Alphabet (GOOGL) subsidiary Google and Fortnite developer Epic Games are preparing for another battle in court today. Google is appealing a lawsuit with Epic Games that would require it to change how its app store operates. This comes after U.S. District Judge James Donato ruled against the company in an anti-competition lawsuit.
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That lawsuit alleges Google doesn’t allow competition by banning the distribution of rival app stores on the Google Play Store. This affects Epic Games as it operates its own platform selling and distributing games. Google argued that it is in fierce competition with Apple’s (AAPL) App Store and isn’t anti-competitive. However, Epic Games’ argument concerns app stores on Android and Apple’s App Store isn’t available on Android devices.
Google appears unlikely to win its lawsuit against the Fortnite developer. This would require the 9th Circuit to overrule the previous outcome of the lawsuit. It also bears mentioning that Microsoft (MSFT), the U.S. Department of Justice (DOJ), and the Federal Trade Commission (FTC) have announced their support for Epic Games in this lawsuit.
What This Lawsuit Could Mean for Google
If Google fails to overturn the lawsuit at the 9th Circuit, it can still appeal the decision to the Supreme Court. This would delay any changes required of the tech company as the 9th Circuit isn’t expected to provide a ruling until later this year.
The Google Play Store will undergo major changes if the company loses all its appeals. The Epic Games lawsuit covers the allowance of other app stores on the Play Store and how transactions in those apps are handled. This could harm Google’s Play Store business model as it partially relies on fees from in-app transactions to generate revenue.
Is GOOGL Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Alphabet is Moderate Buy based on 21 Buy and eight Hold ratings over the last three months. With that comes an average price target of $219, a high of $235, and a low of $185. This represents a potential 7.34% upside for GOOGL stock.
