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) .......................................................................................................... 68

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COUNT 6: Sherman Act § 1 (Tying Google Play Store to Google Play Billing)....... 70

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

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Android App Distribution Market: OEMs) ......................................................... 71
COUNT 8: California Cartwright Act (Unreasonable restraints of trade in
Android App Distribution Market: Developer Distribution Agreement)............ 73

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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) .......................................................................................................... 7528

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COUNT 10: California Cartwright Act (Tying Google Play Store to Google Play
Billing) ................................................................................................................. 77
COUNT 11: California Unfair Competition Law ......................................................... 79
PRAYER FOR RELIEF ................................................................................................ 80

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On the basis of documents produced to date by Defendants Google LLC,

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Google Ireland Limited, Google Commerce Limited, Google Asia Pacific Pte. Limited,3

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

4phrased arguments in Google’s pending motion to dismiss give a misleading picture of5

the full scope of Google’s anticompetitive conduct. Accordingly, although Plaintiff

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Epic Games, Inc. (“Epic”) believes its initial Complaint was more than sufficient, it

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hereby alleges, by its undersigned counsel, as a First Amended Complaint, with8

knowledge with respect to its own acts and on information and belief as to other9

matters, as follows:
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 to20

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(May 18, 2018), https://gizmodo.com/google-removes-nearly-all-mentions-of-dont-be-evil-from1826153393.
First Amended Complaint for Injunctive Relief[[DMS:5678823v1:07/20/2021--12:17 PM]]1

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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

5Since then, Google has changed its course of conduct, deliberately and systematically

6closing the Android ecosystem to competition, breaking the promises it made. Google’s

7anti-competitive conduct has now been condemned by regulators the world over.

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3.

Epic brings claims under Sections 1 and 2 of the Sherman Act and9under 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 to11

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

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within Android mobile apps. Epic seeks to end Google’s unfair, monopolistic and anti-

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

14developers, app distributors, payment processors, and consumers.

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4.

Epic does not seek monetary compensation from this Court for16

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 make

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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.
4
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 Relief2Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 7 of 85

1good on Google’s broken promise: an open, competitive Android ecosystem for all

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users and industry participants. Such injunctive relief is sorely needed.

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5.

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

5developers 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

9developer transacts with a consumer for the sale of an app or in-app digital content.

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

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own app designs and advertising business.

126.

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. Not

14content with the contractual and technical barriers it has carefully constructed to15

eliminate competition, Google uses its size, influence, power, and money to induce third

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parties into anticompetitive agreements that further entrench its monopolies. For

17example, Google has gone so far as to share its monopoly profits with business partners

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to secure their agreement to fence out competition, has developed a series of internal

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projects to address the “contagion” it perceived from efforts by Epic and others to offer

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consumers and developers competitive alternatives, and has even contemplated buying

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some or all of Epic to squelch this threat.

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7.

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 to26

imagine. Two decades ago, through the actions of courts and regulators, Microsoft was

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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 onto their computers, either directly from developers’First Amended Complaint for Injunctive Relief

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websites or from several competing stores. No single entity controls that ecosystem or2

imposes a tax on all transactions. And Google, as the developer of software such as the3

Chrome browser, is a direct beneficiary of this competitive landscape. Android users

4and developers likewise deserve free and fair competition.
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8.

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.

Epic develops and distributes entertainment, social networking andutility applications for personal computers, gaming consoles, and smart mobile devices.
Epic 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 three-dimensional 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, including2

Fortnite, Fall Guys and Rocket League, the social networking app Houseparty, and apps

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that support Epic’s Unreal Engine, such as Live Link Face, which enables users to4

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 connect, meet, play, talk, compete, dance, or attend concerts and cultural events.

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Fortnite Battle Royale offers users competitive gameplay as well as the opportunity to8mingle, watch movies, attend concerts or participate in cultural events with friends and9other users. Fortnite Creative Mode allows users to design and build their own

10experiences within the Fortnite universe.

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a. Fortnite is free for everyone to download and experience, including

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by playing games, attending events, socializing with friends or13

creating new content. To generate revenue, Epic offers users various

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in-app purchases of content for use within the app, such as digital

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avatars, costumes, dances, concert or movie-themed items, or other16

cosmetic enhancements.

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1b. In the first year after Fortnite was released in 2017, it attracted over2

125 million users; in the years since, Fortnite has topped 400 million

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users 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-gaming

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

8third-party app store, itch.io. It offers developers an 88/12 revenue share arrangement

9for all revenues from the sale of a developer’s games through the Epic Games Store.

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For in-app purchases, the Epic Games Store provides developers the choice of using the11developer’s own payment processor (at no fee) or Epic’s own payment solution, Epic

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Direct Payment (for a fee equal to a 12% share of sales revenue).

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13.

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

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powerful, three dimensional environment graphics engine used to build digital three-15

dimensional environments for multiple uses including architecture projects, film &16

television production, medical training, and more. Unreal Engine is used to create

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

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

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

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

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commercially, Epic typically collects a 5% royalty after the22

developer reaches $1 million in gross sales. Alternatively,

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developers can negotiate custom or royalty-free licenses with Epic.

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

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

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Battlegrounds (known as “PUBG”), ARK, Gears of War,

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Borderlands, and Batman: Arkham City.

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1c. The Unreal Engine is also used far beyond the realm of video games.

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Unreal Engine received its first Emmy in 2018 for its contribution to3

televised broadcasts such as the 2018 Winter Olympics, Super Bowl

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LII, and numerous e-sports tournaments. Since 2016, Unreal Engine

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has been used in more than 100 film and television productions. For

6example, The Mandalorian—Disney’s television series in the Star

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Wars franchise—was filmed on a stage set within a huge oval LED

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display. The exteriors and interiors—virtually every background and9

set—were created in Unreal Engine and displayed in real time10

behind the actors. Similarly, the popular HBO series Westworld

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turned to Unreal Engine to develop many of its visual effects. Car

12makers, including Audi and Ford, have used Unreal Engine for a13

variety of uses including automotive design and engineering, as well14

as developing digital showrooms in which customers can configure

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

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

17even helped brain surgeons train for and perform some of the most18

intricate and challenging aspects of brain surgeries by allowing for

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detailed real-time digital anatomy simulations. In total, Unreal

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Engine boasts a community of 11 million users.

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d. As noted above, utility apps designed for use with Unreal Engine are22

available in the Google Play Store, including, Unreal Match 3 and23

Action RPG Game Sample, both of which help developers learn how

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to use Unreal Engine to develop their own mobile games.

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Similar to a PC or a Mac personal computer, smart mobile devices

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use an “operating system” or “OS” to provide core device functionality and to enable27

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

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for mobile devices (a “mobile OS”) depends on the availability of a large number of2compatible apps that cater to the preferences and needs of users.

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15.

Google controls the most ubiquitous OS in mobile devices, the4Android OS. Android OS is used by billions of users the world over, and boasts nearly5

3 million compatible apps.

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Android is the only commercially viable OS that is widely available

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to license by companies that design and sell smart mobile devices, known as original

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equipment manufacturers (“OEMs”). Accordingly, when OEMs select a mobile OS to9install on their devices, they have only one option: Google’s Android OS. Google

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therefore has monopoly power in the market for mobile operating systems that are

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available for licensing by OEMs (the Merchant Market for Mobile Operating Systems

12(infra Part I)).

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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

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deliberately changed its course of conduct, erecting contractual and technological16

barriers that foreclose competing ways of distributing apps to Android users, ensuring

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that the Google Play Store accounts for nearly all the downloads of apps from app stores18

on Android devices. Google thus maintains a monopoly over the market for distributing

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mobile apps to Android users, referred to herein as the “Android App Distribution

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Market” (infra Part II).

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For example, through a series of revenue-sharing and licensing

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agreements with OEMs, Google bundles the Google Play Store with a set of other23

Google services that Android OEMs must have on their devices (such as Gmail, Google

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Search, Google Maps, and YouTube) and conditions the licensing of those services on

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an OEM’s agreement to pre-install the Google Play Store and to prominently display it.

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Google then interferes with OEMs’ ability to make third-party app stores or apps

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available on the devices they make, including through its so-called “Anti-Fragmentation

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Agreements” (“AFAs”) that foreclose OEMs from modifying Android to offer fast andFirst Amended Complaint for Injunctive Relief8Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 13 of 85

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simple (or “frictionless”) downloading of apps in the same way they are offered through2

Google Play. These restrictions effectively foreclose competing app stores—and even3

single apps—from what could be a primary distribution channel. Google’s documents

4show that it pushes OEMs into making Google Play the exclusive app store on the

5OEMs’ devices through a series of coercive carrots and sticks, including by offering

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significant financial incentives to those that do so, and withholding those benefits from7

those that do not. Google’s documents further show that Google has erected these8

contractual barriers to competition for Android app distribution in the recognition that9

Google stands to lose billions of dollars if Android app distribution were opened to10competition and competing Android app stores, including an “Epic Store”, were allowed

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to “gain full traction”.
19.

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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 and15

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[]17

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

18“bypassing the Google Play Store”.
20.

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Another OEM, LG, told Epic that its contract with Google did not

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

21functionality that would install and update Epic apps except through the Google Play

22Store.

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Google also enforces anti-competitive restrictions against app

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developers and distributors. Specifically, Google contractually prohibits app developers

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and would-be distributors from offering on the Google Play Store any app that could be

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used to download other apps, i.e., any app that could compete with the Google Play

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Store in app distribution. And Google further requires app developers to distribute apps

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through the Google Play Store if they wish to advertise those apps through valuable
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1advertising channels controlled by Google, such as ad placements on Google Search or2

on YouTube that are specially optimized to advertise mobile apps.

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Finally, Google stifles or blocks consumers’ ability to download app

4stores and apps directly from developers’ websites. As anyone who has tried to5download directly on an Android device knows, it is significantly different than the6

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 settings

8and bravely click through multiple dire warnings. Accordingly, leading Google Play9executives have acknowledged that directly downloading Fortnite from a source other10

than Google Play is “an awful experience”, and developers like Epic should “worry that11

most will not go through the 15+ steps”. And even if a persistent user manages to12

install a competing app store, Google has prevented such stores from competing on

13equal footing with the Google Play Store by restricting them from offering basic

14functions, such as automatic updating of apps in the background, which is available for15

apps downloaded from the Google Play Store.

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23.

Google engages in these anticompetitive acts to eliminate consumer

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

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justification for these restrictions. Google therefore has changed its course of conduct,

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breaking its promise that Android would be an “open” ecosystem in which other20

participants could participate fairly.

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

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anti-competitive restrictions in the separate Market for Android In-App Payment

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Processing (infra Part III).

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25.

App developers who sell digital content for consumption within apps

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require seamless payment processing solutions to execute purchases. App developers,

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including Epic, have developed payment processing solutions internally. Others may

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use a host of payment processing solutions offered by multiple competing third parties.

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126.

Google, however, ties distribution through its Google Play Store

2

with developers’ exclusive use of Google’s own payment processing solution, called3

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

4developers that distribute through the Google Play Store are even prohibited from5

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

8electing app distribution through an alternative channel.

927.

The result is that in every in-app transaction for digital content, it is10

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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Moreover, through this tie, Google inserts itself as an intermediary15

between each seller and each buyer for every purchase of digital content within the16

Android ecosystem, collecting for itself the personal information of users, which Google

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then uses to give an anti-competitive edge to its own advertising services and mobile

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app development business.

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29.

Google’s anticompetitive conduct has substantially foreclosed

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competing stores from offering consumers and developers choice in distribution and21

payment processing. Indeed, Epic, which distributes apps through its own store to users

22of personal computers, would open a store to compete with Google’s and offer

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developers more innovation, better security, and more choice, including for in-app

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payment processing. App developers would not have to pay Google’s supra-

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competitive tax of 30%, as the price of distribution and payment processing alike would

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be set by market forces rather than Google’s fiat. Developers could address any

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payment-related issues (such as refunds) directly with their own customers, rather than

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1through Google. And users and developers, jointly, would get to decide whether users’2

data should be utilized for other purposes.

330.

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

4developer and as a potential competitor in app distribution and payment processing.

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

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

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But Google would not budge.

831.

Because of Google’s refusal to stop its ongoing anti-competitive and9unlawful conduct, on August 13, 2020, Epic began providing Fortnite users the choice10of using Epic’s own direct payment tool as an alternative to Google’s overpriced billing

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tool, sharing with users who chose to use Epic’s payment tool the resulting savings.

12
13
14
15
16
17
18
19
20
21
22
23

32.

In retribution, Google removed Fortnite from Google Play Store24

listings, preventing new users from obtaining the game. Google also prevented Android

25

users who acquired Fortnite from the Google Play Store from obtaining app updates

26

they needed to continue playing with their friends and family.

27
28

33.

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

competitive conduct addressed in this First Amended Complaint. Google refused toFirst Amended Complaint for Injunctive Relief

12Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 17 of 85

1change its industry-impacting conduct. Instead, Google offered to placate Epic by

2

offering it preferential terms on side deals, such as YouTube sponsorships and cloud3

services, if Epic agreed to distribute Fortnite in the Google Play Store and acceded to4

Google’s 30% tax. Google has reached preferential deals with major mobile app

5developers, such as Activision Blizzard, as part of an initiative Google originally called

6

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

7

allow Google to keep its monopolistic behavior publicly unchallenged. But Epic is not

8interested in any side deals that might benefit Epic alone while leaving Google’s anti-

9competitive restraints intact; instead, Epic is focused on opening up the Android

10

ecosystem for the benefit of all developers and consumers.

11

34.

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

12

has caused and continues to cause Epic financial harm, but Epic is not bringing this case13

to recover these damages; Epic is not seeking any monetary relief, but rather only an

14order enjoining Google from continuing to impose its anti-competitive conduct on the15

Android ecosystem.
PARTIES

16
17

35.

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

18

principal place of business in Cary, North Carolina. Epic was founded in 1991 by a19

college student named Tim Sweeney. Mr. Sweeney ran Epic out of his parents’20basement and distributed, by mail, Epic’s first commercial personal computer software,

21

a game named ZZT. Since then, Epic has developed several popular entertainment

22

software products that can be used on an array of platforms—such as personal

23

computers, gaming consoles, and smart mobile devices. Epic also creates and24

distributes Unreal Engine, a powerful software suite that allows competing developers

25

and others to create realistic three-dimensional content, including video games,

26

architectural recreations, television shows, and movies. An Epic subsidiary also27

develops and distributes the popular Houseparty app, which enables video chatting and28

social gaming on smart mobile devices and personal computers. Worldwide,
First Amended Complaint for Injunctive Relief

13Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 18 of 85

1

approximately 400 million users have signed up to use Epic’s apps and services, and2each day 30 to 40 million individuals log into an Epic app, such as Fortnite, Rocket

3

League, Houseparty, or the Epic Games Store.

