A U.S. judge has ordered Google parent company Alphabet (GOOGL) to offer alternatives to its Play store for downloading apps on Android smartphones.
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The judge has also barred Alphabet from paying fees or sharing revenue with companies in exchange for them not competing with the Google Play app store. The news is the latest blow to Alphabet, which is facing antitrust lawsuits in the U.S. and Europe over accusations it engages in anticompetitive practices.
The ruling by Judge James Donato in California comes out of an antitrust lawsuit filed against Alphabet by Epic Games, a privately held video game developer that’s best known as the maker of Fortnite. In a legal battle that dates back to 2020, Epic Games accused Google of anticompetitive practices, such as paying hardware companies and Android phone makers to not develop competing app stores.
Tying Google’s Hands
The judge’s ruling against Alphabet in the Epic Games case is significant. For the next three years, Google will not be able to pay companies to launch apps exclusively on Google Play, pay companies so they do not compete with the Google Play app store, or pay companies to preinstall Google Play on smartphones and other devices.
Google must also permit competing Android app stores to access Google Play’s catalogue of apps. Analysts said the legal decision will likely lead to developers getting a bigger slice of the market. Google’s app store typically takes 15% to 30% of total sales for popular high-grossing apps. Developers could now keep more revenue by bypassing Google’s rules and the fees the company charges.
Consumers spent $124 billion on apps in 2023, according to data tracking firm Sensor Tower. Alphabet immediately said in a blog post that it plans to appeal the judge’s ruling. GOOGL stock has risen 16.97% so far in 2024.
Is GOOGL Stock a Buy?
Alphabet has a consensus Strong Buy rating among 39 Wall Street analysts. That rating is based on 30 Buy and nine Hold recommendations assigned in the last three months. There are no Sell ratings on the stock. The average GOOGL price target of $202.11 implies 24% upside from current levels.
