Accused of anti-competitive behavior, Google is being sued by 36 states in the United States over its stronghold of Play Store, Google’s digital marketplace for apps distribution, and in-app purchase system. Previously, the tech giant faced Justice Department and states complaints about its search and digital advertising businesses.
As per Bloomberg’s report, the search engine giant is accused of collecting an unfair and huge 30% share cut from developers for all in-app purchases via the Play Store. The company is also accused of playing off companies to prevent them from developing their own app stores.
State attorneys general said in a complaint filed Wednesday in federal court in San Francisco that Google used anticompetitive tactics to thwart competition and ensure that developers have no choice but to go through the Google Play store to reach users. It then collects an “extravagant” commission of up to 30% on app purchases, the states said.
Google was accused of paying Samsung Electronics Co., the largest Android manufacturer, to ensure that the Korean company didn’t develop its own competing app store. Additionally, after Fortnite maker Epic Games Inc. began distributing its app outside of Google’s store, Google “bought off” developers to dissuade them from doing the same, according to the complaint. Details of those payouts were blacked out in the complaint.
Google says that the lawsuit is meritless and gets it wrong
In a blog post titled “A lawsuit that ignores choice on Android and Google Play”, the company has listed down all the details of how “this lawsuit gets it wrong”.
- Play Store competes vigorously with Apple App Store
- Android increases competition and gives choice: We also built an app store, Google Play, that helps people download apps on their devices. If you don’t find the app you’re looking for in Google Play, you can choose to download the app from a rival app store or directly from a developer’s website. We don’t impose the same restrictions as other mobile operating systems do.
- Creates jobs in America
- Benefits developers
Highlighting its reduced 15% commission rate, the company detailed that all other app stores charge more or less the same 30% commission which is industry standard. Calling it a meritless lawsuit, Google says that such regulatory actions are taken to favor a few big developers which will eventually harm the small developers.
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.
During the COVID-19 pandemic, Apple and Google reduced their commission rate to 15% for developers who earn up to $1million annually, when the companies faced pressure to support small developers. In addition, Apple is fighting to maintain the sanctity of the iOS App Store by pushing sideloading off iPhone, which Google already supports.