The Federal Court has ruled against Google and Apple over uncompetitive conduct related to their app stores, a decision that is considered a partial victory for Epic Games, developer of video games such as Fortnite, and a landmark win for consumers.

Justice Johnathan Beach found on Tuesday that the dominance of Apple’s App Store and Google Play Store reduced competition and that the tech giants had no protections against anti-competitive behaviour on these app stores.

The ruling comes amid a years-long legal dispute brought by Epic Games against Google and Apple. Epic previously filed a series of antitrust cases against the two firms in Australia, the UK and the US, claiming the two companies charged high fees for its game downloads on their app stores.

The US-based video game developer also alleged that the phone makers made it impossible for users to download its alternative app store. It also said Google and Apple breached consumer rights and engaged in unconscionable conduct, but the court rejected these claims.

The judgment runs to 2000 pages and will not be released publicly until redactions are made. Justice Beach only read out a summary of his findings in court.

In a post on X, Epic stated the Australian court “just found that Apple and Google abuse their control over app distribution and in-app payments to limit competition”.

“The Epic Games Store and Fortnite will come to iOS in Australia. This is a win for developers and consumers in Australia,” it added.

In a statement, Apple said it welcomed the court’s rejection of some of Epic’s claims, but “strongly disagreed” with the ruling on others. The company added it faces “fierce competition” in every market it operates in.

Google also welcomed the court’s rejection of some claims from Epic Games, but disagreed with the court’s “characterisation of its billing policies and practices”.

Landmark win

In addition to the ruling, the Federal Court also upheld two class actions against Apple and Google. The suits, filed by law firms Phi Finney McDonald and Maurice Blackburn, were on behalf of app developers who sold their apps and other content, as well as consumers who bought them on Apple and Google’s app stores from November 2017 to June 2022.

The class actions alleged that both companies engaged in anti-competitive conduct that harmed Australian consumers and app developers by restricting fair access and inflating prices.

“This judgment is a turning point,” said Kimi Nishimura, principal at Maurice Blackburn Lawyers. “It sends a clear message that even the most powerful corporations must play by the rules and respect the rights of consumers and developers alike.” 

The ruling paves the way for a second stage hearing regarding compensation for consumers and developers, as well as for directives aimed at increasing transparency and competition.

Associate Professor Michael Duffy from Monash University’s Department of Business Law and Taxation considered the court’s findings a landmark, saying they significantly increased the accountability of American ‘big tech’ companies to small app developers and consumers. 

“These cases are examples par excellence of how class actions were intended to operate; in making findings on behalf of an entire class of persons on a common issue for the benefit of that class. 

“Assuming the findings are not appealed, the next stage would be a process of loss assessment for possibly millions of Australians who fall within the class definition,” he added.