4

36.

Defendant Google LLC is a Delaware limited liability company with5

its principal place of business in Mountain View, California. Google LLC is the

6

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

7sole member of Google LLC is XXVI Holdings, Inc., a Delaware corporation with its

8principal place of business in Mountain View, California. Google LLC contracts with9

all app developers that distribute their apps through the Google Play Store and is10

therefore a party to the anti-competitive contractual restrictions at issue in this11

Complaint.

12

37.

Defendant Google Ireland Limited (“Google Ireland”) is a limited

13

company organized under the laws of Ireland with its principal place of business in

14

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

15

developers that distribute their apps through the Google Play Store and is therefore a16party to the anti-competitive contractual restrictions at issue in this Complaint.

17

38.

Defendant Google Commerce Limited (“Google Commerce”) is a18

limited company organized under the laws of Ireland with its principal place of business19

in Dublin, Ireland, and a subsidiary of Google LLC. Google Commerce contracts with20

all app developers that distribute their apps through the Google Play Store and is21

therefore a party to the anti-competitive contractual restrictions at issue in this22

Complaint.

23

39.

Defendant Google Asia Pacific Pte. Limited (“Google Asia Pacific”)

24

is a private limited company organized under the laws of Singapore with its principal

25

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

26

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

27

through the Google Play Store and is therefore a party to the anti-competitive28

contractual restrictions at issue in this Complaint.
First Amended Complaint for Injunctive Relief

14Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 19 of 85

140.

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.

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.

10§§ 1331 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.

This Court has personal jurisdiction over the Defendants. Google

16

LLC and Google Payment are headquartered in this District. All Defendants have17

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

18

availed themselves of the benefits and protections of United States and California law,

19

such that the exercise of jurisdiction over them would comport with due process20

requirements. Further, the Defendants have consented to the exercise of personal

21

jurisdiction by this Court.

22

43.

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

23

Play Developer Distribution Agreement (the “DDA”) with Epic. Section 16.8 of the24

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 any

26legal matter arising from or relating to this Agreement”. Section 16.8 further provides

27

that “[a]ll claims arising out of or relating to this Agreement or Your relationship with28

Google under this Agreement will be governed by the laws of the State of California,
First Amended Complaint for Injunctive Relief

15Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 20 of 85

1

excluding California’s conflict of laws provisions.” The claims addressed in this2Complaint relate to the DDA or to Epic’s relationship with Google under the DDA, or

3

in the alternative such claims arise out of the same nucleus of operative facts as other4

claims as to which the Court may exercise personal jurisdiction over each Defendant, so

5that the exercise of pendent personal jurisdiction would be proper.

6

44.

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.

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

16Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 21 of 85

INTRADISTRICT ASSIGNMENT

1
2

46.

Pursuant to Civil Local Rule 3-2(c), this antitrust case shall not be3

assigned to a particular Division of this District, but shall be assigned on a District-wide4basis.
RELEVANT FACTS

5
6

I.

Google Dominates the Merchant Market for Mobile Operating Systems.

7

47.

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
14

Product Market Definition
48.

Smart mobile devices are handheld, portable electronic devices that15

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.

Like laptop and desktop personal computers, mobile devices require22

an operating system—or “OS”—that enables multi-purpose computing functionality. A

23

mobile OS, just like the OS of any computer, is a piece of software that provides basic

24functionality to users of mobile devices such as button controls, touch commands,

25

motion commands, and the basic “graphical user interface”, which includes “icons” and26

other visual elements representing actions that the user can take. A mobile OS also27

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

17Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 22 of 85

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.

4

50.

To ensure that every user can access the basic functions of a mobile

5

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

6

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

7

that comes pre-installed with Microsoft Windows for PC or Apple’s macOS for a Mac

8

computer. OEMs design mobile devices to ensure the device’s compatibility with a9particular OS the OEM chooses for a particular model of mobile device, so that the10device may utilize the capabilities of that OS. For OEMs, the process of implementing

11

a mobile OS requires significant time and investment, making switching to another12

mobile OS difficult, expensive, and time-consuming.

13

51.

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

14

choose an OS that can be licensed for installation on smart mobile devices they design.

15

There is therefore a relevant Merchant Market for Mobile OSs comprising mobile OSs

16

that OEMs can license for installation on the smart mobile devices they manufacture.

17

The market does not include proprietary OSs that are not available for licensing, such as

18

Apple’s mobile OS, called iOS. Historically, the Merchant Market for Mobile OSs has

19

included the Android OS, acquired and further developed by Google; the Tizen mobile

20

OS, a partially open-source mobile OS that is developed by the Linux Foundation and21

Samsung; and the Windows Phone OS developed by Microsoft.

22

52.

Some consumers continue to use cellular phones that do not have23

multi-purpose, computing functions. These simple phones resemble older “flip24phones”, for example; they are not part of the smart mobile device category. These25

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

26

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

27

operating systems on these phones, to the extent they exist, cannot support the wide

28
First Amended Complaint for Injunctive Relief

18Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 23 of 85

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.

To the extent that electronic devices other than smart mobile devices

4

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

5

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

6

computing devices that are not handheld and portable, that are not capable of multi-

7

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

8computers, laptops, or gaming consoles—are not considered to be “smart mobile

9

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

10

physically difficult to transport, require a stable WiFi or wired connection to operate11smoothly, and require an external screen for the user to engage in game play. Thus,

12

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

would 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 game created17

for his/her PS4 to substitute for the mobile app version of such a game. That is because18

the portability (and typically for smartphones the cellular connectivity) of the mobile

19

devices enable the consumer to play mobile games away from home or anywhere in the20home. Indeed, for this reason, game developers often distribute multiple versions of an

21

app, each of which is programmed for compatibility with a particular type of device and22

its operating system.

23
24

Geographic Market Definition
54.

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

19Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 24 of 85

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.

78

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

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.

A mobile ecosystem typically develops around a mobile OS, such as

17

the Android OS. The “Android ecosystem” is a system of mobile products (such as18

devices, apps and accessories) designed to be inter-dependent and compatible with each19

other and the Android OS. Ecosystem participants include an array of participating

20

stakeholders, such as Google, OEMs that make Android-compatible devices, developers

21

of Android-compatible apps, Android app distribution platforms, including app stores,

22

the makers of ancillary hardware such as headphones or speakers, cellular carriers, and23others.

24

57.

Mobile ecosystems benefit from substantial network effects—that is,25

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 Corp., 87 F. Supp. 2d 30
First Amended Complaint for Injunctive Relief

20Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 25 of 85

1(D.D.C. 2000), new entrants into an operating system market thus face an “applications

2

barrier to entry”. An applications barrier to entry arises because a new operating system

3will be desirable to consumers only if a broad array of software applications can run on

4

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

5

operating system only if there is a large existing base of users.

6

58.

To overcome this challenge and to attract app developers and users,

7

Google has continuously represented that Android is an “open” ecosystem and that any

8ecosystem participant could create Android-compatible products without unnecessary

9

restrictions. Indeed, Google LLC’s CEO, Sundar Pichai, represented in 2014 that

10

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

11Android founder who is described by some as the “Father of Android”, said when he12

departed Google in 2013 that “at its core, Android has always been about openness”.6

13

59.

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

14

openness, Google has now effectively closed the Android ecosystem through its tight15

control of the Android OS. And, as the dominant OS licensor, Google benefits from16

substantial network effects which makes participation on its platform a “must-have”

17market for developers.

18

60.

As further described below, Google uses the Android OS to restrict

19

the apps and app stores OEMs are permitted to pre-install on the devices they make and20

to impose deterrents to the direct distribution of competing app stores and apps to21

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

22

61.

Because of Google’s monopoly power in the Merchant Market for23

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

24

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

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

21Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 26 of 85

1

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

2

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

3

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

4

consumers find essential or valuable when choosing a mobile device. These5

circumstances have biased consumers against the purchase of mobile devices with non-6

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

7

to Google’s demands because it is critical that they be able to offer a popular mobile OS8

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

9purchase.

1062.

The Android OS was designed to be, and advertised as, “open11source”, in that OEMs and others may use portions of the OS without a license from

12

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

13

Android “forks”. But in reality, the Android OS is “open source” in name only. Google

14

has entered into so-called Anti-Fragmentation Agreements (“AFAs”) with Android

15

mobile OEMs that have prevented them from creating Android forks for mobile devices

16

and which prevent OEMs from modifying Android to offer competing app stores

17

without restrictions. Among other things, the AFAs prohibit OEMs from taking “any18

actions that may cause or result in the fragmentation of Android”, which is determined

19

in Google’s “sole discretion”. Further, Android OEMs agree only to distribute20“Android Compatible Devices”, meaning that they may not ship any devices running an

21

Android fork. Android Compatible Devices also must comply with the “Android

22

Compatibility Definition” document and pass the “Android Compatibility Test Suite”,

23

both of which are maintained by Google. Among other things, the Android

24

Compatibility Definition document requires OEMs to prompt users explicitly for25

permission to allow direct downloading of apps outside Google Play. The AFAs also

26

prohibit Android OEMs from distributing certain software on devices that are not27

Android Compatible Devices, and bar OEMs from distributing, creating or promoting “a28First Amended Complaint for Injunctive Relief

22Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 27 of 85

1third-party software development kit (SDK) derived from Android or derived from2

Android Compatible Devices”.

363.

More recently, after the European Commission began investigating

4

Google’s Android-related practices, including the AFAs, Google transitioned to a new5form of agreement with Android OEMs called the Android Compatibility Commitment

6(“ACC”). But the ACC terms are only marginally less restrictive than the AFA terms in

7that they allow OEMs to manufacture non-Android Compatible Devices on behalf of a8

third party and that are marketed under a third-party brand. However, they still9

substantially foreclose OEMs from distributing and marketing their own devices,10

including Android forks. Entering into an AFA or ACC is a precondition to an OEM

11being able to enter into a Mobile Application Distribution Agreement (“MADA”) and12

Revenue Sharing Agreement (“RSA”), which are described below. As a result, all or

13

almost all commercially significant mobile Android OEMs are bound by an AFA or

14

ACC, which helps Google ensure that mobile OEMs do not develop an Android fork

15

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

16

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

17

64.

Google’s conduct described herein creates a further barrier to entry

18

into the Merchant Market for Mobile OSs by, among other things, restricting the ability

19

of OEMs to support alternatives to Google’s version of Android and making it more

20

difficult for consumers to switch to other mobile OSs.

21
22
23
24
25
26
27
28

II.

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

Mobile apps make mobile devices more useful and valuable because

they add functionality to the mobile device that caters to the specific interests of each
mobile device user. For example, they facilitate video chats with friends and family,banking online, shopping, job hunting, photo editing, reading digital news sources,
editing documents, or playing a game like Fortnite Battle Royale. Many workers use
their smart mobile device to check work schedules, access company email, or use otherFirst Amended Complaint for Injunctive Relief

23Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 28 of 85

1

employer software while outside the workplace. For many consumers, a smartphone or2tablet is the only way to access these functions, because the consumer does not own a3

personal computer or because the consumer can only access the Internet using a cellular4

connection. But even when a consumer can perform the same or similar functions on a5

personal computer, the ability to access apps “on the go” using a handheld, portable6

device remains valuable, important, and distinct.

766.

Whereas some apps may be pre-installed by OEMs, OEMs cannot

8

anticipate all the various apps a specific consumer may desire to use. Moreover, many

9

consumers have different preferences as to which apps they want, and it would be10

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

11valuable space on the mobile device. And many apps that consumers may ultimately

12

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

13

consumers who seek to add new functionalities to a mobile device and customize the14

device for their own use need to obtain and install mobile apps themselves after

15

purchasing their device. Currently, on Android devices, this is done most often through16

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

17

portal set up by Google and through which mobile apps can be browsed, searched for,18

purchased (if necessary), and downloaded by a consumer. App stores such as the19

Google Play Store, alongside several other ways by which apps can be distributed to the20

hundreds of millions of consumers using Android-based mobile devices, constitute the21

Android App Distribution Market, defined below.

22

67.

Through various anti-competitive acts and unlawful restraints on

23competition, Google has substantially foreclosed competition and maintained a24monopoly in the Android App Distribution market, causing ongoing harm to25competition and injury to OEMs, app distributors, app developers, and consumers.

26

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

27

that “as an open platform, Android is about choice” and that app developers “can28

distribute [their] Android apps to users in any way [they] want, using any distribution
First Amended Complaint for Injunctive Relief

24Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 29 of 85

1

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

2

users to directly download apps “from a website” or even by “emailing them directly to3consumers”.7

4

A.

The Android App Distribution Market

5

Product Market Definition

6

68.

There is a relevant market for the distribution of apps compatible

7

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

8

Market”). This Market includes all the channels by which mobile apps may be

9

distributed to the hundreds of millions of users of mobile devices running the Android

10

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

11

stores, such as Samsung’s Galaxy Store and Aptoide, trailing far behind. Nominally12

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

13

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

14

69.

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

15

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

16

device itself and an Internet connection. OEMs find it commercially unreasonable to17

ship a smart mobile device to a consumer without at least one app store installed, as a18

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

19

by smart mobile devices.

20

70.

App stores selling mobile apps are currently OS-specific, meaning

21

they distribute only apps that are compatible with the specific mobile OS on which the22

app store is used. A consumer who has a mobile device running the Android OS cannot

23

use apps created for a different mobile operating system. An owner of an Android OS24

device will use an Android compatible app store, and such app stores distribute only25

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

26

store with, for example, Apple’s App Store, as that app store is not available on Android

27
28

7

Google Play Developers Page, Alternative Distribution Options,
https://developer.android.com/distribute/marketing-tools/alternative-distribution (last accessed July 20,2021).
First Amended Complaint for Injunctive Relief

25Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 30 of 85

1devices, is not compatible with the Android OS, and does not offer apps that are

2compatible with the Android OS. Non-Android mobile app distribution platforms—

3such as the Windows Mobile Store used on Microsoft’s Windows Mobile OS or the4Apple App Store used on Apple iOS devices—cannot substitute for Android-specific5

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

6

Distribution Market defined herein.

