Case 5:20-cv-05671-NC Document 1 Filed 08/13/20 Page 1 of 63
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`Paul J. Riehle (SBN 115199)
`paul.riehle@faegredrinker.com
`FAEGRE DRINKER BIDDLE & REATH LLP
`Four Embarcadero Center
`San Francisco, California 94111
`Telephone: (415) 591-7500
`Facsimile: (415) 591-7510
`
`Christine A. Varney (pro hac vice pending)
`cvarney@cravath.com
`Katherine B. Forrest (pro hac vice pending)
`kforrest@cravath.com
`Gary A. Bornstein (pro hac vice pending)
`gbornstein@cravath.com
`Yonatan Even (pro hac vice pending)
`yeven@cravath.com
`M. Brent Byars (pro hac vice pending)
`mbyars@cravath.com
`CRAVATH, SWAINE & MOORE LLP
`825 Eighth Avenue
`New York, New York 10019
`Telephone: (212) 474-1000
`Facsimile: (212) 474-3700
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`Attorneys for Plaintiff Epic Games, Inc.
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`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`EPIC GAMES, INC., a Maryland
`Corporation,
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`Plaintiff,
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`Case No. ___________________
`
`v.
`GOOGLE LLC; GOOGLE IRELAND
`LIMITED; GOOGLE COMMERCE
`LIMITED; GOOGLE ASIA PACIFIC
`PTE. LIMITED; and GOOGLE
`PAYMENT CORP.,
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`COMPLAINT FOR
`INJUNCTIVE RELIEF
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`Defendants.
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`II. 
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`TABLE OF CONTENTS
`PRELIMINARY STATEMENT ..................................................................................... 1 
`PARTIES........................................................................................................................ 10 
`JURISDICTION AND VENUE .................................................................................... 11 
`INTRADISTRICT ASSIGNMENT .............................................................................. 13 
`RELEVANT FACTS ..................................................................................................... 13 
`I. 
`Google Dominates the Merchant Market for Mobile Operating Systems. ......... 13 
`A. 
`The Merchant Market for Mobile Operating Systems .............................. 14 
`Product Market Definition .............................................................. 14 
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`Geographic Market Definition ........................................................ 16 
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`Google’s Monopoly Power in the Merchant Market for Mobile OSs ...... 16 
`B. 
`Google Unlawfully Maintains a Monopoly in the Android Mobile App
`Distribution Market. ............................................................................................ 19 
`A. 
`The Android App Distribution Market ..................................................... 20 
`Product Market Definition .............................................................. 20 
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`Geographic Market Definition ........................................................ 22 
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`Google’s Monopoly Power in the Android App Distribution Market ...... 22 
`Google’s Anti-Competitive Conduct Concerning the Android App
`Distribution Market ................................................................................... 26 
`Google’s Conduct Toward OEMs .................................................. 26 
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`Google’s Conduct Toward App Distributors and Developers ........ 28 
`  Google’s Conduct Toward Consumers ........................................... 30 
`D.  Anti-Competitive Effects in the Android App Distribution Market ......... 35 
`III.  Google Unlawfully Acquired and Maintains a Monopoly in the Android In-
`App Payment Processing Market. ....................................................................... 36 
`A. 
`The Android In-App Payment Processing Market .................................... 37 
`Product Market Definition .............................................................. 37 
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`Geographic Market Definition ........................................................ 39 
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`B. 
`C. 
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`B. 
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`C. 
