Alphabet's Antitrust Battle: Epic Games Lawsuit & Market Influence

Introduction:

Alphabet is facing its second antitrust trial in as many months, with the Department of Justice (DoJ) already closely scrutinizing the tech giant. Now, Alphabet must navigate a legal battle on two fronts, as it faces a lawsuit filed by Epic Games, set to begin trial today.

• Epic Games Sues Alphabet for Unfair Revenue Cut
  • Epic Games alleges that Alphabet unfairly profits from third-party developers selling their apps in the Google Play store, mirroring a similar lawsuit against Apple's App Store.
• Epic's Attempt to Bypass Google Play Store
  • Epic Games attempted to circumvent the Google Play store for in-app purchases in August 2020, leading to a conflict with Google, which remains at the heart of Epic's lawsuit.
• The Lawsuit's Uncertain Fate
  • The lawsuit's prospects appear uncertain, given the relative flexibility and freedom of the Android OS and Google Play store compared to iOS. Notably, Epic's lawsuit against Apple was dismissed, and their appeals were denied.
• Recent Settlement and 'User Choice Billing'
  • Google recently settled a similar lawsuit with Match Group, agreeing to implement a new system called 'user choice billing' by March of the following year. Although this system is more developer-friendly, it might not satisfy Epic.

Why It Matters:

While this lawsuit faces challenges in winning, it couldn't come at a worse time for Alphabet. With both the DoJ's and Epic's antitrust suits, Alphabet faces a daunting task in proving it doesn't exert monopoly influence over the market. Will Alphabet become the first major tech player to fall under antitrust scrutiny? Market sentiment remains uncertain, with GOOG stock trading flat at market open.