The Epic ruling can't stop Big Tech

Hi all, it’s Sarah Frier in San Francisco. Google’s big legal defeat by Fortnite maker Epic Games Inc. could threaten its part of the app st [View in browser]( [Bloomberg]( [by Sarah Frier]( Hi all, it’s Sarah Frier in San Francisco. Google’s big legal defeat by Fortnite maker Epic Games Inc. could threaten its part of the app store duopoly — maybe — and not much else. But first… Three things you need to know today: • X’s 2023 ad sales are [projected to slump]( and miss internal targets • Netflix posted first-ever [detailed viewer data]( • SpaceX’s value jumps [close to $180 billion]( in a tender offer Big Tech is already winning in AI A San Francisco jury took less than four hours to decide on Monday that Google engaged in anticompetitive conduct and illegally forced its app store billing – and its store fees of up to 30% – on software developers, threatening a [$200 billion industry](. The ruling was seen as a blow for Apple Inc. too, since its app store works similarly. Most of all, it was hailed as a major victory in busting Big Tech control. “The last two decades have seen a profound shift away from the open internet towards walled gardens,” helping concentrate tech market power, [said]( Mark Lemley, a Stanford University law professor. “This verdict just knocked a big hole in the garden wall.” There is some evidence for the idea that after all the techlash, the reckoning is finally coming. In a separate case, Alphabet Inc.’s Google spent weeks getting [grilled]( by a Justice Department judge on whether it abused its market dominance in search. The Federal Trade Commission [sued]( Amazon.com Inc. in September, saying it uses unfair strategies to maintain an e-commerce monopoly, and is pursuing Meta Platforms Inc., the Facebook and Instagram owner, for its power in social media. There are a whole host of other antitrust challenges for the biggest companies in the EU. But the legal system only solves problems after they get bad enough for everyone to notice and complain. When the tech industry is building new things, all that seems to matter is growing them, faster. The current big wave of innovation in the industry is happening in artificial intelligence. It’s almost prohibitively expensive for a startup to build a large language model – the technology is trained on masses of data, using custom silicon chips, to answer written prompts with fresh content – so the growth of the industry has concentrated power in the familiar hands of Google, Microsoft Corp., Amazon, Meta and Apple. “We see the large platforms as the primary AI enablers,” Morgan Stanley wrote in a recent note to investors. Besides their infrastructure, computing power and willingness to invest, they hold the most high-quality proprietary data, which is necessary for making powerful models work, too, the analysts wrote. Microsoft invested $13 billion in market leader OpenAI, the maker of ChatGPT, and as part of the deal is letting it grow via Microsoft’s data centers. Google and Amazon have each committed [billions]( to rival Anthropic, with a similar deal. Few other companies could afford to make bets that large. Alphabet shares barely budged on the Epic decision. Maybe that’s because it’s not clear yet whether the company will win on appeal. Or maybe it’s because investors see a future where Google remains dominant — just in a different way. Google is selling its [own]( AI tools to its cloud computing customers, [alongside]( lots of other options from partners and startups, where the debate over self-preferencing can one day begin anew. —[Sarah Frier](mailto:sfrier1@bloomberg.net) The big story A veteran of Sony’s PlayStation group is now helping make the Xbox relevant in Japan. Mena Kato is trying to [crack an elusive market]( that’s been on Microsoft’s wish list since the beginning. One to watch [Watch the Bloomberg Technology TV interview]( with Even Rogers, CEO of the space startup True Anomaly. Get fully charged Italy is considering a move to take control of the Telecom Italia [unit that manages subsea cables](. US prosecutors argued that Nikola founder Trevor Milton should serve a decade in prison for misleading investors about the [future of his electric truck maker](. Hackers stole about $1.7 billion this year [from crypto projects](. Warren Buffett’s Berkshire Hathaway [cut its holding in HP]( by almost half. Nokia cut its 2026 profit goal after [losing AT&T’s business](. Snap said it has 7 million subscribers to Snapchat+, which gives users [early or exclusive access to AI tools]( and other features. 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