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`Google’s Monopoly Power in the Android In-App Payment
`Processing Market ..................................................................................... 39 
`Google’s Anti-Competitive Conduct Concerning the Android In-App
`Payment Processing Market ...................................................................... 40 
`D.  Anti-Competitive Effects in the Android In-App Payment Processing
`Market........................................................................................................ 41 
`COUNT 1: Sherman Act § 2 (Unlawful Monopoly Maintenance in the Android
`App Distribution Market) .................................................................................... 43 
`COUNT 2: Sherman Act § 1 (Unreasonable restraints of trade concerning
`Android App Distribution Market: OEMs) ........................................................ 44 
`COUNT 3: Sherman Act § 1 (Unreasonable restraints of trade concerning
`Android App Distribution Market: DDA) .......................................................... 45 
`COUNT 4: Sherman Act § 2 (Unlawful Monopolization and Monopoly
`Maintenance in the Android In-App Payment Processing Market) ................... 46 
`COUNT 5: Sherman Act § 1 (Unreasonable restraints of trade concerning
`Android In-App Payment Processing Market) .................................................... 47 
`COUNT 6: Sherman Act § 1 (Tying Google Play Store to Google Play Billing) ....... 49 
`COUNT 7: California Cartwright Act (Unreasonable restraints of trade in
`Android App Distribution Market) ...................................................................... 50 
`COUNT 8: California Cartwright Act (Unreasonable restraints of trade in
`Android App Distribution Market) ...................................................................... 51 
`COUNT 9: California Cartwright Act (Unreasonable restraints of trade in
`Android In-App Payment Processing Market) .................................................... 53 
`COUNT 10: California Cartwright Act (Tying Google Play Store to Google Play
`Billing) ................................................................................................................. 55 
`COUNT 11: California Unfair Competition Law ......................................................... 58 
`PRAYER FOR RELIEF ................................................................................................ 59 
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`Case 5:20-cv-05671-NC Document 1 Filed 08/13/20 Page 4 of 63
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`Plaintiff Epic Games, Inc. (“Epic”), by its undersigned counsel, alleges,
`with knowledge with respect to its own acts and on information and belief as to other
`matters, as follows:
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`PRELIMINARY STATEMENT
`1.
`In 1998, Google was founded as an exciting young company with a
`unique motto: “Don’t Be Evil”. Google’s Code of Conduct explained that this
`admonishment was about “how we serve our users” and “much more than that . . . it’s
`also about doing the right thing more generally”.1 Twenty-two years later, Google has
`relegated its motto to nearly an afterthought, and is using its size to do evil upon
`competitors, innovators, customers, and users in a slew of markets it has grown to
`monopolize. This case is about doing the right thing in one important area, the Android
`mobile ecosystem, where Google unlawfully maintains monopolies in multiple related
`markets, denying consumers the freedom to enjoy their mobile devices—freedom that
`Google always promised Android users would have.
`2.
`Google acquired the Android mobile operating system more than a
`decade ago, promising repeatedly over time that Android would be the basis for an
`“open” ecosystem in which industry participants could freely innovate and compete
`without unnecessary restrictions.2 Google’s CEO, Sundar Pichai, represented in 2014
`
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`1 Kate Conger, Google Removes ‘Don’t Be Evil’ Clause from Its Code of Conduct, Gizmodo
`(May 18, 2018), https://gizmodo.com/google-removes-nearly-all-mentions-of-dont-be-evil-from-
`1826153393.
`2 Google Blog, News and notes from Android team, The Benefits & Importance of Compatibility,
`(Sept. 14, 2012), https://android.googleblog.com/2012/09/the-benefits-importance-of-
`compatibility.html (“We built Android to be an open source mobile platform freely available to anyone
`wishing to use it . . . . This openness allows device manufacturers to customize Android and enable
`new user experiences, driving innovation and consumer choice.”); Stuart Dredge, Google’s Sundar
`Pichai on wearable tech: ‘We’re just scratching the surface’, The Guardian (Mar. 9, 2014),
`https://www.theguardian.com/technology/2014/mar/09/google-sundar-pichai-android-chrome-sxsw
`(“Android is one of the most open systems that I’ve ever seen”); Andy Rubin, Andy Rubin’s Email to
`Android Partners, The Wall Street Journal (Mar. 13, 2013), available at
`https://blogs.wsj.com/digits/2013/03/13/andy-rubins-email-to-android-partners/?mod=WSJBlog (“At
`its core, Android has always been about openness”).
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`that Android “is one of the most open systems that I’ve ever seen”.3 And Andy Rubin,
`an Android founder who is described by some as the “Father of Android”, said when he
`departed Google in 2013 that “at its core, Android has always been about openness”.4
`Since then, Google has deliberately and systematically closed the Android ecosystem to
`competition, breaking the promises it made. Google’s anti-competitive conduct has
`now been condemned by regulators the world over.
`3.
`Epic brings claims under Sections 1 and 2 of the Sherman Act and
`under California law to end Google’s unlawful monopolization and anti-competitive
`restraints in two separate markets: (1) the market for the distribution of mobile apps to
`Android users and (2) the market for processing payments for digital content within
`Android mobile apps. Epic seeks to end Google’s unfair, monopolistic and anti-
`competitive actions in each of these markets, which harm device makers, app
`developers, app distributors, payment processors, and consumers.
