Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Google chief executive Sundar Pichai took to the witness stand on Tuesday for the second time in a month, testifying in a trial over whether the company uses its popular app store to stifle competition and extract excessive fees.
Epic Games, the maker of the popular Fortnite game, has argued in its lawsuit that Google has set up a thicket of contractual and technical restrictions around its Android operating system that in effect made its Play Store the only channel where users can buy apps. The trial began last week and is expected to head to a jury in mid-December.
Google’s Android is the most widely used mobile operating system in the world, eclipsing Apple’s iOS. Epic claims Google struck restrictive deals with smartphone makers and mobile networks to ensure no serious rivals to its own store emerged.
Epic has alleged Google’s operating profit on the Play Store exceeded $12bn in 2021, at a margin of more than 70 per cent.
During Tuesday’s proceedings, a lawyer for Epic asked Pichai about Google’s deals with smartphone makers requiring them to pre-install the Play Store along with a suite of apps on their devices.
Pichai conceded that no smartphone maker other than Apple offers a widely used alternative mobile operating system, even though smartphone developers can technically create their own operating systems and stores based on Google’s Android.
Google’s contracts have also been central to the second trial that the tech giant is currently embroiled in, in a case brought by the US Department of Justice alleging it abused its dominance in the search market. Pichai testified at that trial in late October, saying deals making its search engine the default on smartphones and browsers can be “very valuable”.
Pichai on Tuesday confirmed Google pays Apple about 36 per cent of search revenues generated on iOS to be the default search engine on its devices. Wall Street analysts had previously put the company’s payments to Apple at $16bn-$20bn a year.
He also came under intense grilling by Epic lawyer Lauren Moskowitz about the company’s policy of deleting internal employee messages. The judge overseeing the case has summoned Google’s chief legal officer, Kent Walker, later this week to explain its apparent failure to preserve internal company messages that were meant to be saved for potential use in litigation.
The judge has warned he could instruct the jury to assume that information Google destroyed was incriminating.
Under questioning from Epic’s lawyer, Pichai said he followed Walker’s advice in continuing the policy of deleting internal chat history every 24 hours, which was established in 2008 before he took over as chief executive.
One message shown to the court from October 2021, after Epic filed its litigation against the company, showed Pichai asking to switch history to “off” — although the discussion did not concern the Play Store or Android.
“I supported all the recommendations from our legal and compliance teams,” Pichai said.
Later, under questioning from Google’s lawyer, Pichai said he followed instructions to preserve documents related to Epic’s case, and never turned off chat history to stop communications from appearing in court.
After the jury was dismissed for lunch, the judge directly questioned Pichai about the chat deletion issue, asking him to confirm who was responsible for informing employees about which communications should be saved.
Pichai said the responsibility ultimately fell to Walker, but that each division within Google has its own legal team required to keep employees informed of their obligations. Google has since changed its policy around chat deletion and now requires them to be saved, he later told the court.
Pichai said Google competes “fiercely” with Apple’s iOS devices, and that Android devices offer an important, and cheaper, alternative: “We enable more affordable smartphones.”
Epic has also brought similar claims of anti-competitive behaviour against Apple. The two tech giants removed Fortnite from their respective app stores after Epic deliberately bypassed their payment methods. These payment methods levy a 15-30 per cent fee on digital purchases, which Epic says are excessive.
In 2021, Apple emerged mostly victorious, although it was ordered to tweak rules that stop developers from directing customers outside of the App Store to make purchases.
That ruling was upheld by an appeals court earlier this year, with both sides now seeking a review by the US Supreme Court.
Credit: Source link
