37 States and Territories Sue Google for Illegal Monopoly

One of the issues is the 30% commission Google charges developers to have their apps in the Google Play Store.

 Attorneys general in 36 states and the District of Columbia filed suit against Google last week, accusing the tech giant of anticompetitive tactics and use of its dominant market position in terms of the Google Play Store. Among the issues listed in the complaint filed on July 7 is Google’s commission on digital content and subscription purchases made in the Google Play store. Similar to Apple, Google charges developers as much as 30% in fees for the privilege of being a part of the Google Play Store for Android apps. This is the fourth antitrust lawsuit filed against Google since last fall by U.S. states and territories. Individual companies, including Epic Games, have filed their own lawsuits against Google and Apple.

“To collect and maintain this extravagant commission, Google has employed anticompetitive tactics to diminish and disincentivize competition in Android app distribution. Google has not only targeted potentially competing app stores, but also has ensured that app developers themselves have no reasonable choice but to distribute their apps through the Google Play Store,” the complaint says.

“Google did not stop at excluding potential threats to its app distribution monopoly and extracting monopoly rents for app distribution. Google also ensured it could continue to reap windfall commissions from apps after the Google Play Store distributed them to consumers – often months or even years later. Namely, Google imposed the same extravagant commission of up to 30% of any future digital purchase a consumer might make within an all. For all apps that consumers obtain from the Google Play Store, Google requires that consumers purchase any in-app digital content through Google Play Billing. By imposing this unduly restrictive and anticompetitive tie, Google can indefinitely collect supracompetitive commissions from consumers who purchase in-app digital content,” reads the complaint.

Google disputes claims

In a July 7 blog post, Wilson White, Google’s senior director of public policy, disputes the antitrust claims against the company. He contends that Google has actually created more choices for Android users and allows those users to download an app from a competing app store or from a developer’s website. White even sides with Apple in the Epic Games vs. Apple lawsuit.

“We don’t impose the same restrictions as other mobile operating systems do. So it’s strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others. This complaint mimics a similarly meritless lawsuit filed by the large app developer Epic Games, which has benefitted from Android’s openness by distributing its Fortnite app outside of Google Play,” White says.

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White also provides a list of how he believes that Google does things fairly and how the lawsuit “gets it wrong.”

  • Google Play competes vigorously and fairly, allowing developers and consumers to choose to use other app stores.
  • Android increases competition and choice by allowing developers and consumers to use preloaded apps or download their own from Google Play, other app stores or directly from developer websites.
  • Google says it helps developers succeed. As of February 2020, developers had earned $80 billion through Google Play and has helped to create nearly 2 million jobs.
  • The business model of Google Play and Android benefits developers, charging them a progressive service fee of 15% on the first $1 million earned (this represents 99% of developers) and a commission of 30% on earnings over $1 million.

“We understand that scrutiny is appropriate, and we’re committed to engaging with regulators. But Android and Google Play provide openness and choice that other platforms simply don’t. This lawsuit isn’t about helping the little guy or protecting consumers. It’s about boosting a handful of major app developers who want the benefits of Google Play without paying for it. Doing so risks raising costs for small developers, impeding their ability to innovate and compete, and making apps across the Android ecosystem less secure for consumers,” White says.

Insider Take

The timing of this case is interesting because the FTC recently lost a complaint against Facebook for anticompetitive behavior. Though that case is still pending (the FTC can amend its complaint up until July 29), federal and state regulators are eager to send a message to big tech that they can no longer monopolize the digital marketplace. Regulators want transparency and choice for businesses of all sizes, and they feel that companies like Apple, Amazon, Google and Facebook are taking advantage of their dominant market power. We expect to see more cases like this in the future and the outcomes of the earliest cases (Epic Games vs. Apple) could set a precedent for how other courts will rule on antitrust matters.