`Epic does not seek monetary compensation from this Court for
`4.
`the injuries it has suffered. Epic likewise does not seek a side deal or favorable
`treatment from Google for itself. Instead, Epic seeks injunctive relief that would deliver
`Google’s broken promise: an open, competitive Android ecosystem for all users and
`industry participants. Such injunctive relief is sorely needed.
`5.
`Google has eliminated competition in the distribution of Android
`apps using myriad contractual and technical barriers. Google’s actions force app
`developers and consumers into Google’s own monopolized “app store”—the Google
`Play Store. Google has thus installed itself as an unavoidable middleman for app
`developers who wish to reach Android users and vice versa. Google uses this monopoly
`power to impose a tax that siphons monopoly profits for itself every time an app
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`3 Stuart Dredge, Google’s Sundar Pichai on wearable tech: ‘We’re just scratching the surface’, The
`Guardian (Mar. 9, 2014), https://www.theguardian.com/technology/2014/mar/09/google-sundar-
`pichai-android-chrome-sxsw.
`4 Andy Rubin, Andy Rubin’s Email to Android Partners, The Wall Street Journal (Mar. 13, 2013),
`available at https://blogs.wsj.com/digits/2013/03/13/andy-rubins-email-to-android-
`partners/?mod=WSJBlog.
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`developer transacts with a consumer for the sale of an app or in-app digital content.
`And Google further siphons off all user data exchanged in such transactions, to benefit
`its own app designs and advertising business.
`6.
`If not for Google’s anti-competitive behavior, the Android
`ecosystem could live up to Google’s promise of open competition, providing Android
`users and developers with competing app stores that offer more innovation, significantly
`lower prices and a choice of payment processors. Such an open system is not hard to
`imagine. Two decades ago, through the actions of courts and regulators, Microsoft was
`forced to open up the Windows for PC ecosystem. As a result, PC users have multiple
`options for downloading software unto their computers, either directly from developers’
`websites or from several competing stores. No single entity controls the ecosystem or
`imposes a tax on all transactions. And Google, as the developer of software such as the
`Chrome browser, is a direct beneficiary of this competitive landscape. Android users
`and developers likewise deserve free and fair competition.
`*
`*
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`7.
`In today’s world, virtually all consumers and businesses stay
`connected, informed, and entertained through smart mobile computing devices such as
`smartphones and tablets. Mobile applications (“apps”) are innovative software products
`that greatly contribute to those devices’ value. Consumers the world over use smart
`mobile devices and mobile apps to video chat with friends, pay bills, stay current with
`the news, listen to music, watch videos, play games, and more.
`8.
`Epic develops and distributes entertainment apps for personal
`computers, gaming consoles, and smart mobile devices. The most popular game Epic
`currently makes is Fortnite, which has connected hundreds of millions of people in a
`colorful virtual world where they meet, play, talk, compete, dance, and even attend
`concerts and other cultural events.
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`9.
`Fortnite is free for everyone to download and play. To generate
`revenue, Epic offers users various in-app purchases of content for use within the app,
`such as digital avatars, costumes, dances, or other cosmetic enhancements.
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`10.
`In the first year after Fortnite was released in 2017, the game
`attracted over 125 million players; in the years since, Fortnite has topped 350 million
`players and has become a global cultural phenomenon.
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`11. Similar to a PC or a Mac personal computer, smart mobile devices
`use an “operating system” or “OS” to provide core device functionality and to enable
`the operation of compatible programs. As with PCs, the commercial viability of an OS
`for mobile devices (a “mobile OS”) depends on the availability of a large number of
`compatible apps that cater to the preferences and needs of users.
`12. Google controls the most ubiquitous OS used in mobile devices, the
`Android OS. Android OS is used by billions of users the world over, and boasts nearly
`3 million compatible apps.
`13. Android is the only commercially viable OS that is widely available
`to license by companies that design and sell smart mobile devices, known as original
`equipment manufacturers (“OEMs”). Accordingly, when OEMs select a mobile OS to
`install on their devices, they have only one option: Google’s Android OS. Google
`therefore has monopoly power in the market for mobile operating systems that are
`available for license by OEMs (the Merchant Market for Mobile Operating Systems
`(infra Part I)).