771.

Likewise, stores distributing personal computer or gaming console

8

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

9

compatible apps: the Epic Games Store distributes software compatible with personal

10

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

11

game consoles, and the PlayStation Store distributes software compatible with the

12

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

13

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

14

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

15

72.

The same is true even when an app like Fortnite is available for16

different types of platforms running different operating systems, because only the OS-

17compatible version of that software can run on a specific type of device or computer.

18

Accordingly, as a commercial reality, an app developer that wishes to distribute mobile

19

apps for Android mobile devices must develop an Android-specific version of the app

20

and avail itself of the Android App Distribution Market.

21

73.

In the alternative only, the Android App Distribution Market is a22

relevant, economically distinct sub-market of a hypothetical broader antitrust market for23

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

24

Apple’s iOS.

25
26

Geographic Market Definition
74.

The geographic scope of the Android App Distribution Market is27

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

28

stores, are developed and distributed on a global basis; OEMs, in turn, make app stores,First Amended Complaint for Injunctive Relief

26Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 31 of 85

1such as the Google Play Store, available on Android devices on a worldwide basis

2(except in China). China is excluded from the relevant market because legal and3

regulatory barriers prevent the operation of many global app stores, including the4

Google Play Store, within China. Additionally, app stores prevalent in China are not5

available, or have little presence, outside of China.

6

B.

7
8
9

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

Google has monopoly power in the Android App Distribution

76.

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

10things, Google’s massive market share in terms of apps downloaded. The European

11

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

12

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

13

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

14

Android App Distribution Market, the European Commission found that the only such15

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

16

compatible with the Windows Mobile OS. The Commission determined that even if the17

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

18

still have had a market share greater than 90%. Google admits as much. A 201719

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

20

countries”, including the United States. Google has recognized that in one quarter (June21

to September 2016), app installations through channels other than Google Play22

(including direct downloads and competing app stores) amounted to a mere 4.4% of

23

Android app downloads in the United States.

24

77.

Other existing Android mobile app stores do not discipline Google’s

25

exercise of monopoly power in the Android App Distribution Market. No other app

26

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

27

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

28

OEMs on practically all Android mobile devices sold outside of China. As a result, noFirst Amended Complaint for Injunctive Relief27Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 32 of 85

1other Android app store comes close to that number of pre-installed users. With the2

exception of app stores designed for and installed only on mobile devices sold by those3

respective OEMs, such as Samsung Galaxy Apps and the LG Electronics App Store, no4

other Android app store is pre-installed on more than 10% of Android devices, and5

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

6

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

7but it comes pre-installed on no more than 5% of Android mobile devices.

878.

Because of Google’s success in maintaining its monopoly in Android

9

app distribution, there is no viable substitute to distributing Android apps through the10

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

11

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

12

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

13

thereby benefits from ongoing network effects based on the large number of

14participating app developers and users. The large number of apps attracts large numbers

15of users, who value access to a broad range of apps, and the large number of users

16

attract app developers who wish to access more Android users. Android OEMs find it

17

commercially unreasonable to make and sell phones without the Google Play Store, and18

they view other app stores as poor substitutes for the Google Play Store because of the19lower number and lesser quality of apps they offer.

20

79.

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

21

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

22Store, which is a far higher commission than would exist under competitive conditions.

23

80.

Furthermore, Google’s monopoly power in app distribution is not

24

constrained by competition at the smart mobile device level. Before a consumer can

25even consider purchasing an app, she must purchase a device on which to install and run

26

apps. There are currently only two smartphone operating systems with significant

27

market share, each at the core of a separate, differentiated ecosystem of devices,

28

accessories, apps and services: Apple’s iOS and Google’s Android OS. When aFirst Amended Complaint for Injunctive Relief

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1

consumer wishes to purchase a smartphone, the first choice she must make therefore is2

which operating system she wants the device to run and which mobile ecosystem she

3wants to participate in. Android device users face significant switching costs and lock-4

in to the Android ecosystems that serves to protect Google’s monopoly power, and5

consumers are unable to account for Google’s anticompetitive conduct when they

6purchase a smart mobile device.

7

81.

First, consumers are deterred from leaving the Android ecosystem

8due to the difficulty and costs of switching. Consumers choose a smartphone based in

9part on the OS that comes pre-installed on that device and the ecosystem in which the10device participates (in addition to a bundle of other features, such as price, battery life,11

design, storage space, and the range of available apps and accessories). Once a12

consumer has selected a smartphone, the consumer cannot replace the mobile OS that

13

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

14

wishes to change the OS must purchase a new smartphone entirely, which is an15

investment that most consumers do not make more often than every two or three years.

16

Many Android phones are cheaper than non-Android (i.e., Apple) phones; for those17

users, a comparably-priced non-Android alternative simply isn’t available. In addition,

18

mobile OSs have different designs, controls, and functions that consumers must learn to19navigate. Over time, consumers who use Android devices learn to operate efficiently on

20

the Android OS. For example, the Android OS layout differs from iOS in a wide range

21

of functions, including key features such as searching and installing “widgets” on the22phone, organizing and searching the phone’s digital content, configuring control center23

settings, and organizing photos. The cost of learning to use a different mobile OS is

24part of consumers’ switching costs.

25

82.

Second, switching from Android devices may also result in a26

significant loss of personal and financial investment that consumers put into the27

Android ecosystem. Because apps, in-app content and many other products are28

designed for or are only compatible with a particular mobile OS, switching to a newFirst Amended Complaint for Injunctive Relief

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1

mobile OS may mean losing access to such products or to data. Even if versions of such2

apps and products are available within the new ecosystem chosen by the consumer, the3consumer would have to go through the process of downloading them again onto the4

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

5

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

6purchased in-app content and consumer-generated data on those apps. Because apps

7

and device functionalities may not synchronize or operate efficiently across operating

8

systems, existing Android users also face costs associated with “mixing and matching”

9

different operating systems if they attempt to purchase a non-Android device. Whether

10across a consumer’s own set of personal devices (e.g., a phone and a tablet), or across11

the consumer’s family or business, “mixing and matching” operating systems can

12significantly diminish the utility of applications, which raises an additional and13

significant barrier to switching.

14

83.

Third, consumers are not able to avoid the switching costs and lock-15

in to the Android OS ecosystem by acquiring more information prior to the purchase of16

the Android device. The vast majority of mobile device consumers have no reason to17

inquire, and therefore do not know about, Google’s anticompetitive contractual

18

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

19

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

20

whether to purchase an Android device. Consumers consider many features when

21

deciding which smartphone or tablet to purchase, including design, brand, processing

22

power, battery life, functionality, and cellular plan. These features are likely to play a23

substantially larger role in a consumer’s decision as to which smart mobile device to24purchase than Google’s anticompetitive conduct in the relevant markets, particularly

25

given that a consumer may consider the direct monetary cost of Google’s conduct to be

26

small relative to the price of smart mobile devices, if the consumer is even aware of the27

conduct or assigns it such a cost at all. For example, over time a typical Android user

28

may make multiple small purchases of paid apps and in-app digital content—
First Amended Complaint for Injunctive Relief

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1

accumulating to $100 or less annually—but may spend several hundreds of dollars at

2

once to purchase an Android smart mobile device.

384.

Consumers are also unable to determine the “lifecycle price” of4devices—i.e., to accurately assess at the point of purchase how much they will end up

5

spending in total (including on the device and all apps and in-app purchases) for the6

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

7purchasing a device all of the apps or in-app content that they may want to purchase8

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

9

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

10content that becomes available only after purchasing a device. New apps and in-app

11

content will continue to be developed and marketed after a consumer purchases a12

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

13

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

14purchasing mobile devices, consumers are unable to calculate the lifecycle prices of the15

devices. This prevents consumers from effectively taking Google’s anticompetitive16

conduct into account when making mobile device purchasing decisions.

17

85.

Because consumers face substantial switching costs and lock-in to18

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

19

the Android ecosystem. Thus, developers face an even greater cost in not participating

20

in the Android ecosystem—loss of access to hundreds of millions of Android OS users.

21

86.

Google’s anticompetitive restraints and policies serve to maintain22

and increase the switching costs described above. For example, by restricting the23

manner in which consumers can discover, download and install app stores that compete

24with the Google Play Store and by restricting the functionality of such competing stores

25(see paragraphs 122-141 below), Google blocks the emergence of competing

26

multiplatform app stores that could lower switching costs by cataloguing or tracking a27

user’s apps and purchases across different OSs. These various restrictions that increase

28
First Amended Complaint for Injunctive Relief

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1

switching costs impede the adoption of competing OSs, and thereby help perpetuate and2strengthen Google’s monopoly.

3

87.

Moreover, the close relationship that Google maintains with Apple4further reduces Google’s incentive to compete, innovate, and invest in app distribution

5

because Google benefits by cooperating with its “competitor” Apple. As Google’s

6

founder and former CEO Larry Page once told Apple CEO Steve Jobs during a private

7

meeting in 2010 about a “partnership” between Android and iOS: “there will always be

8places we compete, and places where we cooperate”. For example, for over 15 years,

9

Google has maintained an agreement with Apple whereby Google pays Apple a10

significant percentage of revenue derived from searches run on iOS devices—an11

estimated $8-12 billion per year in recent years, according to the U.S. Department of

12

Justice—in exchange for Apple making Google Search the default search engine on the13

Safari browser, Siri voice command searches, and other search access points on Apple’s

14

devices. Default status on Apple devices is valuable to Google because Google search15

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

16

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

17

virtually all mobile devices, whether iOS or Android, as most consumers are unlikely to18change these settings on their phone and will become Google Search users by default.

19

Because Android and iOS account for over 99% of smartphone OSs installed on mobile

20

devices, Google’s agreement with Apple guarantees that Google will generate revenue

21

from virtually all smartphone OS users, regardless of whether they choose to purchase22

iOS or Android devices.

23

88.

Because Google reaps considerable profits from iOS users through24

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

25

Apple at the smartphone OS level and expend more resources attracting users from iOS

26

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

27

devices, Google might be more incentivized to, among other things, differentiate its

28

Android platform from Apple with respect to the commissions it charges on app
First Amended Complaint for Injunctive Relief

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1transactions. If Android competed with iOS on app transactions, the market

2competition would make Android apps cheaper for users and attract developers to3launch their apps first (or even only) on Android. Instead, Google and Apple are cozy4

duopolists, offering virtually the same terms to developers and changing those terms in5tandem (if at all). After a meeting involving senior executives of Google and Apple,

6

notes of the meeting were exchanged between the two companies. The notes reflect:

7“Our vision is that we work as if we are one company”.
C.
Google’s Anti-Competitive Conduct Concerning the Android App
Distribution Market

8
9
10
11
12

89.

Android App Distribution Market through a series of related anti-competitive acts thathave substantially foreclosed competing ways of distributing apps to Android users.
Google’s Conduct Toward OEMs and Mobile Network Operators

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Google has willfully and unlawfully maintained its monopoly in the

90.

Google imposes anti-competitive constraints on Android OEMs

based on their need for access to a viable Android app store and other important services
provided by Google.
91.

First, Google conditions OEMs’ licensing of the Google Play Store,

as well as other essential Google services and the Android trademark, on OEMs’agreements to provide the Google Play Store with preferential treatment compared toany other competing app store. Specifically, to access the Google Play Store, Android
OEMs (which, as noted above, include virtually all OEMs that obtain an OS on themerchant market) have signed a Mobile Application Distribution Agreement(“MADA”) with Google. A MADA confers a license to a bundle of products
comprising proprietary Google apps, Google-supplied services necessary for
functioning of mobile apps, and the Android trademark. Through its MADAs with
Android OEMs, Google requires OEMs to locate the Google Play Store on the “homescreen”8 of each mobile device. Android OEMs must further pre-install up to 30
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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1

Google mandatory apps and must locate these apps on the home screen or on the next2

screen, occupying valuable space on each user’s mobile device that otherwise could be3

occupied by competing app stores and other services. These requirements ensure that4

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

5other app store at a significant disadvantage.

6

92.

Absent this restraint, OEMs could pre-install and prominently

7

display alternative app stores to the purchasers of some or all of their mobile devices,8

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

9

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

10

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

11

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

12

would increase the distribution opportunities for Epic’s own apps, as well as a variety of

13

apps developed by third parties.

14

93.

Second, Google’s AFA and ACC compatibility standards require

15

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

16

to offer frictionless direct downloading of apps outside Google Play.

17

94.

Third, Google forecloses developers’ ability to effectively distribute18

Android app stores and apps directly to consumers outside the Google Play Store,

19

including by entering “exclusivity” agreements with certain OEMs ensuring that Google

20

Play is the only app store that may be pre-installed on the devices the OEMs sell.

21

95.

As Google’s own documents recognize, pre-installation of apps and22

app stores by an OEM presents a unique and particularly important opportunity for23competing app distributors and app developers to reach Android users outside Google

24

Play, especially new distributors seeking a foothold in Android app distribution. An

25OEMs’ pre-installation of an icon corresponding to an app or app store on the device

26

provides users of those devices convenient, trusted access to apps or app stores, without

27

requiring consumers to seek out and acquire such apps or app stores on their own.

28

Some OEMs may even compete for device buyers by offering mobile devices thatFirst Amended Complaint for Injunctive Relief

34Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 39 of 85

1provide such easy access to desirable apps and app stores. For example, as described2

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

3version of Fortnite for OnePlus, an Android OEM, in exchange for OnePlus’s

4agreement to enable a “one-touch” installation of Fortnite on its devices—only for that

5agreement to be blocked by Google’s anti-competitive conduct.
96.

6

Fearful that Epic and others would successfully begin distributing

7

competing app stores in this way, Google designed and undertook coercive steps to8

foreclose this possibility. Specifically, Google has since 2019 entered agreements with

9certain OEMs restricting the OEMs from pre-installing other app stores on most or all of10

the new Android devices they sell. Pursuant to these exclusivity agreements, Google

11

agrees to share with OEMs monopoly profits Google earns from its Search business

12(and in some cases, profits from the Play Store itself), in exchange for these OEMs’

13

agreement not to pre-install alternative app stores. As described below, Google reached14

these agreements after specifically recognizing the competitive threat to its monopoly

15

that Epic and other potential Android app distributors posed and Google intentionally16

designed these agreements to lock in Google’s monopoly power in “high monetizing”

17

geographies.

18

97.

