Thursday, July 8, 2021

Reshuffling of antitrust cases against Google Play Store: Epic and class action plaintiffs will file amended complaints, 36 states filed new lawsuit

In November, Google brought a motion to dismiss antitrust lawsuits Epic Games and class action plaintiffs had brought in the Northern District of California over the Google Play Store. There has been some back and forth since, and the motion-to-dismiss hearing (originally scheduled for a few months earlier) was finally going to take place in two weeks from today. Not so anymore: Judge James Donato has vacated that hearing and some other procedural deadlines. That's because Epic Games wasn't going to take any chances--a dismissal of the complaint would have been a major setback for the Fortnite and Unreal Engine company--and, therefore, informed all other parties (defendant Google, and the other plaintiffs) of its intent to amend its complaint "based on documents uncovered in discovery to date." The developer class-action plaintiffs then made the decision to do the same.

On July 2, Epic and the class-action plaintiffs informed the court (CourtListener PDF) that they would file their amended complaints on July 21--literally on the eve of the motion-to-dismiss hearing. In order for this not to appear more defensive than necessary, they said they were "prepared to proceed with oral argument on July 22, 2021, on their operative complaint, as they believe their current allegations are sufficient to overcome the pending motion to dismiss." However, a federal judge didn't just fall of a turnip truck. This initiative undoubtedly does mean that there was some concern over Google's motion to dismiss potentially succeeding.

That the plaintiffs in the related actions aren't 100% sure (who can ever be 100% sure ahead of a motion-to-dismiss hearing against a litigant like Google) is also evidenced by the statement that consumer plaintiffs (whose theories partly overlap with developers' theories, but are not identical) would rather go ahead with the motion-to-dismiss hearing and seek leave to amend their complaint should the motion be granted, but if the court preferred to adjudicate all those matters at the same time, the consumer plaintiffs, too, "reserve their right to seek leave to amend their complaint."

At 5 PM Pacific Time, Judge Donato then entered the following order to streamline the process:

"ORDER. In light of the Notice of Intent to Amend Complaints, MDL Dkt. No. 51, Epic Games, Inc. and the Developer Plaintiffs are directed to file their amended complaints by July 21, 2021. The July 22, 2021 motion to dismiss hearing is vacated, including for the Consumer Plaintiffs' complaint, and the pending motions to dismiss Epic's and the Developer Plaintiffs' complaints are terminated. Motions to dismiss the amended complaints should be briefed on a coordinated basis and noticed to be heard on the same day, together with the motion to dismiss the Consumer Plaintiffs' complaint. The parties should advise the Court and file a statement by July 15, 2021, if they would like to have a status conference on July 22, 2021. Signed by Judge James Donato on 7/7/2021."

It's unlikely that Google wouldn't move again to dismiss the complaints. But if Epic and the other plaintiffs had a successful fishing expedition so far, they may indeed be able to bring stronger factual allegations. And with the benefit of knowing Google's motion-to-dimiss theories, they might even optimize their legal arguments. Sure, they could have done so after a dismissal without prejudice. But Intel (& temporarily Apple) v. Fortress is an example of the quagmire you may get into after the first dismissal.

There is another development that will change everything, and all of this is no coincidence: in the late evening by local time, the attorneys-general of 36 U.S. states (led by Utah) filed an antitrust lawsuit against Google over Google Play and its impact on consumer and developers (CourtListener PDF). I guess (though I can't be sure) there was some communication between certain state attorneys-general and Epic. That's not a conspiracy theory: there's nothing wrong with governmental and private entities coordinating litigation when tackling some of the same issues. The Federal Trade Commission and Apple had a Common Interest Agreement in place against Qualcomm, to give just one example. In that case, Qualcomm was represented by the attorneys now representing Epic Games against Apple and Google.

The fact that Epic's and the class-action plaintiffs' complaints are going to be amended, while 36 states take action as well (and in the same district, the Northern District of California), makes it likely that Judge Donato will consolidate all of those cases pretty soon. And then Google will have to take on not only Epic Games and the class-action plaintiffs but also 36 states at the motion-to-dismiss stage.

The damage that Google has been doing and continues to do to customer choice, competition, and innovation with its Google Play terms and policies becomes clearer and clearer. For example, the state AGs note that Google even tried to bully Samsung into giving up its Galaxy Store in the sense of just allowing Samsung to let it look like a Galaxy Store, while actually letting Google run it all (including in-app payments, of course). If Samsung had agreed to that "white-label" approach, Samsung's customers wouldn't have access to Fortnite now after Google threw it out of the Google Play Store last summer. The Galaxy Store in its current form, run by Samsung, is probably the #1 distribution channel for Fortnite Mobile as we speak.

Maybe the facts are so strong that Google will even give up on its motion to dismiss, or that the court will give it short shrift. That would be the ideal outcome.

I haven't blogged too much about the different app stores cases lately. Rest assured my position hasn't changed at all as I'm still pursing my own complaints against Apple and Google (which sometimes also counsels against blogging too much about the topic). In one jurisdiction, my company replied in May to both companies' responses to my original complaints (which I brought in January). I have to take a lot of different things and interests into consideration, and that's why I can't--at least at this stage--promise consistent and granular coverage of those app distribution antitrust matters. If I was going to cover those investigations and lawsuits in detail again, I might do so outside of FOSS Patents (with just occasionally linking to the app distribution stories from FOSS Patents). I'd like to keep FOSS Patents focused on what its name indicates--patents (which more often than not involves antitrust aspects as well, given that a lot of my commentary is about standard-essential patents). That's why I recently encouraged everyone to follow me on LinkedIn, where I sometimes comment on non-patent matters, at times even including sports-related antitrust law.

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