Epic and Google are gearing up for another legal battle. You might recall that Google has an in-app billing crackdown coming to the Play Store soon. The new rules require all apps selling digital goods to use Google Play Billing by March 31, so Google gets a cut of the sales. Any app in non-compliance has been unable to ship updates since March 31, but the real deadline is June 1, when these apps will be removed from the Play Store. Epic Games bought the popular independent music site Bandcamp in March, and it’s already taking Google to court over its newest acquisition. Bandcamp isn’t in compliance with the billing rules, so it’s due for a ban in June. As part of its antitrust case against Google, Epic is filing a motion for a preliminary injunction to block Bandcamp’s de-listing from the Play Store.
Epic has attacked Google and Apple over their app store rules and what Epic says are excessive fees. In March, there were a lot of questions surrounding why the creator of Fortnite and the Unreal Engine would buy an independent music site. One line of commentary from Music Business Worldwide founder Tim Ingham seems to have nailed Epic’s strategy. Ingham notes that Epic failed to get Apple to reduce its 30 percent app store cut, in part because the alternative model Epic could demonstrate to the court, the Epic Games Store and its 12 percent fee, wasn’t profitable. Apple’s lawyers argued the unprofitability of Epic’s Games Store justified Apple’s 30 percent fees.
Bandcamp is a profitable digital content business, though. Bandcamp has a searchable content store, and it hosts and delivers the content by charging artists a 10 to 15 percent commission. Ingham predicted Epic would hold up Bandcamp’s business model as a viable alternative to Apple and Google’s app store fees, and that Epic would use its new acquisition to attack app store owners. It looks like we’re seeing the first actions of that plan.
Bandcamp says its business is incompatible with Google Play Billing
Epic’s court filing argues that “Google has a monopoly over Android app distribution, and uses its monopoly power to illegally tie its payment product—Google Play Billing—to its app distribution product—Google Play.” Bandcamp is used as an example of what harm this billing system will cause, arguing that Bandcamp’s business model is mostly incompatible with Google Play Billing.
Epic raises several issues with Google’s billing system. First, that Bandcamp’s payment system is “custom-built to maximize efficiency and minimize costs, allowing artists to be paid within 24 to 48 hours of a sale.” Google Play takes 15 to 45 days to pay out, and Bandcamp’s speedy system is meant to help independent artists pay monthly bills on time.
Second, Epic says Bandcamp’s ability to give artists 82 percent of revenue would be harmed if Google takes a 30 percent cut. Epic also notes that Google offered the company a sweetheart deal of 10 percent commission after Epic complained. Google keeps offering huge companies special discounts on its Play Store fees. Spotify has another special arrangement that allows it to run its own payments system alongside Google Play. Epic turned down the 10 percent deal, too, saying Bandcamp currently has a 7 percent profit margin on its 13 percent cut, so it can’t afford it.
One of the more interesting complaints is that Google Play Billing just isn’t compatible with the type of store Bandcamp runs. The first is that Bandcamp is a mix of digital and physical content. That makes sense for a music company—you can buy a digital download, a physical CD or vinyl record, and some band merch like a T-shirt, all in one store. Google Play Billing, which was meant for in-app purchases, isn’t built for this and doesn’t support physical sales. Bandcamp would have to support two different payment systems, and it would have to run two checkout systems. Bandcamp’s second compatibility issue is that it’s an open marketplace, with thousands of artists selling goods. Google Play supports paying a single developer entity, not playing middle-man to thousands of sellers.
On Bandcamp’s blog, CEO Ethan Diamond said, “If Google’s policy changes stand, beginning on June 1st, we would have to either pass Google’s fees on to consumers (making Android a less attractive platform for music fans), pass fees on to artists (which we would never do), permanently run our Android business at a loss, or turn off digital sales in the Android app.” Removing purchases due to Google’s new billing rules is the option Amazon and Barnes & Noble took earlier this month. Poor Barnes & Noble is also an Android manufacturer, and now it can’t sell digital books on its own hardware!
Epic’s antitrust case against Google is set for April 2023, while non-compliant apps will get booted off the Play Store in a month. We’ll be on the lookout for more developments.
Update: Google sent a statement:
This is yet another meritless claim by Epic, which is now using its newly acquired app Bandcamp to continue its effort to avoid paying for the value that Google Play provides. We’ve been transparent about Play’s Payment policy for more than 18 months and, as Epic knows, Bandcamp is eligible for a service fee of just 10% through Play’s Media Experience Program—far less than the fees they charge on their own platforms. Despite their claims, Android’s openness means that Bandcamp has multiple ways of distributing their app to Android users, including through other app stores, directly to users via their website or as a consumption-only app as they do on iOS.