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

19

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

20

became Epic Games Launcher) that could be directly downloaded from its website and21then used to install Fortnite (and, later, other Epic apps) on Android devices. Epic also

22

entered into a Collaboration Agreement with Samsung pursuant to which Samsung

23

would make available Fortnite to users of Samsung devices via the Samsung Galaxy

24

Store. Historically, Samsung’s app store had performed poorly—Google estimated that25

users spent only 3% of the time on the Samsung Galaxy Store that they spent on the26

Google Play Store. But Epic’s partnership with Samsung and determination to bypass

27

Google Play for distribution of Fortnite struck fear into senior Google executives, not28

only because it meant the loss of 30% of revenues that would be generated by theFirst Amended Complaint for Injunctive Relief

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1

Android version of one of the most popular apps in the world, but also because Epic was2paving the way for other Android app developers to distribute their apps without relying

3

on Google Play.

4

98.

In particular, documents that Google’s Finance Director for

5

Platforms and Ecosystems prepared for the CFO of Alphabet around the time of

6

Fortnite’s launch on Android showed that Google feared what it termed a “contagion

7risk” resulting from more and more app developers forgoing Google Play. Google

8

feared that the “contagion” would spread in this way: first, inspired by Epic’s example,

9“[p]owerful developers” such as “Blizzard, Valve, Sony, Nintendo”—creators of some10of the most popular and profitable entertainment—would be “able to go on their own”,

11

bypassing Play by directly distributing their own apps. Then, other “[m]ajor

12developers”, including Electronic Arts, King, Supercell and Ubisoft, will choose to “co-13

launch off Play”, collaborating to forego Google’s distribution services as well. And

14

finally, Google even identified a risk that “[a]ll remaining titles [will] co-launch off

15Play”. Google calculated the total at-risk revenue from the threatened loss of market

16

share in Android app distribution to be $3.6B, with the probability-weighted loss

17

“conservative[ly]” estimated at $550M through 2021. Google also recognized that the18“[r]ecent Fortnite + Samsung partnership further amplifies risk & urgency of problem”

19

facing its monopoly position in Android app distribution. Google was determined not to20

let this happen.

21

99.

The first step Google took to prevent this “contagion” was its

22

decision to offer Epic a special deal to launch Fortnite on Google Play. In July 2018,23

senior Google executives held a special, irregular “off-cycle” meeting of its Business24

Council, comprised of some of the Google’s highest ranking executives including25

Alphabet’s CFO. At this meeting, the Google Play team sought approval for a26“[c]ustom, cross-PA [cross–product area] partnership with Epic Games worth up to27$208M (incremental cost to Google of $147M) over 3 years”. The notes from this28

meeting indicate that Google believed Epic was choosing to distribute Fortnite off
First Amended Complaint for Injunctive Relief

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1

Google Play “to express frustration [about] closed ecosystems (iOS, consoles) through2

use of [direct downloading] on Android to distribute via their website” and that such an

3

action would “threaten Play revenue ($130M) and [the] broader business model”. The

4

rationale for the deal also included the “[h]igh risk of contagion”, with “up to $310M in

5revenue at risk”. When one Google executive asked for “the exact Play store rev share

6

if we can get to the deal with them”, a Director of Finance responded that “[t]he key

7premise of this proposal is that we would protect the rev share terms and hold them at8

the 70/30 split in line with our current business model to ensure we don’t establish a9precedent that puts at risk our broader ecosystem”. He represented to the Business10

Council that the additional revenue share to Epic was roughly 5%, meaning, after

11

accounting for the special benefits Google had determined to offer, Google would

12

receive an effective discounted revenue share of 25% rather than the standard 30%

13share. The Business Council approved the offer to Epic.

14

100. As part of these efforts, senior Google Play managers began reaching15

out to Epic. One manager contacted Epic’s Vice President and Co-Founder to gauge

16

Epic’s interest in a special deal and, among other things, discussed “the experience of

17getting Fortnite on Android” via direct downloading. The manager’s call notes state

18

that she viewed direct downloading Fortnite as “frankly abysmal” and “an awful

19

experience”, and that Epic should “worry that most will not go through the 15+ steps”.

20

101. Google recognized that Epic might not accept its offer. “As a21potential alternative”, a senior Google executive proposed that Google “consider

22

approaching Tencent”, a company that owns a minority stake in Epic, “to either (a) buy

23

Epic shares from Tencent to get more control over Epic”, or “(b) join up with Tencent to24

buy 100% of Epic”. Another senior Google executive suggested that if Epic chose not25

to launch Fortnite on Google Play, Google could “lock down Play/Android and [not]26

allow sideloading (or make it very hard to sideload (policy position or even architecture)27- difficult move in the face of the EC decision but we have good privacy/security

28

arguments about why sideloading is dangerous to the user)”.
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1

102.

Epic rejected Google’s special deal, opting instead to distribute2

Fortnite for Android via Epic’s website and through a partnership with the large

3

Android OEM, Samsung. In the immediate wake of that decision, to discourage

4

consumers from direct downloading Fortnite, the Google Play security team began

5collecting “exciting” statistics on “fake apps caught by [Google Play Protect] from off-

6

Play downloads” that it shared not with Epic or users, but rather with a Google

7

Communications Manager for use in “coverage” by journalists of Epic’s decision to8launch Fortnite off Google Play.

9103. More broadly, Epic’s decision to launch Fortnite for Android off

10

Google Play motivated Google to execute a series of anticompetitive actions to limit the11“contagion”. Among other initiatives discussed below, Google increased its focus on

12

the nascent competitive threats posed by Epic and others who may be able to offer

13

alternative app stores on Android, including by negotiating for pre-installation of such14

app stores with OEMs. In a 2019 presentation prepared by Google Play’s finance team,

15

Google estimated that the most likely scenario among the scenarios it considered was

16that Epic would strike a deal for the distribution of its Epic Games Store with “1 mobile

17

OEM” or as many as “3-5 mobile OEMs”, in addition to the Collaboration Agreement it

18

had entered with Samsung. Google forecasted that Epic’s Android store would attract

19

numerous developers who would “migrate Mature Western/US titles to Epic store”,

20

which would capture “50% spend in those games on those devices”. Indeed, Google

21

recognized that Epic’s entry could dramatically reduce the barriers faced by new market

22

entrants: “[e]very developer that follows Epic’s path & launches on the Epic store will23

have less friction & a larger addressable user base than title before it”. And even if a24

developer attracted fewer users by supporting a new market entrant rather than relying

25

on Google Play, they could still earn more revenue due to the favorable 88/12 revenue

26

share offered by the Epic Games Store: “[d]evelopers can afford to take a ~20%27

performance hit on Epic store (due to 88% rev share) and still break-even”. In the 201928

document, Google estimated that entry by Epic Games Store alone threatened a “[m]ost
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1[l]ikely loss” of $350M of Google’s monopoly revenue, and a “[m]ax risk” of $1.4B, by

22022; Google also identified a probability weighted combined loss of $1.1B and $6B of

3total at-risk revenue “if other store(s)”, including those distributed by Samsung and4

Amazon, were able to “gain full traction”.

5104. Recognizing the threat that preinstalled app stores could pose to

6

Google Play’s dominance, Google took action to ensure that OEMs would not enter into

7

partnerships with distributors like Epic. Less than a year after having been found by the8

European Commission to have monopoly power in an Android app distribution market,

9

Google devised and executed a plan to eliminate the risk of the “contagion” of

10competition that was threatening Google’s monopoly.

11105. Google’s anticompetitive conduct proceeded in this way: Google

12

began offering OEMs the chance to participate in its “Premier Device Program”

13

beginning in 2019. Although Google had previously offered OEMs that signed its

14

restrictive MADAs the chance to participate in an RSA, the new “Premier” tier RSAs

15

and similar agreements contain even more restrictions on OEMs. Google’s own

16

documents recognize that the “Premier” tier agreements mandate “Google exclusivity

17and defaults for all key functions: No apps with APK install rights” on Premier devices,18

meaning that the OEM cannot install any apps with the ability to install other apps (in19other words, app stores, or the Fortnite Launcher Epic sought to distribute outside of20Play). Google recognized that the new Premier agreements result in “Exclusivity” for21

Google Play on covered devices. In exchange for these exclusivity commitments,

22

Google offered OEMs various forms of financial incentives, including 4% of Google’s

23

Search revenues earned on the covered devices (on top of the 8% of Search revenues

24

Google already commits to OEMs who sign a non-Premier RSA and a MADA), as well25

as other financial incentives such as monthly bonuses. For certain OEMs, including LG

26

and Motorola, Google also agreed to pay between 3-6% of “Play spend” incurred on

27

Premier devices manufactured by the OEMs, structuring the deal “to increase overall

28

appeal” and lock-in its monopoly power in “high monetizing [geographies]” (such as inFirst Amended Complaint for Injunctive Relief

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1

the United States, where LG and Motorola sell the most popular Android mobile2

devices outside of Samsung devices). Google’s RSAs play a significant role in inducing

3

OEMs to sign a MADA, because OEMs cannot have the benefits of an RSA without

4

being a party to a MADA.

5

106. Although the exact terms of the agreements vary, to take one

6illustrative example, Google executed a “Premier” tier RSA with OEM HMD Global,

7

which sells Nokia-branded mobile devices, effective December 1, 2019, through8

November 30, 2022.

9107. Section 5.1 of Google’s RSA with HMD Global requires that each10“Premier Device” (i.e., those devices that comply with all restrictions contained in

11

Section 5) comply with “all requirements set forth in Attachment C (Premier Service

12

Access Points)”, which mandates that the Google Play app “[i]con is placed on the13

Default Home Screen and Google Play app is set as default marketplace for

14

applications, games, books, movies, music, and all other digital content (including

15

subscriptions)”.

16108. Moreover, under Section 5.1(d), HMD Global is required to comply

17with the “Premier Device Program Requirements Document”. Epic believes based on

18

the reference in the RSA to “restriction[s] on the installation of applications with

19

INSTALL-PACKAGE permissions set forth in Section 3.7 (Application Preloads) of the20

Premier Device Program Requirements”, that this document is likely to contain further

21

anticompetitive requirements. Google also has published “Premier Tier Program

22

Requirements” on its “Android Partners” website—a document that appears to be23

related to the “Premier Device Program Requirements Document” that Google has not24

yet produced. There, Google provides again that Android OEMs releasing devices

25

designated as “Premier” must not include apps that might compete with Google Play. In

26

Section 3.7, Google commands that “[a]pplication preloads” “MUST NOT contain

27

INSTALL_PACKAGES permissions”, i.e. must not be able to install other applications,28

an essential function of an app store. Google further instructs that pre-loaded apps
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1“MUST NOT overlap with the following Google preloads in terms of the applications,

2

features or functionality: . . . Google Play”. Google also expressly prohibits “[first-

3

party] installers and [third-party] engines powering [first-party] installers . . . without

4

Google’s prior review and approval”, and makes clear that such installers may not5“promote Alternative Services”, which includes alternative app stores. Further,6

preloaded apps that are permitted “MUST be available in Google Play”, further ensuring

7

that Android app developers cannot forego Google’s app distribution services or the8anti-competitive restrictions Google imposes on developers.

9109. As a further restriction, Section 5.2, relating to the configuration of

10

Google Play and other Google Apps, requires that HMD Global agree that it “will not . .

11. include in any manner on a Premier Device . . . any Alternative Service, or any

12

application, bookmark, product, service, icon, launcher, Hotword, Gesture, or

13functionality that has the primary purpose of providing access to any Alternative

14

Service” nor may “introduce, promote, or suggest (including via over-the-air prompt) an

15

Alternative Service to an End User”. The agreement defines Alternative Service as

16

including any “Alternative Play Service”, defined as “any service that is substantially17

similar to Google Play (as determined by Google in its sole discretion)”.

18

110. In addition, under Section 11.1, entitled “Shared Revenue”, Google

19

expressly conditions HMD Global’s receipt of “Shared Net Play Transaction Revenue”

20

and “Shared Net Ad Revenue” on HMD Global maintaining compliance with the21

requirements of “Sections 3 through 5 (regarding Device requirements)”.

22

111.

More recently, Google has reached agreements with OEMs in the23

form of “Mobile Incentive Agreements” (“MIAs”). In one such agreement involving

24

Motorola, Google conditioned Motorola’s receipt of “Monthly Incentives” on

25

Motorola’s promises not to “include in any manner on a Foundation Tier Device . . .

26

Any Alternative Service, or any application, service, or functionality that has the27

primary purpose of providing access to any Alternative Service” and not “to introduce,

28

promote or suggest (including via over-the-air prompt) an Alternative Service to an End
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1User” on such devices. The “Alternative Services” prohibited by Google include any

2“Alternative Play Service”, which is defined to mean “any service that is substantially3similar to Google Play (as determined by Google in its sole discretion”.

4112. Google’s efforts to foreclose competition in this way were a5resounding success. Within a matter of months after the Premier Device Program

6

began, Google recognized that the program had successfully eliminated the “risk of

7

contagion”. By May 2020, many of the world’s largest and most popular Android

8

OEMs had agreed to Google Play exclusivity for most of their new Android devices.

9

Motorola and LG—which Google had targeted for extra financial incentives—both

10committed nearly all (98% and 95%) of their devices to the Premier program. The giant

11

Chinese conglomerate BBK—which manufactures and sells a range of Android devices

12

under its Oppo, Vivo and OnePlus brands, among others—had designated around 70%

13of its new devices as “Premier”. Other brands participating in the program included

14

Xiaomi (40%), HMD (which manufactures devices with the Nokia Mobile brand)

15(100%), Sony (50%), Sharp (50%) and “Other” (80%). In a presentation prepared by16

and presented to senior Google Play executives, Google noted that in the short time

17

since the beginning of the program, over 200 million new devices were covered. The

18

same presentation shows that Google believed that the new RSAs successfully

19

eliminated the “risk of app developer contagion”; noting that there was “no risk” under20

the “Current Premier tier”.

