Apple, Google Get Billions From Their App Stores. That’s Now Under Threat.

Monday’s court ruling that Google has operated an illegal app-store monopoly is the latest in a mounting series of threats to the $500 billion-a-year app-store economy, which has evolved into a profit machine for Apple AAPL 0.79%increase; green up pointing triangle and Google that helped define the smartphone era.

A jury unanimously sided with Epic Games, saying that Google had harmed the videogame maker by maintaining an illegal monopoly. Google said it plans to appeal the verdict and stands by its business model. In a separate case that concluded in 2021, a federal judge largely ruled against Epic even as she ruled that Apple must allow third-party software makers to steer customers to payment options within their own apps. The outcome might ultimately be decided by the Supreme Court.

Since that ruling, Google and Apple, which tightly control third-party software on most of the world’s billions of smartphones, have seen their control gradually erode as regulators in Europe, Asia and the U.S. have passed laws challenging company policies. 

Beginning in March, Apple is expected to allow software downloads outside the confines of its App Store for the first time due to a new European Union law. In South Korea, the two companies were forced in 2021 to open their stores to alternative payment systems. The Justice Department and state attorneys general in the U.S. have trained their sights on a deal in which Google has paid Apple around $20 billion a year to be the default search engine on Safari on its more than one billion devices.

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