Exterior view of the new Google Bayview campus in Mountain View, California, May 16, 2022. Aric Crabb—Digital First Media/East Bay Times via Getty Images
Google agreed to pay $700 million and make several other concessions to resolve allegations that it was stifling competition with the Android app store. The issue was brought to court in a separate case and could lead to even bigger changes.
Google reached an agreement with the state attorney general in September, but the terms of the settlement were not disclosed in documents filed in San Francisco federal court until late Monday. The disclosure comes a week after a federal jury accused Google of deploying anti-competitive tactics in its Play Store for Android apps.
The proposed settlement with the states includes $630,000 in compensation for U.S. consumers being funneled into payment processing systems that state attorneys general say inflated the prices of digital transactions within apps downloaded from the Play Store. Includes $1,000,000. This store carries the Android software found in most smartphones around the world.
Just like Apple does with its iPhone app store, Google also collects a 15% to 30% commission on in-app purchases. State attorneys general argued that the fees were driving prices higher than they would have been had there been an open market for payment processing. According to evidence presented in a recent trial focused on the Play Store, these fees cost Google billions of dollars in profits annually.
Consumers eligible to receive a portion of the $630 million compensation fund will be automatically notified of various options on how to receive their portion.
An additional $70 million of the pretrial settlement will cover fines and other costs Google must pay to states.
Google also agreed to make other changes to allow consumers to download and install Android apps from retailers other than the Play Store for the next five years. Try to avoid issuing security warnings or “scary screens” when alternatives are used.
Android app makers will also have the flexibility to offer consumers alternative payment options instead of automatically processing transactions through the Play Store and its fee system. Apps can also promote lower prices available to consumers who choose alternatives to Play Store payment processing.
Washington, D.C., Attorney General Brian Schwalb hailed the settlement as a victory for the tens of millions of Americans who rely on Android phones to make ends meet. “For too long, Google’s anticompetitive practices in app distribution have deprived Android users of choice and forced them to pay artificially high prices,” Schwalb said.
Wilson White, Google’s vice president of government affairs and public policy, said the partnership is a positive for the company, even though it involves a lot of money and concessions. The settlement “builds on Android’s choice and flexibility, Google’s ability to maintain strong security protections, compete with other (software) manufacturers, and invest in the Android ecosystem for the benefit of users and developers.” ,” White said in a blog post.
While state attorneys general hailed the settlement as a big win for consumers, it’s not enough for Epic Games, which spearheaded the attack on Google’s app store practices in an antitrust lawsuit filed in August 2020. It wasn’t.
Epic, the maker of the popular video game Fortnite, settled in September despite having already lost most of the key claims in a similar lawsuit against Apple and its iPhone app store. He refused and chose to take the case to court. 2021.
But the Apple case was decided by a federal judge, not a jury, which vindicated Epic with a unanimous verdict that Google had erected anticompetitive barriers around the Play Store. Google has vowed to appeal the ruling.
But the outcome of the case still could lead to Google being ordered to pay even more money as punishment for past practices and prompting it to make even more drastic changes to its lucrative Android app ecosystem. This is causing some anxiety.
These changes are expected to be decided next year by U.S. District Judge James Donato, who presided over the Epic Games case. Donato also needs to approve a settlement between Google’s Play Store and the state.
Google faces an even bigger legal threat in a separate antitrust case targeting its dominant search engine, which serves as the core of a digital advertising empire that generates more than $200 billion in annual revenue. Closing arguments in the case between Google and the Department of Justice are scheduled for early May before a federal judge in Washington, D.C.