`14. Google has not been satisfied with its control of the Android OS.
`Notwithstanding its promises to make Android devices open to competition, Google has
`erected contractual and technological barriers that foreclose competing ways of
`distributing apps to Android users, ensuring that the Google Play Store accounts for
`nearly all the downloads of apps from app stores on Android devices. Google thus
`maintains a monopoly over the market for distributing mobile apps to Android users,
`referred to herein as the “Android App Distribution Market” (infra Part II).
`15. For example, Google bundles the Google Play Store with a set of
`other Google services that Android OEMs must have on their devices (such as Gmail,
`Google Search, Google Maps, and YouTube) and conditions the licensing of those
`services on an OEM’s agreement to pre-install the Google Play Store and to
`prominently display it. Google then interferes with OEMs’ ability to make third-party
`app stores or apps available on the devices they make. These restrictions effectively
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`foreclose competing app stores—and even single apps—from what could be a primary
`distribution channel.
`16. Epic’s experience with one OEM, OnePlus, is illustrative. Epic
`struck a deal with OnePlus to make Epic games available on its phones through an Epic
`Games app. The Epic Games app would have allowed users to seamlessly install and
`update Epic games, including Fortnite, without obstacles imposed by Google’s Android
`OS. But Google forced OnePlus to renege on the deal, citing Google’s “particular[]
`concern” about Epic having the ability to install and update mobile games while
`“bypassing the Google Play Store”.
`17. Another OEM, LG, told Epic that its contract with Google did not
`allow it to enable the direct distribution of apps, and that the OEM could not offer any
`functionality that would install and update Epic games except through the Google Play
`Store.
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`18. Google also enforces anti-competitive restrictions against app
`developers. Specifically, Google contractually prohibits app developers from offering
`on the Google Play Store any app that could be used to download other apps, i.e., any
`app that could compete with the Google Play Store in app distribution. And Google
`further requires app developers to distribute their apps through the Google Play Store if
`they wish to advertise their apps through valuable advertising channels controlled by
`Google, such as ad placements on Google Search or on YouTube that are specially
`optimized to advertise mobile apps.
`19. Finally, Google stifles or blocks consumers’ ability to download app
`stores and apps directly from developers’ websites. As anyone who has tried to
`download directly on an Android device knows, it is significantly different than the
`simple process available on a personal computer: directly downloading Fortnite on an
`Android device can involve a dozen steps, requiring the user to change default settings
`and bravely click through multiple dire warnings. And even if a persistent user manages
`to install a competing app store, Google prevents such stores from competing on equal
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`footing with the Google Play Store by blocking them from offering basic functions,
`such as automatic updating of apps in the background, which is available for apps
`downloaded from the Google Play Store.
`20. Google engages in these anticompetitive acts to eliminate consumer
`choice and competition in mobile app distribution. Google has no legitimate
`justification for these restrictions. Google therefore has broken its promises that
`Android would be an “open” ecosystem in which other participants could participate
`fairly.
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`21. But Google does not stop at app distribution. Google also imposes
`anti-competitive restrictions in the separate Market for Android In-app Payment
`Processing (infra Part III).
`22. App developers who sell digital content for consumption within the
`app itself require seamless payment processing tools to execute purchases. App
`developers, including Epic, may develop such payment processing tools internally or
`use a host of payment processing tools offered by multiple competing third parties.
`23. Google, however, ties distribution through its Google Play Store
`with developers’ exclusive use of Google’s own payment processing tool, called
`Google Play Billing, to process in-app purchases of digital content. Indeed, app
`developers that distribute through the Google Play Store are even prohibited from
`offering Android users the choice of additional payment processing options alongside
`Google’s for digital content. And because Google has a monopoly in the Android App
`Distribution Market, app developers cannot practically avoid this anti-competitive tie by
`electing app distribution through an alternative channel.
`24. The result is that in every in-app transaction for digital content, it is
`Google, not the app developer, that collects the payment in the first instance. Google
`then taxes the transaction at an exorbitant 30% rate, remitting the remaining 70% to the
`developer who actually made the sale. This 30% commission is often ten times higher
`than the price typically paid for the use of other electronic payment solutions.
