Google Play Store Fees Cause States to File Antitrust Lawsuit Against Google
37 US states are suing Google over Google Play and the Android app store.
The filing is to do with the way the company manages the people who sell through its storefronts. App developers allege that Google has a monopoly on the market and that the company uses this to leverage higher fees from people using Google Play.
Alongside this, the lawsuit suggests that Google also attempts to retain developers and consumers within its ecosystem by overstating the security risks of leaving their platform.
In response, Google has said that rival app stores are available for devices on Android and apps are also available on developers’ websites, where they can be downloaded.
The filing was made in California to a federal court. New York, Tennessee, North Carolina, and Washington DC are also taking part in the legal action.
As part of the lawsuit, it is pointed out that Google can take up to 30% commission on purchases that are made on Google play. This figure is also found in similar competitors services such as Apple’s App Store, Amazon, and Microsoft Xbox. Last year, in 2020, Google Play reported $36.8bn in gross revenue.
However, Google points out that 97% of the developers on the Google Play store are not charged by the service fees, this is because no digital products are sold in their apps.
On the lawsuit, Sean Reyes, the Attorney General for Utah said, ‘Google’s monopoly is a menace to the marketplace. Google Play is not fair play. Google must be held accountable for harming small businesses and consumers. It must stop using its monopolistic power and hyper-dominant market position to unlawfully leverage billions of added dollars from smaller companies, competitors and consumers beyond what should be paid.’
The issue that is being discussed is that Google allegedly has no competitors in its field and because of this, the company has been able to unfairly increase prices. On top of this, there is a requirement for any developer using the Google Play Store to use Google Billing. In this situation, the developer gets locked into a payment processing system that requires them to distribute their app on a platform that will take up to a 30% commission of their in-app purchases.
Reyes continues by stating, ‘Most consumers have no idea that for years Google has imposed unnecessary fees far beyond the market rates for in-app transactions, unlawfully inflating costs for many services, upgrades and other purchases made through apps downloaded on the Google Play Store. As a result, a typical American consumer may have paid hundreds if not thousands of dollars more than needed over many years. Utah and the other states in our coalition are fighting back to protect our citizens and innovative app developers—including many small businesses across America—from Google’s unlawful practices.’
Google has commented on this lawsuit via a blogpost which can be read here. In it they argue that, ‘This complaint alleges that consumers and developers have no option other than to use Google Play. But that’s not correct. Choice has always been a core tenet of Android. Device makers and carriers can preload competing app stores alongside Google Play on their devices. In fact, most Android devices ship with two or more app stores preloaded. And popular Android devices such as the Amazon Fire tablet come preloaded with a competitive app store and no Google Play Store.’
The argument that Google makes is that there is competition from other app stores and in fact their model is designed to help developers grow their offerings. They sign off their blogpost with this statement,
‘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.’
The results of this lawsuit will have big implications for the tech industry and some of the biggest names in the market that have a storefront for app developers.