Google Sued By 36 US States Over Play Store Fees

The suit claims the tech giant “enjoys virtually unchallenged power over Android app distribution and Android in-app purchases of digital content that extends to every state, district, and territory in the United States.”

This article was originally published by Insider Paper.

Google and parent company Alphabet were hit with yet another federal antitrust lawsuit on Wednesday—this one filed in a San Francisco-based U.S. district court by the attorneys general of 36 states and Washington, D.C.

“Through its illegal conduct, the company has ensured that hundreds of millions of Android users turn to Google, and only Google, for the millions of applications they may choose to download to their phones and tablets.”
—New York Attorney General Letitia James

“Google has served as the gatekeeper of the internet for many years, but, more recently, it has also become the gatekeeper of our digital devices—resulting in all of us paying more for the software we use every day,” said New York Attorney General Letitia James, who is co-leading the bipartisan coalition with the AGs of North Carolina, Tennessee, and Utah.

This suit focuses on the company’s behavior related to Google Play Store, its application store for Android devices.

Google, which acquired the Android mobile operating system in 2005, “promised repeatedly that Android would be the basis for an ‘open’ ecosystem in which industry participants could freely compete,” the complaint (pdf) says.

“Instead, Google has taken steps to close the ecosystem from competition and insert itself as the middleman between app developers and consumers,” according to the AGs. “Unbeknownst to most consumers who own a mobile device running Android, every time they purchase an app from the Google Play Store, or purchase digital content or subscriptions within an app, up to 30% of the money they pay goes to Google.”

The complaint goes on to say that “Google enjoys virtually unchallenged power over Android app distribution and Android in-app purchases of digital content that extends to every state, district, and territory in the United States.”

The case focuses on five categories of alleged anti-competitive conduct. The complaint claims:

• Google creates and imposes broad practical, technological, and contractual impediments to effectively close the Android app distribution ecosystem;
• Google disincentivizes and discourages competition from the only market participants that could otherwise avoid the technological restrictions and be well-positioned to compete in app distribution—Android device manufacturers and mobile network operators;
• Google has focused its anti-competitive strategies on Samsung, the largest manufacturer of Android devices sold in the United States;
• Google launched incentive programs to share monopoly profits with large app developers that might be capable of disrupting Google’s app distribution monopoly; and
• Google mandates that consumers who download apps from the Google Play Store also use Google Play Billing for all in-app purchases.

As James put it: “Once again, we are seeing Google use its dominance to illegally quash competition and profit to the tune of billions.”

“Through its illegal conduct, the company has ensured that hundreds of millions of Android users turn to Google, and only Google, for the millions of applications they may choose to download to their phones and tablets,” she said.

“Worse yet, Google is squeezing the lifeblood out of millions of small businesses that are only seeking to compete,” James added. “We are filing this lawsuit to end Google’s illegal monopoly power and finally give voice to millions of consumers and business owners.”

In a statement to Yahoo! Finance before the suit was filed, a Google spokesperson defended the company’s app store policies, saying that “Android is the only major operating system that allows people to download apps from multiple app stores.”

“In fact, most Android devices ship with two or more app stores preinstalled,” Google’s spokesperson added. “They can also install additional app stores or apps directly from their browser if they choose.”

This is just one of many suits faced by by company, as Politico pointed out Wednesday:

Google also faces a suit that the Justice Department and 14 states filed in October, focused on Google’s efforts to dominate the mobile search market; one from 38 states and territories filed in December, also focused on search; and a third suit by 15 states and territories related to Google’s power over the advertising technology.

Wednesday’s filing notably comes just days after a federal judge in Washington, D.C. dismissed a pair of lawsuits that the Federal Trade Commission and a coalition of AGs led by James brought against fellow tech giant Facebook.

As Common Dreams reported, Alex Harman, competition policy advocate for Public Citizen, responded with a call for congressional action, saying that “once again, our antitrust laws have been shown by the courts to be woefully inadequate to address the abuses of the richest companies in the world.”