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`25. Moreover, through this tie, Google inserts itself as an intermediary
`between each seller and each buyer for every purchase of digital content within the
`Android ecosystem, collecting for itself the personal information of users, which Google
`then uses to give an anti-competitive edge to its own advertising services and mobile
`app development business.
`26. But for Google’s monopolistic conduct, competing stores could offer
`consumers and developers choice in distribution and payment processing. Indeed, Epic,
`which distributes gaming apps through its own store to users of personal computers,
`would open a store to compete with Google’s and offer developers more innovation and
`more choice, including in payment processing. App developers would not have to pay
`Google’s supra-competitive tax of 30%, as the price of distribution and payment
`processing alike would be set by market forces rather than by Google’s fiat. Developers
`could address any payment-related issues (such as refunds) directly with their own
`customers rather than through Google. And users and developers, jointly, would get to
`decide whether users’ data should be utilized for other purposes.
`27. Google’s anti-competitive conduct has injured Epic, both as an app
`developer and as a potential competitor in app distribution and payment processing.
`Epic has repeatedly approached Google and asked to negotiate relief that would stop
`Google’s unlawful and anti-competitive restrictions on app developers and consumers.
`But Google would not budge.
`28. Because of Google’s refusal to stop its ongoing anti-competitive and
`unlawful conduct, on August 13, 2020, Epic began providing Fortnite players the choice
`of using Epic’s own direct payment tool as an alternative to Google’s overpriced Billing
`tool, sharing with players who chose to use Epic’s payment tool the resulting savings.
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`29.
`In retribution, Google removed Fortnite from Google Play Store
`listings, preventing new players from obtaining the game. Google also prevented
`Android users who acquired Fortnite from the Google Play Store from obtaining app
`updates they will need to continue playing with their friends and family.
`30. Epic has publicly advocated for years that Google cease the anti-
`competitive conduct addressed in this Complaint. Google refused to change its
`industry-impacting conduct. Instead, Google offered to placate Epic by offering it
`preferential terms on side deals, such as YouTube sponsorships and cloud services, if
`Epic agreed to distribute Fortnite in the Google Play Store and acceded to Google’s
`30% tax. Google has reached at least one preferential deal with another mobile game
`developer, Activision Blizzard, and Epic believes that Google is using similar deals with
`other companies to allow Google to keep its monopolistic behavior publicly
`unchallenged. But Epic is not interested in any side deals that might benefit Epic alone
`while leaving Google’s anti-competitive restraints intact; instead, Epic is focused on
`opening up the Android ecosystem for the benefit of all developers and consumers.
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`31. Accordingly, Epic seeks injunctive relief in court. Google’s conduct
`has caused and continues to cause Epic financial harm, but Epic is not bringing this case
`to recover these damages; Epic is not seeking any monetary relief, but rather only an
`order enjoining Google from continuing to impose its anti-competitive conduct on the
`Android ecosystem.
`
`PARTIES
`32. Plaintiff Epic Games, Inc. is a Maryland corporation with its
`principal place of business in Cary, North Carolina. Epic’s mission is “to create fun
`games we want to play and to build the art and tools needed to bring those games to
`life”. Epic was founded in 1991 by a college student named Tim Sweeney. Mr.
`Sweeney ran Epic out of his parents’ basement and distributed, by mail, Epic’s first
`commercial personal computer software, a game named ZZT. Since then, Epic has
`developed several popular entertainment software products that can be played on an
`array of platforms—such as personal computers, gaming consoles, and smart mobile
`devices. Epic also creates and distributes the Unreal Engine, a powerful software suite
`that allows competing game developers and others to create realistic three-dimensional
`content, including video games, architectural recreations, television shows, and movies.
`An Epic subsidiary also develops and distributes the popular Houseparty app, which
`enables video chatting and social gaming on smart mobile devices and personal
`computers. Worldwide, approximately 400 million users have signed up to play Epic
`games, and each day 30 to 40 million individuals log into an Epic game.
`33. Defendant Google LLC is a Delaware limited liability company with
`its principal place of business in Mountain View, California. Google LLC is the
`primary operating subsidiary of the publicly traded holding company Alphabet Inc. The
`sole member of Google LLC is XXVI Holdings, Inc., a Delaware corporation with its
`principal place of business in Mountain View, California. Google LLC contracts with
`all app developers that distribute their apps through the Google Play Store and is
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`therefore a party to the anti-competitive contractual restrictions at issue in this
`Complaint.