21

113. In the same presentation, Google recognized that the Premier Device

22

Program had “impact[ed]” “Epic’s ability to preload” its apps by negotiating with

23

OEMs. Google’s Premier RSAs (and MIAs) thus intentionally and directly resulted in24

the substantial foreclosure of an important, alternative method of app distribution on

25

Android: installation by OEMs. Indeed, Epic had reached an agreement with OnePlus,26

one of the brands owned by BBK, to allow users of OnePlus mobile devices to27

seamlessly install Fortnite and other Epic apps by touching an Epic Games app on their28

devices—without encountering any obstacles typically imposed by the Android OS on
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1apps directly downloaded from developers. In conjunction with this agreement, Epic2

designed a version of Fortnite for certain OnePlus devices that delivers a state-of-the-art

3framerate (the frequency at which consecutive images appear on the device’s screen),

4

providing an even better user experience for Fortnite. Although the original agreement

5

between Epic and OnePlus contemplated making this installation method available

6

worldwide, Google demanded that OnePlus not implement its agreement with Epic with7

the limited exception of mobile devices sold in India. OnePlus informed Epic that8

Google was “particularly concerned that the Epic Games app would have ability to9potentially install and update multiple games with a silent install bypassing the Google

10

Play Store”.9 Further, OnePlus advised that any waiver of Google’s restriction “would

11

be rejected due to the Epic Games app serving as a potential portfolio of games and

12game updates”. As a result, OnePlus mobile device users in India can install Epic apps

13

seamlessly without using the Google Play Store, while users outside India cannot.

14114. Another OEM who participated in a Premier RSA, LG, also told

15

Epic that it had a contract with Google “to block side downloading off Google Play

16Store this year”, but that the OEM could “surely” make Epic apps available to17

consumers if the Google Play Store were used. Google prevented LG from pre-18

installing the Epic Games app on LG devices.

19

115. Google’s Premier Device Program was not publicly known, and was20

not known to Epic, before Google recently began producing relevant documents in this21

litigation. Google has sought to conceal its most restrictive anticompetitive conduct by,

22

among other things, including in the agreements themselves a provision restricting

23

signatories from making “any public statement regarding [the] Agreement without the24other party’s prior written approval”. Google then used the confidentiality it imposed25

on OEMs to argue, in its Motion to Dismiss, that Android OEMs are not prohibited

26

from “pre-installing alternative app stores”, and that Epic failed to sufficiently allege the

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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1

exclusivity agreements it concealed. (Dkt. 91 at 9 (“OEMs retain the ability under the2

MADAs to pre-install . . . competing app stores”); see also id. at 8 (“Plaintiffs also

3

challenge Google’s agreements with OEMs, which they claim ‘discourage’—but do not4claim prohibit—OEMs from pre-installing alternative app stores”); id. at 15 (“Plaintiffs’

5allegations fall short of alleging actual foreclosure or exclusivity, and Plaintiffs do not6

allege the MADAs prohibit OEMs from pre-installing rival app stores” (emphasis in

7

original)); id. at 17 (“Nor is there any allegation that MADAs prevent rival app stores

8

from being pre-installed elsewhere on a device.”).) Google’s representations also

9

obscured its efforts to ensure that Google Play would retain exclusivity on the default

10

screen through other OEM agreements. (Dkt. 91 at 17 (“There is no allegation that

11

MADAs prevent rival app stores from also being pre-installed on the home screen . .

12.”).) The revelations in Google’s recent document productions (which are thus far

13

incomplete) make clear that the exceedingly carefully phrased arguments and14

representations Google made in connection with its Motion to Dismiss are inconsistent15

with Google’s own documents.

16

116. In the absence of this conduct, Epic could and would negotiate with

17

OEMs to make Fortnite and other Epic apps directly available to consumers, free from

18

Google’s anti-competitive restraints. OEMs could then compete for the sale of mobile

19

devices based in part on the set of apps offered on the OEMs’ devices. But Google

20

substantially forecloses alternative ways of distributing Android apps other than through21

its own monopolized app store, harming competition among OEMs and among app

22

developers, to the detriment of consumers.

23

117. Google has also historically leveraged revenue share agreements to24

discourage mobile network operators (“MNOs”) from creating competing app stores.

25

Many consumers contract with an MNO to enable their devices to communicate and26

access the Internet over cellular networks. Prominent MNOs in the United States

27

include AT&T Mobility, T-Mobile, and Verizon Wireless. In 2009, shortly after the28

launch of Android and Google Play’s predecessor, Android Market, Google beganFirst Amended Complaint for Injunctive Relief

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1

discussing using revenue share agreements to address the “challenge” of MNOs and2OEMs looking to create their own app stores. Google’s goal was to “[i]ncentivize

3

partners[s] to drive developer and user communities towards Android market”.

4118. Google increased the market share of Android Market by adopting

5

revenue share agreements that split the revenue from app purchases with certain MNOs.

6

Google knew at the time that “Mobile operators are not willing to give up the revenue

7

stream on content distribution . . . Will block Market if we don’t share revenue”.

8

Beginning in 2009, Google entered into revenue share agreements with various MNOs

9that split Android Market revenue between app developers, MNOs, and Google. Under10

these arrangements, app developers typically received 70% of a given purchase, while

11

MNOs received 20-25% and Google received the remaining 5-10% for its operating and

12transaction costs. Google understood that this 20-25% revenue share for MNOs

13“[p]rovide[d] incentive for operators to distribute Android market” by “offset[ting the]14

opportunity cost” of giving up their own app distribution channels.

15

119. In its Motion to Dismiss, Google has argued that the existence of

16

Samsung’s Galaxy Store—which exists only on devices that Samsung sells—is17

somehow “fatal to Plaintiffs’ claim of actual foreclosure”. But documents discussing

18

Google’s “Project Banyan” demonstrate how Google attempted to negotiate a deal with

19

Samsung that would prevent the Galaxy Store from becoming a competitive threat and20

impose Google’s anti-competitive Google Play Billing tie on apps distributed by

21

Samsung. In April 2019, Google executives traveled to Korea to meet with Samsung to

22

discuss an “app distribution” proposal. Internal documents presented to Google’s

23

Business Council reveal the details of this proposal. First, Google sought Samsung’s

24agreement that Google Play would host the apps and games distributed by the Galaxy

25

Store and that Google Play would provide “infrastructure support to Galaxy Store

26(including Play Billing)”, ensuring that Google’s in-app payment solution would be

27

used in apps distributed through the Galaxy Store. Because Samsung would thus “forgo

28

store services revenue”, Google planned to make annual payments to Samsung of “up toFirst Amended Complaint for Injunctive Relief

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1$60M, which was Google’s top-end estimate of the “current . . . operating profit of [the]2Galaxy Store” but a small fraction of the “likely 2022 margin risk to Play”. Second, the3Business Council documents indicate that Google sought Samsung’s agreement that

4“Play and Galaxy Store” would be the “only app stores on Default Home Screen”,

5

ensuring that Samsung could not provide convenient placement to any other competing6

app store. Google recognized that such a deal, in conjunction with a developer-focused

7plan described below called “Project Hug”, would “mitigate[] risk that top game8

developers de-prioritize Google Play for title distribution” and secure the “Play revenue

9/ margin at risk”, which was “up to $6B / $1.1B in 2022” alone. In an email exchange

10

following Google’s visit to Samsung’s headquarters in Korea, Samsung indicated that it

11

was “willing to accept [Google’s] proposal to distribute Android apps through [the12Google] Play store, with Samsung maintaining a front end of Galaxy store”, but asked

13

that Google allow users to choose between Samsung IAP and Google Play Billing. In

14internal emails that followed, Google Play and Android executives noted their

15

opposition to the idea of allowing Galaxy users even the option to use Samsung IAP,

16

and one executive relayed ideas from the head of Android that in response to Samsung’s

17

request, Google could “[r]equest a revshare on [Samsung’s] hardware margin (I’m

18

serious) in exchange for their own IAP”, charge Samsung “a license fee for Play in

19exchange for their own IAP”, or “[o]ffer revshare or bounty for IAP on Play if they20

don’t have their own IAP platform”.

21

120. Project Banyan was not Google’s first attempt to buy out Samsung’s

22

app store. Google emails show that in 2011, senior Android executives were “having

23

discussions with Samsung to get them to stop distributing apps through Samsung App

24

store”. Other documents reveal that in late 2013, Google again met with Samsung to

25

discuss the possibility that “Samsung Apps should no longer compete directly with

26

Google Play”, that it would “only have 200 apps” that would appear “for limited time”

27

and be “boutique and complimentary [sic] to Google Play”, and that “Samsung Apps

28

could link to Google Play for many purchases if the right infrastructure is in place”. As
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1

one Google employee explained, “Samsung’s duplication of our services on Android is2

one of the critical issues with the partnership right now. Samsung Apps relative to3

Google Play is one of the most glaring.”

4121. Google ultimately chose not to pursue Project Banyan as authorized

5by the Business Council. However, the Complaint filed by 36 States and the District of

6

Columbia in State of Utah, et al. v. Google LLC, et al., alleges that Google then sought

7“a different implementation toward the same anticompetitive goal” as part of a new8

effort, “Project Agave”. Epic does not have the details of any deal Google reached9with Samsung as part of Project Agave because Google has not yet produced many10

underlying documents to Epic, and Google has maintained redactions over the States’

11

relevant allegations when Google produced the States’ Complaint to Epic. But

12documents that Google has produced to Epic reveal that Google sought an “[i]ndividual

13

surgical deal[]” with Samsung, in which Google would secure, among other things,

14“play protections” and in exchange give Samsung a “rev share on browsers and15

assistant”, a percentage “of Play rev share on IAP powered by Google”, and “Billing

16

integrations for App Gallery”.

17

Google’s Conduct Toward App Distributors and Developers

18

122. Google imposes anti-competitive restrictions on competing app

19

distributors and developers that further entrench its monopoly in Android App

20

Distribution.

21

123. First, Google prevents app distributors from providing Android users

22

ready access to competing app stores. Specifically, even though competitive app stores23

themselves are mobile apps that could easily be distributed through the Google Play

24

Store, Google prohibits the distribution of any competing app store through the Google

25

Play Store, without any technological or other justification.

26

124. Google imposes this restraint through provisions of the Google Play27

Developer Distribution Agreement (“DDA”), which Google requires all app developers

28
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1

to sign before they can distribute their apps through the Google Play Store. Each of the2

Defendants, except Google Payment, is a party to the DDA.

3125. Section 4.5 of the DDA provides that developers “may not use

4

Google Play to distribute or make available any Product that has a purpose that5

facilitates the distribution of software applications and games for use on Android

6

devices outside of Google Play.” The DDA further reserves to Google the right to7

remove and disable any Android app that it determines violates this requirement. The

8

DDA is non-negotiable, and developers that seek access to Android users through the9

Google Play Store must accept Google’s standardized contract of adhesion.

10

126. In the absence of these unlawful restraints, competing app

11

distributors could allow users to replace or supplement the Google Play Store on their12

devices with competing app stores, which users could easily download and install13

through the Google Play Store. App stores could compete and benefit consumers by

14

offering lower prices and innovative app store models, such as app stores that are

15

curated to specific consumers’ interests—e.g., an app store that specializes in games or

16

an app store that only offers apps that increase productivity. Without Google’s unlawful

17

restraints, additional app stores would provide additional platforms on which more apps

18

could be featured, and thereby, discovered by consumers. Epic has been damaged

19

through its inability to provide a competing app store (as it does on personal computers)

20

and by the loss of the opportunity to reach more Android users directly in the ways that

21

personal computers allow developers to reach consumers without artificial constraints.

22127. Second, Google conditions app developers’ ability to effectively

23

advertise their apps to Android users on being listed in the Google Play Store.

24

Specifically, Google markets an App Campaigns program that, as Google says, allows

25

app developers to “get your app into the hands of more paying users” by “streamlin[ing]26

the process for you, making it easy to promote your apps across Google’s largest

27

properties”. This includes certain ad placements on Google Search, YouTube, Discover28

on Google Search, and the Google Display Network, as well as with Google’s “searchFirst Amended Complaint for Injunctive Relief48Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 53 of 85

1partners”, that are specially optimized for the advertising of mobile apps. However, in2order to access this valuable advertising space through the App Campaigns program,

3

Google requires that app developers list their app in either the Google Play Store (to4reach Android users) or in the Apple App Store (to reach Apple iOS users). This5

conduct further entrenches Google’s monopoly in Android App Distribution by

6

coercing Android app developers to list their apps in the Google Play Store or risk

7losing access to a great many Android users they could otherwise advertise to but for

8

Google’s restrictions.

9128. Third, “responding to Epic’s decision to launch Fortnite completely

10

off of Play and build their own store, and the likeliness of others to follow suit or11

consider launching off Play on other stores (notably Samsung)”, Google launched an

12initiative called “Project Hug”, now referred to as the Games Velocity Program. As

13

explained by Android executives in internal documents, Project Hug, which was created14

and developed alongside Project Banyan, was “a hug developers close and show love15

plan”, or “a surge plan to throw extra love/promotion to top developers and games

16(including Tencent portfolio companies)”. As Google Play and Android executives

17

explained to the Business Council in April 2019, in the same presentation that secured

18

the approval of Project Banyan, Google’s plan was to spend hundreds of millions of19dollars on secret deals with over 20 top developers that were “most at risk . . . of20

attrition from Play”, in order to prevent these developers from competing with Google

21

Play and inspiring the widespread “contagion” effect that Google feared. Google’s

22

documents reveal that a majority of the Project Hug developers were “[a]gitated or23

inquired about revenue share”, and several had “[c]onsidered [their] own distribution

24

and/or payments platforms”. Other Project Hug presentations prepared for senior

25

executives note that “Fortnite would have been substantially more successful had they26

launched on Play”, but “other developers might follow Epic’s path for various reasons”.

27

The Business Council approved Project Hug as part of a package with Project Banyan

28First Amended Complaint for Injunctive Relief49Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 54 of 85

1and, by December 2020, Google had signed deals with the vast majority of the2

developers it targeted.

3
4

Google’s Conduct Toward Consumers
129. Google directly and anti-competitively restricts the manner in which

5consumers can discover, download and install mobile apps and app stores. Although

6

Google nominally allows consumers to directly download and install Android apps and7

app stores—a process that Google pejoratively describes as “sideloading”—Google has

8ensured, through a series of technological impediments imposed by the Android OS,

9that direct downloading remains untenable for most consumers.

10130. But for Google’s anticompetitive acts, Android users could freely

11

download apps from developers’ websites, rather than through an app store, just as they12

might do on a personal computer. There is no reason that downloading and installing an

13

app on a mobile device should differ from downloading and installing software on a14

personal computer. Millions of personal computer users download and install software

15

directly every day, such as Google’s own Chrome browser or Adobe’s Acrobat Reader.

