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SENSOR TOWER · SEEMA SHAH · DECEMBER 2023
MMM: Epic Games Wins Landmark Decision in Google Case; Sephora and Ulta Ramp US Advertising Efforts
The jury in Epic Games' trial against Google found that Google's business practices in its Play Store are monopolistic. Sensor Tower data shows that Google earns a significant amount of revenue (~$49bn since 2020) from Play Store fees. Sephora and Ulta, two major players in the beauty industry, advertised heavily during the holiday season to drive consumer engagement and sales.
Key Takeaways:
A landmark verdict was reached in the Epic Games vs Google trial, establishing that Google’s practices with both its app store and billing services are anticompetitive. Although it's still unclear on what the presiding judge’s ultimate decision will be, this marks an important win for Epic in its yearslong legal battles with both Apple and Google. Per Sensor Tower estimates, Google has brought in almost $49bn in Play Store revenue (or developer fees) since 2020
On an annual basis, ST data shows that Google likely brings in between $11-$13bn from its Play Store fees placed upon developer/publishers (assuming a ~30% take rate between 2020-2023 YTD). Should the judge rule that Google must allow alternative payment outside of its ecosystem or significantly reduce its fees, the company could see a material affect to its topline
Prior to Epic’s hit title Fortnite, being removed from both app stores, consumers spent nearly $1.2bn on the game between 2018 to 2020 according to ST data. Assuming a ~30% take rate, Epic likely saw less than $840mn of this IAP revenue
Sephora and Ulta both utilize TikTok as an advertising channel, accounting for 15% and 18% of each brand’s US ad spend in 2023, respectively. For Ulta, TikTok was the channel with the highest increase in US ad spend as of 3Q23, up ~500% YoY, compared to 95% YoY for Sephora
Ulta is very strategically spending on channels that skew younger, with nearly 40% of the brand’s budget in 2023 dedicated to TikTok, Snapchat, and YouTube
The importance of holiday seasonality can also be detected in the distribution of each brand’s US ad spend, as 4Q22 accounted for 40% and ~50% of Sephora’s and Ulta’s total spend in 2022, respectively
For more information, request the full report from reports@sensortower.com.