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`34. Defendant Google Ireland Limited (“Google Ireland”) is a limited
`company organized under the laws of Ireland with its principal place of business in
`Dublin, Ireland, and a subsidiary of Google LLC. Google Ireland contracts with all app
`developers that distribute their apps through the Google Play Store and is therefore a
`party to the anti-competitive contractual restrictions at issue in this Complaint.
`35. Defendant Google Commerce Limited (“Google Commerce”) is a
`limited company organized under the laws of Ireland with its principal place of business
`in Dublin, Ireland, and a subsidiary of Google LLC. Google Commerce contracts with
`all app developers that distribute their apps through the Google Play Store and is
`therefore a party to the anti-competitive contractual restrictions at issue in this
`Complaint.
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`36. Defendant Google Asia Pacific Pte. Limited (“Google Asia Pacific”)
`is a private limited company organized under the laws of Singapore with its principal
`place of business in Mapletree Business City, Singapore, and a subsidiary of Google
`LLC. Google Asia Pacific contracts with all app developers that distribute their apps
`through the Google Play Store and is therefore a party to the anti-competitive
`contractual restrictions at issue in this Complaint.
`37. Defendant Google Payment Corp. (“Google Payment”) is a
`Delaware corporation with its principal place of business in Mountain View, California,
`and a subsidiary of Google LLC. Google Payment provides in-app payment processing
`services to Android app developers and Android users and collects a 30% commission
`on many types of processed payments, including payments for apps sold through the
`Google Play Store and in-app purchases made within such apps.
`JURISDICTION AND VENUE
`38. This Court has subject-matter jurisdiction over Epic’s federal
`antitrust claims pursuant to the Clayton Antitrust Act, 15 U.S.C. § 26, and 28 U.S.C.
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`§§ 1331 and 1337. The Court has supplemental jurisdiction over Epic’s state law claims
`pursuant to 28 U.S.C. § 1367. The Court also has subject-matter jurisdiction over the
`state-law claims pursuant to 28 U.S.C. § 1332 based on the diversity of citizenships of
`Plaintiff, on the one hand, and of Defendants, on the other, and the amount in
`controversy exceeding $75,000.
`39. This Court has personal jurisdiction over the Defendants. Google
`LLC and Google Payment are headquartered in this District. All Defendants have
`engaged in sufficient minimum contacts with the United States and have purposefully
`availed themselves of the benefits and protections of United States and California law,
`such that the exercise of jurisdiction over them would comport with due process
`requirements. Further, the Defendants have consented to the exercise of personal
`jurisdiction by this Court.
`40. Each of the Defendants except Google Payment is party to a Google
`Play Developer Distribution Agreement (the “DDA”) with Epic. Section 16.8 of the
`DDA provides that the parties “agree to submit to the exclusive jurisdiction of the
`federal or state courts located within the county of Santa Clara, California, to resolve
`any legal matter arising from or relating to this Agreement”. Section 16.8 further
`provides that “[a]ll claims arising out of or relating to this Agreement or Your
`relationship with Google under this Agreement will be governed by the laws of the State
`of California, excluding California’s conflict of laws provisions.” The claims addressed
`in this Complaint relate to the DDA or to Epic’s relationship with Google under the
`DDA, or in the alternative such claims arise out of the same nucleus of operative facts
`as other claims as to which the Court may exercise personal jurisdiction over each
`Defendant, so that the exercise of pendent personal jurisdiction would be proper.
`41. Google Payment is party to a Google Payments—Terms of
`Service—Seller Agreement with Epic. Section 11.3 of that Agreement provides that
`“[t]he exclusive venue for any dispute related to this Agreement will be the state or
`federal courts located in Santa Clara County, California, and each party consents to
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`personal jurisdiction in these courts.” Section 11.3 further provides that “The laws of
`California, excluding California’s choice of law rules, and applicable federal United
`States laws will govern this Agreement.” The dispute between Google Payment and
`Epic relates to the parties’ Agreement, or in the alternative Epic’s claims arise out of the
`same nucleus of operative facts as other claims as to which the Court may exercise
`personal jurisdiction over Google Payment, so that the exercise of pendent personal
`juris