16

Personal computer users do this easily and safely.

17

131. Direct downloading on Android mobile devices, however, differs

18

dramatically. Google ensures that the Android process is technically complex,

19

confusing and threatening, filled with dire warnings that scare most consumers into

20

abandoning the lengthy process. Google understands this, and staff members have21

acknowledged internally that the difficulty Google imposes on consumers who wish to22

direct download leads to a “[p]oor user experience,” in that there are “15+ steps to get

23

app [via sideloading] vs 2 steps with Play or on iOS”. For example, depending on the24version of Android running on a mobile device, downloading and installing Fortnite or

25

any other Epic app on an Android device could take as many as 16 steps or more,

26

including requiring the user to make changes to the device’s default settings and27

manually granting various permissions while being warned that doing so is dangerous.

28
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1

Below are the myriad steps an average Android user has to go through in order to2

download and install Fortnite directly from Epic’s secure servers.

3
4
5
6
7
8
9
10
11
12
13

132. Below are two of the intimidating messages and warnings about the

14

supposed danger of directly downloading and installing apps that consumers encounter

15

during this process.

16
17
18
19
20
21
22
23
24
25
26
27
28
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1
2
3
4
5
6
7
8
9
10
11
12
13
14

133. 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. Google further restricts direct downloading under the guise of26

offering protection from malware. When Google deems an app “harmful”, Google may

27

prevent the installation of, prompt a consumer to uninstall, or forcibly remove the app

28

from a consumer’s device. And direct downloading has been prevented entirely on theFirst Amended Complaint for Injunctive Relief

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1

Android devices that are part of Google’s so-called Advanced Protection Program

2(“APP”). Consumers who have enrolled in APP are unable to directly download apps;

3

their Android device can only download apps distributed in the Google Play Store or in4

the rare instance of another pre-installed app store that Google has pre-approved for an

5

OEM to offer on its devices. App developers therefore cannot reach APP users unless6

they first agree to distribute their apps through the Google Play Store or through a7

separate Google-approved, OEM-offered app store, where available. Google’s

8

invocation of security is an excuse to further strangle an app developer’s ability to reach

9

Android users, as shown by a comparison to personal computers, where users can

10

securely purchase and download new software without being limited to a single

11

software store owned or approved by the user’s anti-virus software vendor.

12135. Direct downloading is also nominally available to competing app

13

distributors who seek to distribute competing Android app stores directly to consumers.

14

However, the same restrictions Google imposes on the direct downloading of apps apply

15

to the direct downloading of app stores. Indeed, Google Play Protect has flagged at

16

least one competing Android app store, Aptoide, as “harmful”, further hindering

17

consumers’ ability to access a competing app store.

18

136. Google prohibits apps downloaded from “sideloaded” app stores,

19

like apps directly downloaded from a developer’s website, from being automatically20

updated in the background. 10 Thus, direct downloading is not a viable way for app

21

stores to reach Android users, any more than it is a viable alternative for single apps; the22

only difference is that the former do not have any alternative, ensuring the latter are23

forced into the Google Play Store.

24
25

137. Google understands that the myriad barriers it erects to direct
downloading have the effect of protecting its app distribution monopoly and limiting

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 to use 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/android-12-beta/.
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1

developers’ ability to distribute their apps. In an internal document titled “Response to2Epic”, a Google employee explained that the “install friction” associated with direct3

downloading was “not only a bad experience” for users but that Google knew “from its

4

data that it will drastically limit [Epic’s] reach”. The document goes on to explain that

5“[f]uture [Fortnite] updates will be challenged re: targeting, update experience via

6web”; that the direct downloading approach was “most associated with malicious apps”,

7

which would be “incompatible with [Epic’s] brand/demographics”; and that “[t]he8

approach will create significant user confusion, since [Google Play] will still attract

9[billions] of users who will search for Fortnite and run into deadends that aren’t clear

10

how to resolve”.

11138. But for Google’s restrictions on direct downloading, Epic and other12

app distributors and developers could directly distribute their stores and apps to those13

consumers who would be open to a process outside an established app store. But as14

explained above, Google makes direct downloading substantially and unnecessarily

15

difficult, and in some cases prevents it entirely, further narrowing this already narrow

16

alternative distribution channel.

17139. There is no legitimate reason for Google’s conduct. Indeed, for18

decades the users of personal computers have been able to install software acquired

19

from various sources without being deterred by anything like the obstacles erected by

20

Google. For many years, a user has been able to navigate to the Internet webpage

21

sponsored by the developer of software he/she desires, click once or twice to download

22

and install an application, and be up and running, often in a matter of minutes. The

23

operating systems used by personal computers efficiently facilitate this download and24

installation (unlike Android), and security screening is conducted by a neutral security

25

software operating in the background, allowing users to download software from any

26source they choose (unlike Android).

27
28140. Google’s anti-competitive and unjustified restrictions on distributing
apps through any means other than its own app store contradict its own claims thatFirst Amended Complaint for Injunctive Relief

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1

Android app developers can “us[e] any distribution approach or combination of2

approaches that meets your needs”, and that developers can even provide consumers

3“apps from a website or [by] emailing them directly to users.” 11 In reality, Google

4

specifically prevents app developers from effectively availing themselves of alternative

5

distribution channels that Google touts as available.
141. Through these anti-competitive acts, including contractual provisions

6
7

and exclusionary obstacles, Google has willfully obtained a near-absolute monopoly

8over Android mobile app distribution. Google Play Store downloads have accounted for

9more than 90% of downloads through Android app stores, dwarfing other available

10

distribution channels.
D.

11
12

Anti-Competitive Effects in the Android App Distribution Market
142. Google’s anti-competitive conduct has substantially foreclosed

13

competition in the Android App Distribution Market, affecting a substantial volume of14

commerce in this Market and causing anti-competitive harms to OEMs, competing

15

mobile app distributors, mobile app developers, and consumers.

16

143. Google’s conduct harms OEMs by forcing them to dedicate to the17

Google Play Store and other mandatory Google applications valuable space on their18

devices’ “home screen”, even if they would rather use that real estate for other purposes,

19

including to offer alternative app stores. Individually and together, these requirements

20

limit OEMs’ ability to innovate and compete with each other by offering innovative and21

more appealing (in terms of price and quality) distribution platforms for mobile apps.

22

Google’s restrictions also interfere with OEMs’ ability to compete with each other by

23

offering Android devices with tailored combinations of pre-installed apps that would

24

appeal to particular subsets of mobile device consumers.

25
26
27
28

11

Google Play Developers Page, Alternative Distribution Options,
https://developer.android.com/distribute/marketing-tools/alternative-distribution (last accessed July 20,2021).
First Amended Complaint for Injunctive Relief

55Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 60 of 85

1144. Google’s conduct harms would-be competitor app distributors, such2

as Epic, which could otherwise innovate new models of app distribution and provide

3

OEMs, app developers, and consumers choice beyond Google’s own app store.

4

145. Google’s anti-competitive conduct harms app developers, such as

5

Epic, which are forced to agree to Google’s anti-competitive terms and conditions if

6they wish to reach many Android users, such as through advertising on Google’s

7

valuable advertising properties. Google’s restrictions prevent developers from

8experimenting with alternative app distribution models, such as providing apps directly9

to consumers, selling apps through curated app stores, creating their own competing app

10

stores, or forming business relationships with OEMs who can pre-install apps. By

11

restricting developers in such a way, Google ensures that the developer’s apps will be

12

distributed on the Google Play Store, and that Google is then able to monitor and collect

13

a variety of information on the apps’ usage, which it can then use to develop and offer

14

its own competing apps that are, of course, not subject to Google’s supra-competitive

15

taxes.

16

146. Both developers and consumers are harmed by Google’s supra-

17

competitive taxes of 30% on the purchase price of apps distributed through the Google

18

Play Store, which is a much higher transaction fee than would exist in a competitive19

market. Google’s supra-competitive taxes raise prices for app developers and20

consumers and reduce the output of mobile apps and related content by depriving app

21

developers incentive and capital to develop new apps and content.

22147. Consumers are further harmed because Google’s control of app

23

distribution reduces developers’ ability and incentive to distribute apps to consumers in

24

different and innovative ways—for example, through genre-specific app stores. By

25

restraining the distribution market and eliminating the ability and incentive for26

competing app stores, Google also limits consumers’ ability to discover new apps of27

interest to them. More competing app stores would permit additional platforms to28

feature diverse collections of apps. Instead, consumers are left to sift through millions
First Amended Complaint for Injunctive Relief

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1

of apps in one monopolized app store, where Google controls which apps are featured

2and identified or prioritized in user searches.
III. Google Unlawfully Acquired and Maintains a Monopoly in the Android InApp Payment Processing Market.

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

148. By selling digital content within a mobile app rather than (or in
addition to) charging a price for the app itself, app developers can make an app widely
accessible to all users, then charge users for additional digital content or features, thus
still generating revenue from their investment in developing new apps and content. Thisis especially true for mobile game developers. By allowing users to play without upfront costs, developers permit more players to try a game “risk free” and only pay forwhat they want to access. Fortnite, for example, is free to download and play, but
makes additional content available for in-app purchasing on an à la carte basis or via a
subscription-based Battle Pass. App developers who sell digital content rely on in-app
payment processing solutions to process consumers’ purchases in a seamless andefficient manner.
149. When selling digital content, Android app developers are unable toutilize the multitude of electronic payment processing solutions generally available on
the market to process other types of transactions. Instead, through contractual
restrictions and its monopoly in app distribution, Google coerces developers into using
its own in-app payment processing solution by conditioning developers’ use of Google’s
dominant Google Play Store on the use of Google’s payment processor for digitalcontent, thereby acquiring and maintaining monopoly power in the Android In-App
Payment Processing Market. Google thus ties its Google Play Store to its own
proprietary payment processing solution, Google Play Billing, substantially foreclosing
competition.
A.

The Android In-App Payment Processing Market
Product Market Definition
150. There is a relevant antitrust market for payment processing solutions

for the purchase of digital content, including virtual gaming products, that is consumed
First Amended Complaint for Injunctive Relief

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1within Android apps (the “Android In-App Payment Processing Market”). The Android

2

In-App Payment Processing Market includes the payment processing solutions that3

Android developers could integrate into their Android apps to process the purchase of

4such in-app digital content.

5151. Absent Google’s unlawful conduct, app developers could integrate a

6compatible payment processor into their apps to facilitate the purchase of in-app digital

7

content. Developers also would have the capability to develop their own in-app

8

payment processing functionality. And developers could offer users a choice among9

multiple payment processors, just like a website or brick-and-mortar store can offer a10customer the option of using Visa, MasterCard, Amex, Google Pay, and more.

11152. Google offers separate payment solutions for the purchase of digital

12

content and for other types of purchases even within mobile apps. Google Play Billing13

can be used for the purchase of digital content and virtual gaming products, while

14

Google offers a separate tool, Google Pay, to facilitate the purchase of physical products

15

and services within apps.

16

153. It is particularly important that app developers who sell in-app digital

17

content be able to offer in-app transactions that are seamless, engrossing, quick, and fun.

18

For example, a gamer who encounters a desirable “skin” within Fortnite, such as a

19

Marvel superhero, may purchase it nearly instantly for a small price without leaving the20

app. Although Fortnite does not offer content that extends gameplay or gives players

21competitive advantages, other game developers offer such products—for example,

22“boosts” and “extra lives”—that extend and enhance gameplay. It is critical that such

23

purchases can be made during gameplay itself, rather than in another manner. If a24

player were required to purchase game-extending extra lives outside of the app, the25player may simply stop playing.

26

154. As another example, if a user of a mobile dating app encounters a27

particularly desirable potential dating partner, he/she can do more than “swipe right” or28“like” that person, but can also purchase a digital item that increases the likelihood thatFirst Amended Complaint for Injunctive Relief

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1

the potential partner will notice his/her profile. If the user could not make that purchase2

quickly and seamlessly, he/she would likely abandon the purchase and may even stop3

“swiping” in the app altogether.
155. It is therefore essential that developers who offer digital content be4
5able to seamlessly integrate a payment processing solution into the app, rather than

6

requiring a consumer to go elsewhere, such as to a separate website, to process a

7transaction. Indeed, if an app user were directed to process a purchase of digital content

8outside of a mobile app, the user might abandon the purchase or stop interacting with9

the mobile app altogether.

10

156. Mobile game developers particularly value the ability to allow users

11

to make purchases that extend or enhance gameplay without disrupting or delaying that12

gameplay or a gamer’s engagement with the mobile app. For these reasons, and in the13

alternative, there is a relevant antitrust sub-market for payment processing solutions for14

the purchase of virtual gaming products within mobile Android games (the “Android

15

Games Payment Processing Market”).
Geographic Market Definition

16

157. The geographic scope of the Android In-App Payment Processing

17
18

Market is worldwide, excluding China. Outside China, in-app payment processing

19

solutions, such as Google Play Billing, are available on a worldwide basis. By contrast,

20

in-app payment processing solutions available in China are not available outside of

21

China, including because Google prevents the use of non-Google payment processing

22

solutions for all apps distributed through the Google Play Store, which as noted above

23

dominates distribution of apps outside of China.
B.
Google’s Monopoly Power in the Android In-App Payment Processing
Market24
25

158. Google has monopoly power in the Android In-App Payment

26

Processing Market and, in the alternative, in the Android Games Payment Processing

27

Market.

28
First Amended Complaint for Injunctive Relief

59Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 64 of 85

1159. For apps distributed through the Google Play Store, Google requires

2that the apps use only its own in-app payment processor, Google Play Billing, to process3

in-app purchases of digital content and for all purchases within Android games. And

4because 90% or more of Android-compatible mobile app downloads conducted through5

an app store have been done through the Google Play Store, Google has a monopoly in

6these Markets.

7160. For the vast majority of transactions, Google charges a 30%

8commission for Google Play Billing. 12 This rate reflects Google’s market power, which

9

allows it to charge supra-competitive prices for payment processing within the market.

10

Indeed, the cost of alternative electronic payment processing solutions, which Google

11

does not permit to be used for the purchase of in-app digital content or within Android

12

games, can be one tenth of the 30% cost of Google Play Billing.

