Google deals with Epic Games by offering to reduce its App Store commissions

SAN FRANCISCO (AP) — Google will drop the lucrative fees charged on its Android app store and offer a way for competing options to get its stamp of approval, ending a bitter legal battle that has led to one of the few rulings condemning its tactics as an illegal monopoly.

The proposed changes, filed Wednesday in federal court in San Francisco, mark the latest twist in a case that began in August 2020 when video game maker Epic Games filed an antitrust lawsuit seeking to ease competition against Google’s Play Store system for alternative payment options, which widely charge 15% to 30% commissions on in-app transactions.

Google’s concessions come five months after the US Supreme Court refused to hear the company’s request to overturn a federal judge’s order requiring a more comprehensive review of the Play Store after a 2023 trial that resulted from a magazine that declared the organization an illegal monopoly.

Backed into a legal corner, Google is now willing to cut its base commissions by 10% to 20% for subscription and e-commerce transactions. It also offers an optional 5% payment processing charge that applies in addition to other service fees for apps that choose to keep everything on the Play Store.

App developers can still rely on another payment processing system besides Google, and customers will be able to download apps from alternative stores that go through the verification process. Although not required, alternative app stores that go through Google’s registration process are less likely to prompt warnings about security risks.

James Donato of the United States has yet to approve the proposed registration process as an alternative to a more dramatic change he ordered in October 2024, but Google is already moving forward with plans to reduce its fees worldwide. The Mountain View, Calif., company intends to roll out in the United States, United Kingdom and the European Union.

Google is seeking a hearing before a judge on April 9 to answer any questions about the review, which is backed by Epic Games CEO Tim Sweeney, the North Carolina company best known for making the Fortnite video game.

“Epic has been supporting open platforms for a long time and this really brings Android to true open platform status,” Sweeney told The Associated Press during an interview that also included Sameer Smith, Google’s executive director of Android.

“We think it’s really better to focus more energy and time on building than on conflict,” Smith said of Google’s decision to finally call a truce with Epic after years of conflict.

The lower fees are likely to hurt the profits of Google’s corporate parent, Alphabet Inc., which is now well-positioned to weather the blow to a market value of $3.7 trillion — more than four times what it was when Epic filed its lawsuit.

Alphabet also faces other potential hurdles with search engine Google being ordered to share more of the data it collects after being declared an illegal monopoly in another case by the US Department of Justice. The technology division that powers Google’s digital ad network was also found to be an abusive monopoly in another federal lawsuit last year. A federal judge in Virginia is considering whether to order a stay to restore competition in the case.

Epic 2020’s attack against Google’s Play Store coincided with a similar crusade against Apple’s iPhone app store, which is still embroiled in some legal disputes over how to handle alternative payment systems.

Sweeney isn’t optimistic about reaching a deal with Apple that mirrors Google’s concessions because the cases were handled differently. In the Apple case, a federal judge concluded that the iPhone App Store is not a monopoly but still ordered changes designed to make it easier for customers to switch to alternative payment options — a change that Epic argues has yet to happen.

For now, Sweeney intends to enjoy the results of a Play Store case set to the soundtrack of a classic tune by the Rolling Stones.

“As the song says, you can’t always get what you want, but if you try, you can often get what you need,” Sweeney said. “And what we need is competition.”