13
14

Electronic Payment Processing Solution Base U.S. Rate 13

15

PayPal2.9%

16Stripe2.9%

17Square2.6%-3.5%

18

Braintree

2.9%

19
C.

20
21
22
23
24
25
26
27
28

Google’s Anti-Competitive Conduct Concerning the Android In-App
Payment Processing Market
161. Through provisions of the DDA that Google imposes on all

developers who seek to access Android users, Google unlawfully ties its Google PlayStore, through which it has a monopoly in the Android App Distribution Market, to its
own in-app payment processing solution, Google Play Billing. Section 3.2 of the DDA
12Seven months after this lawsuit was filed, Google instituted a new policy reducing the Play Store
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://androiddevelopers.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 orless in addition to the listed percentage.
First Amended Complaint for Injunctive Relief

60Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 65 of 85

1requires that Android app developers enter into a separate agreement with Google’s

2

payment processor, Defendant Google Payment, in order to receive payment for apps

3

and in-app digital content.

45

162. Further, Google’s Developer Program Policies, compliance withwhich Section 4.1 of the DDA makes obligatory, require in relevant part that:6• Developers offering “Play-distributed apps must use [Google Play

7

Billing] as the method of payment if they require or accept payment

8for access to features or services, including any app functionality,

9

digital content or goods”.

10• Developers offering products within any category of app

11

downloaded on Google Play must use Google Play Billing as the12method of payment, except for the following cases:

13
14
15
16

o Payment is primarily for physical products or services,o Payment is for digital content that may be consumed outsideof the app itself (e.g., songs that can be played on other music
players).

17

163. Google’s unlawful restraints in the DDA prevent app developers

18

from integrating alternative, even multiple, payment processing solutions into their19mobile apps, depriving app developers and consumers alike a choice of competing

20

payment processors. For example, Epic offers its own in-app payment processing

21

solution that it could integrate, alongside Google’s and others, into Epic mobile apps.

22

Epic consumers could then choose to process their payment using Google’s solution,

23

Epic’s solution, or another solution altogether. These restraints result in a substantial

24

foreclosure of competition.

25

164. In December of 2019, Epic submitted a build of Fortnite to Google

26

Play that enabled users to make in-app purchases through Epic’s own payment

27

processor. Upon review of the submission, Google Play rejected the application, citing28

its violation of Google’s Payments policy as well as an unrelated issue raised byFirst Amended Complaint for Injunctive Relief

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1

Google. In January 2020, Epic again submitted a Fortnite build that resolved the2unrelated issue but still enabled users to use Epic’s own payment processor. Google

3

again rejected Epic’s submission.

4165. Epic was prevented from offering Fortnite on the Google Play Store,

5

and therefore unable to reach many Android users, until it submitted a new version of

6

Fortnite that only offered Google Play Billing. Google has damaged Epic by

7

foreclosing it from the Android in-app payment processing market.

8166. Google has no legitimate justifications for its tie. If it were9

concerned, for example, about the security of its users’ payment information, then it

10

would not permit alternative payment processing for certain transactions made on

11

Android phones for physical products or digital content consumed outside an app. But

12

Google does allow alternative payment processing solutions in that context, with no13

diminution in security.
D.
Anti-Competitive Effects in the Android In-App Payment Processing
Market

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

167. Google’s conduct harms competition in the Android In-App
Payment Processing Market (and, in the alternative, in the Android Games Payment
Processing Market) and injures app developers, consumers, and competing in-app
payment processors. Google’s conduct substantially forecloses competition.
168. Google’s conduct harms would-be competitor in-app payment
processors, who would otherwise have the ability to innovate and offer consumers
alternative payment processing solutions that offer better functionality, lower prices,and better security. For example, in the absence of Google’s Developer Program
Policies, Epic could offer consumers a choice of in-app payment processor for eachpurchase made by the consumer, including a choice of Epic’s own payment processor ata lower cost and with better customer service.
169. Google also harms app developers and consumers by inserting itself
as a mandatory middleman in every in-app transaction. When Google acts as payment
processor, Epic is unable to provide users comprehensive customer service relating toFirst Amended Complaint for Injunctive Relief

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1

in-app payments. Google has little incentive to compete through improved customer

2

service because Google faces no competition and consumers often blame Epic for3

payment-related problems. In addition, Google is able to obtain information concerning

4

Epic’s transactions with its own customers, which Google could use to give its ads and5

Search businesses an anti-competitive edge, even when Epic and its own customers

6

would prefer not to share their information with Google. In these ways and in others,

7

Google directly harms app developers’ relationships with the users of their apps.

8

170. Finally, Google raises app developers’ costs and consumer prices

9through its supra-competitive 30% tax on in-app purchases, a price it could not maintain10

if it had not foreclosed competition for such transactions. The resulting increase in

11

prices for in-app content likely deters some consumers from making purchases and12

deprives app developers of resources they could use to develop new apps and content.

13

The supra-competitive tax rate also reduces developers’ incentive to invest in and create

14

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)

15
16
17
18
19
20
21
22

171. Epic restates, re-alleges, and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
172. 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.
173. The Android App Distribution Market is a valid antitrust market.

23
24
25
26
27
28

174. Google holds monopoly power in the Android App Distribution
Market.
175. Google has unlawfully maintained monopoly power in the Android
App Distribution Market through the anti-competitive acts described herein, including
conditioning the licensing of the Google Play Store, as well as other essential Google
First Amended Complaint for Injunctive Relief

63Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 68 of 85

1services and the Android trademark, on OEMs’ agreement to provide the Google Play

2Store with preferential treatment. Google has done this by incentivizing OEMs to enter3

agreements that prevent alternative app stores from being installed on the default Home

4

Screen of Android devices and coercing OEMS into making the Google Play Store5exclusive on their devices, by restricting OEMs from offering frictionless downloading

6of apps outside of Google Play through compatibility standards in the AFA and ACC,

7

by imposing technical restrictions and obstacles on both OEMs and developers which

8

prevent the distribution of Android apps through means other than the Google Play

9Store, and by conditioning app developers’ ability to effectively advertise their apps to10

Android users on being listed in the Google Play Store.

11
12

176. Google’s conduct affects a substantial volume of interstate as well as
foreign commerce.

13177. Google’s conduct has substantial anti-competitive effects, including

14

increased prices and costs, reduced innovation and quality of service, and lowered15

output.

16

178. As a potential competing app distributor and as an app developer,

17

Epic has been harmed by Defendants’ anti-competitive conduct in a manner that the18

antitrust laws were intended to prevent. Epic has suffered and continues to suffer

19

damages and irreparable injury, and such damages and injury will not abate until an

20

injunction ending Google’s anti-competitive conduct issues.
COUNT 2: Sherman Act § 1(Unreasonable restraints of trade concerning
Android App Distribution Market: OEMs)(against all Defendants except Google Payment)

21
22
23
24
25
26
27

179. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
180. Defendants’ conduct violates Section 1 of the Sherman Act, which
prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy,

28
First Amended Complaint for Injunctive Relief

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1

in restraint of trade or commerce among the several States, or with foreign nations”.

2

15 U.S.C. § 1.

3

181. Google has entered into agreements with OEMs that unreasonably

4

restrict competition in the Android App Distribution Market. These include MADAs

5

with OEMs that condition their access to the Google Play Store and other “must have”

6

Google services on the OEM offering the Google Play Store as the primary and often7

the only viable app store on Android mobile devices.

8182. These agreements also include exclusivity agreements that prevent

9

OEMs from pre-installing alternative app stores on a substantial portion of new Android

10

devices, including devices that are sold in markets with the largest monetization

11

opportunities. Google also has entered agreements that prevent alternative app stores

12

from being installed on the default Home Screen of Android devices.

13
14183. Through the AFA and ACC compatibility standards, Google restricts
OEMs from offering frictionless downloading of apps outside of Google Play.

15

184. These agreements serve no legitimate or pro-competitive purpose

16that could justify their anti-competitive effects, and thus unreasonably restrain and17

substantially foreclose competition in the Android App Distribution Market.

1819

185. Google’s conduct affects a substantial volume of interstate as well as
foreign commerce.

20

186. Google’s conduct has substantial anti-competitive effects, including

21

increased prices and costs, reduced innovation and quality of service, and lowered

22

output.

23

187. As a potential competing app distributor and as an app developer that24

consumes app distribution services, Epic has been harmed by Defendants’ anti-

25

competitive conduct in a manner that the antitrust laws were intended to prevent. Epic26

has been foreclosed from the market and has suffered and continues to suffer damages

27

and irreparable injury, and such damages and injury will not abate until an injunction

28

ending Google’s anti-competitive conduct issues.
First Amended Complaint for Injunctive Relief

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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

COUNT 3: Sherman Act § 1(Unreasonable restraints of trade concerning
Android App Distribution Market: Developer Distribution Agreement)(against all Defendants except Google Payment)
188. Epic restates, re-alleges, and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
189. Defendants’ conduct violates Section 1 of the Sherman Act, which
prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several States, or with foreign nations”.
15 U.S.C. § 1.
190. 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. 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“Malicious Behavior” Policy, Google prohibits developers from distributing apps that
“download executable code [i.e., code that would execute an app] from a source otherthan Google Play”. The DDA further reserves to Google the right to remove anddisable any Android app that it determines violates either the DDA or its Developer
Program Policies and to terminate the DDA on these bases. (§§ 8.3, 10.3.) These
provisions prevent app developers from offering competing app stores through theGoogle Play Store, even though there is no legitimate technological or other impediment
to distributing a competing app store through the Google Play Store.

28
First Amended Complaint for Injunctive Relief

66Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 71 of 85

1192. These agreements serve no legitimate or pro-competitive purpose

2

that could justify their anti-competitive effects, and thus unreasonably restrain and3

substantially foreclose competition in the Android App Distribution Market.

45

193. Google’s conduct affects a substantial volume of interstate as well as
foreign commerce.

6194. Google’s conduct has substantial anti-competitive effects, including

7

increased prices and costs, reduced innovation and quality of service, and lowered8

output.

9195. As a potential competing app distributor and as an app developer that

10

consumes app distribution services, Epic has been harmed by Defendants’ anti-

11

competitive conduct in a manner that the antitrust laws were intended to prevent. Epic12

has been substantially foreclosed from the market and has suffered and continues to13

suffer damages and irreparable injury, and such damages and injury will not abate until

14

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)

15
16
17
18
19
20
21
22
23
24
25
26
27
28

196. Epic restates, re-alleges, and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
197. 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.
198. The Android In-App Payment Processing Market is a valid antitrust
market. In the alternative, the Android Games Payment Processing Market is a valid
antitrust market.
199. Google holds monopoly power in the Android In-App Payment
Processing Market and, in the alternative, in the Android Games Payment Processing
Market.
First Amended Complaint for Injunctive Relief

67Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 72 of 85

1200. Google has unlawfully acquired monopoly power in these Markets,

2

including through the anti-competitive acts described herein. And however Google

3

initially acquired its monopoly, it has unlawfully maintained its monopoly, including

4

through the anti-competitive acts described herein.

56201. Google’s conduct affects a substantial volume of interstate as well as
foreign commerce.

7202. Google’s conduct has substantial anti-competitive effects, including

8

increased prices and costs, reduced innovation and quality of service, and lowered9

output.

10203. As an app developer and as the developer of a competing in-app

11

payment processing solution, Epic has been harmed by Defendants’ anti-competitive

12

conduct in a manner that the antitrust laws were intended to prevent. Epic has suffered13

and continues to suffer damages and irreparable injury, and such damages and injury

14

will not abate until an injunction ending Google’s anti-competitive conduct issues.
COUNT 5: Sherman Act § 1(Unreasonable restraints of trade concerning
Android In-App Payment Processing Market: Developer Distribution Agreement)(against all Defendants)

15
16
17
18
19
20
21
22
23
24
25
26
27

204. Epic restates, re-alleges, and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
205. Defendants’ conduct violates Section 1 of the Sherman Act, which
prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several States, or with foreign nations”.
15 U.S.C. § 1.
206. Google, except Google Payment, forces app developers to enter its
standardized DDA, including Developer Program Policies integrated into that
Agreement, as a condition of having their apps distributed through Google’s
monopolized app store, Google Play Store. The relevant provisions of these agreements

28
First Amended Complaint for Injunctive Relief

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1

unreasonably restrain and substantially foreclose competition in the Android In-App

2

Payment Processing Market.

3207. Section 3.2 of the DDA requires that Android app developers enter4

into a separate agreement with Google’s payment processor, Defendant Google

5

Payment, in order to receive payment for apps and content distributed through the6

Google Play Store. This includes payments related to in-app purchases of digital

7

content. Further, Google’s Developer Program Policies, compliance with which Section

8

4.1 of the DDA makes obligatory, require that apps distributed through the Google Play

9Store “must use [Google Play In-app Billing, offered by Google Payment] as the10method of payment” for such in-app purchases. While Google’s Policies exclude

11

certain types of transactions from this requirement, such as the purchase of “primarily

12. . . physical” goods and services or of digital content that may be consumed outside of13

the app itself, Google expressly applies its anti-competitive mandate to all “Play-

14

distributed apps . . . if they require or accept payment for access to features or services,15

including any app functionality, digital content or goods”, which includes Fortnite.

16

208. The challenged provisions serve no sufficient legitimate or pro-

17

competitive purpose and unreasonably restrain and substantially foreclose competition18

in the Android In-App Payment Processing Market and, in the alternative, the Android

19

Games Payment Processing Market.

20
21
22

209. Defendants’ conduct affects a substantial volume of interstate as well
as foreign commerce.
210. Defendants’ conduct has substantial anti-competitive effects,

23

including increased prices and costs, reduced innovation and quality of service, and24

lowered output.

25

211. As an app developer and as the developer of a competing in-app

26

payment processing solution, Epic has been harmed by Defendants’ anti-competitive27

conduct in a manner that the antitrust laws were intended to prevent. Epic has been

28

substantially foreclosed from the market and has suffered and continues to sufferFirst Amended Complaint for Injunctive Relief

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1

damages and irreparable injury, and such damages and injury will not abate until an

2injunction ending Google’s anti-competitive conduct issues.
COUNT 6: Sherman Act § 1(Tying Google Play Store to Google Play Billing)(against all Defendants)

3
4
5
6

212. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.

7

213. Defendants’ conduct violates Section 1 of the Sherman Act, which

8

prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy,

9

in restraint of trade or commerce among the several States, or with foreign nations.”

10

15 U.S.C. § 1.

11

214. Google has unlawfully tied its in-app payment processor, Google

12

Play Billing, to the Google Play Store through its DDAs with app developers and its

13

Developer Program Policies.

14215. Google has sufficient economic power in the tying market, the15

Android App 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

216. 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 solution. Google’s foreclosure of alternative app distribution channels forces23

developers like Epic to use Google’s in-app payment processing solution, which Google24

has expressly made a condition of reaching Android users through its dominant Google

25

Play Store.

26

217. The tying product, Android app distribution, is distinct from the tied27

product, Android in-app payment processing, because app developers such as Epic have28

alternative in-app payment processing options and would prefer to choose among themFirst Amended Complaint for Injunctive Relief

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1

independently of how an Android app is distributed. Google’s unlawful tying

2

arrangement thus ties two separate products that are in separate markets.

3218. Google’s conduct substantially forecloses competition in the

4

Android In-App Payment Processing Market, and, in the alternative, in the Android

5

Games Payment Processing Market, affecting a substantial volume of commerce in6these Markets.

7219. Google has thus engaged in a per se illegal tying arrangement and8

the Court does not need to engage in a detailed assessment of the anti-competitive9

effects of Google’s conduct or its purported justifications.

10220. In the alternative only, even if Google’s conduct does not constitute11

a per se illegal tie, a detailed analysis of Google’s tying arrangement would demonstrate

12that this arrangement violates the rule of reason and is illegal.

13

221. As an app developer which uses in-app payment processing solutions

14

and as the developer of a competing in-app payment processing solution, Epic has been

15

harmed by Defendants’ anti-competitive conduct in a manner that the antitrust laws

16

were intended to prevent. 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 7: California Cartwright Act(Unreasonable restraints of trade in Android App Distribution Market: OEMs)(against all Defendants except Google Payment)

19
20
21
22
23

222. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
223. Google’s acts and practices detailed above violate the Cartwright24

Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, the combination

25of resources by two or more persons to restrain trade or commerce or to prevent market

26

competition. See §§ 16720, 16726.

27
28First Amended Complaint for Injunctive Relief

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1224. Under the Cartwright Act, a “combination” is formed when the anti-

2competitive conduct of a single firm coerces other market participants to involuntarily

3

adhere to the anti-competitive scheme.

4225. The Android App Distribution Market is a valid antitrust market.

5226. Google has executed agreements with OEMs that unreasonably

6

restrict competition in the Android App Distribution Market. Namely, Google has

7entered into MADAs with OEMs that require OEMs to offer the Google Play Store as

8

the primary—and practically the only—app store on Android mobile devices. These9

agreements further prevent OEMs from offering alternative app stores on Android

10

mobile devices in any prominent visual positioning.

11

227. These agreements also include exclusivity agreements that prevent

12

OEMs from pre-installing alternative app stores on a substantial portion of new Android

13

devices, including devices that are sold in markets with the largest monetization

14

opportunities. Google has also entered agreements that prevent alternative app stores

15

from being installed on the default Home Screen of Android devices.

16
17
18

228. Through the AFA and ACC compatibility standards, Google restricts
OEMs from offering frictionless downloading of apps outside of Google Play.
229. Google’s conduct and practices have substantial anti-competitive19

effects, including increased prices and costs, reduced innovation, poorer quality of20

customer service and lowered output.

21

230. Google’s conduct harms Epic which, as a direct result of Google’s

22

anti-competitive conduct, has been unreasonably restricted in its ability to distribute its

23

Android applications, including Fortnite, and to market a competing app store to the24

Google Play Store.

25

231. It is appropriate to bring this action under the Cartwright Act

26

because many of the illegal agreements were made in California and purport to be

27

governed by California law, many affected consumers reside in California, Google has

28
First Amended Complaint for Injunctive Relief

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1

its principal place of business in California and overt acts in furtherance of Google’s

2anti-competitive scheme took place in California.

3232. Epic has suffered and continues to suffer damages and irreparable

4

injury, and such damages and injury will not abate until an injunction ending Google’s

5anti-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)

6
7
8
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10
11
12
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14
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19
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21
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24
25
26
27
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233. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
234. Google’s acts and practices detailed above violate the CartwrightAct, 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.
235. Under the Cartwright Act, a “combination” is formed when the anticompetitive conduct of a single firm coerces other market participants to involuntarily
adhere to the anti-competitive scheme.
236. The Android App Distribution Market is a valid antitrust market.
237. Google conditions distribution through the Google Play Store on
entering into the standardized DDA described above, including the Developer Program
Policies integrated therein. Through certain provisions in these agreements, Google
forces app developers to submit to conditions that unreasonably restrain competition in
the Android App Distribution Market.
238. 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

73Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 78 of 85

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.

9239. These provisions have no legitimate or pro-competitive purpose or10

effect, and unreasonably restrain competition in the Android App Distribution Market.

11240. Google’s conduct and practices have substantial anti-competitive12

effects, including increased prices and costs, reduced innovation, poorer quality of13

customer service, and lowered output.

14241. Google’s conduct harms Epic which, as a direct result of Google’s

15

anti-competitive conduct, has been unreasonably restricted in its ability to distribute its

16

Android applications, including Fortnite, and to market a competing app store to the17

Google Play Store.

18

242. It is appropriate to bring this action under the Cartwright Act

19

because many of the illegal agreements were made in California and purport to be

20

governed by California law, many affected consumers reside in California, Google has

21

its principal place of business in California, and overt acts in furtherance of Google’s

22

anti-competitive scheme took place in California.

23

243. Epic has suffered and continues to suffer damages and irreparable

24

injury, and such damages and injury will not abate until an injunction ending Google’s

25

anti-competitive conduct issues.

26
27
28
First Amended Complaint for Injunctive Relief

74Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 79 of 85

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7
8
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19
20
21
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24
25
26
27
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COUNT 9: California Cartwright Act(Unreasonable restraints of trade in Android In-App Payment Processing Market:
Developer Distribution Agreement)(against all Defendants)
244. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
245. Google’s actps and practices detailed above violate the CartwrightAct, 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. Under the Cartwright Act, a “combination” is formed when the anticompetitive conduct of a single firm coerces other market participants to involuntarily
adhere to the anti-competitive scheme.
247. The Android App Distribution Market and Android In-App Payment
Processing Market, and, in the alternative, the Android Games Payment Processing
Market, are valid antitrust markets.
248. Google has monopoly power in the Android In-App Payment
Processing Market and, in the alternative, in the Android Games Payment Processing
Market.
249. Google conditions distribution through the Google Play Store on
entering into the standardized DDA described above, including the Developer Program
Policies integrated therein. Through certain provisions in these agreements, Google
forces app developers to submit to conditions that unreasonably restrain competition in
the Android In-App Payment Processing Market.
250. Section 3.2 of the DDA requires that Android app developers enter
into a separate agreement with Google’s payment processor, Defendant Google
Payment, in order to receive payment for apps and content distributed through theGoogle Play Store. This includes payments related to in-app purchases. Further,
Google’s Developer Program Policies, compliance with which Section 4.1 of the DDAFirst Amended Complaint for Injunctive Relief

75Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 80 of 85

1

makes obligatory, require that apps distributed through the Google Play Store “must use

2

Google Play In-app Billing [offered by Google Payment] as the method of payment” for3

in-app purchases. While Google’s Policies exclude certain types of transactions from4

this requirement, such as the purchase of “primarily . . . physical” goods and services or

5of digital content that may be consumed outside of the app itself, Google expressly and6

discriminatorily applies its anti-competitive mandate to all “Play-distributed apps . . . if

7they require or accept payment for access to features or services, including any app

8functionality, digital content or goods”, which includes Fortnite.

9251. These provisions have no legitimate or pro-competitive purpose or10

effect, and unreasonably restrain competition in the Android In-App Payment

11

Processing Market, and, in the alternative, in the Android Games Payment Processing

12

Market.

13

252. Google’s conduct and practices have substantial anti-competitive14

effects, including increased prices and costs, reduced innovation, poorer quality of15

customer service and lowered output.

16

253. Google’s conduct harms Epic which, as a direct result of Google’s

17anti-competitive conduct, has been unreasonably restricted in its ability to distribute and18

use its own in-app payment processor.

19

254. It is appropriate to bring this action under the Cartwright Act

20

because many of the illegal agreements were made in California and purport to be

21

governed by California law, many affected consumers reside in California, Google has

22

its principal place of business in California and overt acts in furtherance of Google’s

23

anti-competitive scheme took place in California.

24

255. Epic has suffered and continues to suffer damages and irreparable

25

injury, and such damages and injury will not abate until an injunction ending Google’s

26

anti-competitive conduct issues.

27
28First Amended Complaint for Injunctive Relief76Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 81 of 85

1
2
3
4
5

COUNT 10: California Cartwright Act(Tying Google Play Store to Google Play Billing)(against all Defendants)
256. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
257. Google’s acts and practices detailed above violate the Cartwright6

Act, Cal. Bus. & Prof. Code § 16700 et seq., which prohibits, inter alia, the7

combination of resources by two or more persons to restrain trade or commerce, or to8

prevent market competition. See §§ 16720, 16726.

9258. Under the Cartwright Act, a “combination” is formed when the anti-

10competitive conduct of a single firm coerces other market participants to involuntarily

11adhere to the anti-competitive scheme.

12259. The Cartwright Act also makes it “unlawful for any person to lease13

or make a sale or contract for the sale of goods, merchandise, machinery, supplies,

14

commodities for use within the State, or to fix a price charged therefor, or discount15

from, or rebate upon, such price, on the condition, agreement or understanding that the16lessee or purchaser thereof shall not use or deal in the goods, merchandise, machinery,

17

supplies, commodities, or services of a competitor or competitors of the lessor or seller,

18

where the effect of such lease, sale, or contract for sale or such condition, agreement or

19

understanding may be to substantially lessen competition or tend to create a monopoly

20

in any line of trade or commerce in any section of the State.” § 16727.

21

260. As detailed above, Google has unlawfully tied its in-app payment

22

processor, Google Play Billing, to the Google Play Store through its DDAs with app

23

developers and its Developer Program Policies.

24

261. Google has sufficient economic power in the tying market, the25

Android App Distribution Market, to affect competition in the tied market, the Android

26

In-App Payment Distribution Market. With Google Play Store installed on nearly all

27

Android OS devices and over 90% of downloads on Android OS devices being

28

performed by the Google Play Store, Google has overwhelming market power.
First Amended Complaint for Injunctive Relief

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1

Google’s market power is further evidenced by its ability to extract supra-competitive2

taxes on the sale of apps through the Google Play Store.

3

262. The availability of the Google Play Store for app distribution is

4

conditioned on the app developer accepting a second product, Google’s in-app payment

5

processing solution. Google’s substantial foreclosure of alternative app distribution

6

channels forces developers like Epic to use Google’s in-app payment processing

7

solution, which Google has expressly made a condition of reaching Android users

8

through its dominant Google Play Store.

9263. The tying product, Android app distribution, is separate and distinct

10from the tied product, Android in-app payment processing, because app developers such11

as Epic have alternative in-app payment processing options and would prefer to choose

12

among them independently of how an Android app is distributed. Google’s unlawful

13

tying arrangement thus ties two separate products that are in separate markets.

14

264. Google’s conduct substantially forecloses competition in the15

Android In-App Payment Processing Market and, in the alternative, in the Android

16

Games Payment Processing Market, affecting a substantial volume of commerce in17these Markets.

18

265. Google has thus engaged in a per se illegal tying arrangement and19

the Court does not need to engage in a detailed assessment of the anti-competitive20

effects of Google’s conduct or its purported justifications.

21266. Even if Google’s conduct does not form a per se illegal tie, an

22assessment of the tying arrangement would demonstrate that it is unreasonable under the23

Cartwright Act, and therefore, illegal.

24267. Google’s acts and practices detailed above unreasonably restrain

25

competition in the Android In-App Payment Processing Market and, in the alternative,

26

in the Android Games Payment Processing Market.

27
28

268. Google’s conduct harms Epic which, as a direct result of Google’s
anti-competitive conduct, is paying a supra-competitive commission rate on in-app
First Amended Complaint for Injunctive Relief

78Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 83 of 85

1purchases processed through Google’s payment processor and has forgone commission

2

revenue it would be able to generate if its own in-app payment processor were not3

unreasonably restricted from the market.

4269. As an app developer which uses in-app payment processing solutions

5and as the developer of a competing in-app payment processing tool, Epic has been

6

harmed by Defendants’ anti-competitive conduct in a manner that the antitrust laws

7

were intended to prevent.

8270. 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.

13271. Epic has suffered and continues to suffer damages and irreparable

14

injury, and such damages and injury will not abate until an injunction ending Google’s

15

anti-competitive conduct issues.
COUNT 11: California Unfair Competition Law(against all Defendants)

16
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25
26
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272. Epic restates, re-alleges and incorporates by reference each of theallegations set forth in the rest of this Complaint as if fully set forth herein.
273. 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. Epic has standing to bring this claim because it has suffered injury infact 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 and distributes
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. Google’s conduct violates the Sherman Act and the Cartwright Act,and thus constitutes unlawful conduct under § 17200.
First Amended Complaint for Injunctive Relief

79Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 84 of 85

12276. Google’s conduct is also “unfair” within the meaning of the Unfair
Competition Law.

3277. Google’s conduct harms Epic which, as a direct result of Google’s

4anti-competitive conduct, is unreasonably prevented from freely distributing mobile

5

apps or its in-app payment processing tool, and forfeits a higher commission rate on the6

in-app purchases than it would pay absent Google’s conduct.

7278. Epic seeks injunctive relief under the Unfair Competition Law.

8

PRAYER FOR RELIEF

9

WHEREFORE, Plaintiff respectfully requests that the Court enter judgment in

10
11

favor of Epic and against Defendants:
A.

Issuing an injunction prohibiting Google’s anti-competitive and unfair

12

conduct and mandating that Google take all necessary steps to cease such

13

conduct and to restore competition;

14

B.

15
16

are unlawful and unenforceable;
C.

17
18

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.

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24
25
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First Amended Complaint for Injunctive Relief

80Case 3:20-cv-05671-JD Document 166 Filed 08/20/21 Page 85 of 85

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Dated: July 21, 2021
Respectfully submitted,

3
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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)cvarney@cravath.com
Katherine B. Forrest (pro hac vice)kforrest@cravath.com
Gary A. Bornstein (pro hac vice)gbornstein@cravath.com
Timothy G. Cameron (pro hac vice)tcameron@cravath.com
Yonatan Even (pro hac vice)
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)
mbyars@cravath.com

9

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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

81