September 24, 2023

WASHINGTON – A group of 36 states and the District of Columbia sued Google Wednesday over allegations that its mobile app store is abusing its market power and imposing aggressive terms on software developers, expanding legal challenges for the internet search giant.

The lawsuit is the fourth federal or state antitrust lawsuit filed against Google since October, but the first to scrutinize the company’s lucrative app store. Utah, North Carolina, New York and Tennessee led the lawsuit, which was filed in federal court in the Northern District of California.

Mobile app developers are struggling with the way Google is getting them to use their own system for some payments in their products. This system charges a 30 percent commission on many transactions, which, according to the developers, forces them to charge higher prices for their services.

The lawsuit reflected those concerns, saying Google had taken control of the proliferation of mobile apps in its Android smartphone operating system.

“Because of Google’s anti-competitive behavior, the Google Play Store’s market share – which is well over 90 percent – is not exposed to credible threats and market forces cannot put pressure on its over-competitive commissions,” the complaint said.

Google described the lawsuit in a blog post as “unfounded”. It is strange that the attorneys general decided to attack their Play Store instead of their rival Apple.

“Android and Google Play offer openness and choice that other platforms simply don’t,” wrote William White, Google’s senior director of public policy. “This lawsuit is not about helping the little guy or protecting consumers. It’s about promoting a handful of large app developers who want to take advantage of Google Play without paying for it. “

The lawsuit, previously reported by Bloomberg News, signals that state and federal regulators continue to scrutinize Google’s corporate empire for examples of monopoly practices. For years, regulators chose not to take action against Google even though its companies became increasingly dominant and competitors complained about how it was using its power unfairly.

The most recent series of antitrust complaints against Google have mainly focused on search and advertising. The Justice Department sued the company last year on allegations that it illegally protected its monopoly on online search advertising. A later lawsuit filed by attorneys general accused Google of abusing its power over advertising technology, and they separately sued it for pressuring smaller search services.

Google has argued that it allows other companies like Samsung and Epic Games, creator of Fortnite, to run app stores for its Android software. In the complaint, the states stated that while the Google Play Store is the source of more than 90 percent of all Android apps in the United States, no other Android app store has more than 5 percent of the market.

The complaints join other proceedings against the tech giants or investigations into their practices. The Federal Trade Commission and a group of states filed antitrust lawsuits against Facebook last year; A judge dismissed the lawsuit last month. The FTC has also been investigating Amazon, and the Justice Department has asked questions about Apple’s business.

Apple, which operates the other major smartphone app store, is also on trial because of developer cuts on app sales and subscriptions. Epic Games filed an antitrust lawsuit against Apple last year, accusing it of abusing its market power to charge app makers unfairly high commissions. It is waiting for a decision on the case next month.

As the money flowing through Apple and Google’s marketplaces has grown to tens of billions annually, developers said the companies levied taxes on access that were too high. With the two companies’ software controlling almost every smartphone in the world, developers would have no choice but to stick to their guidelines and pay the fees.

Last year, Google began cracking down on subscription-based app developers like Netflix and Spotify who bypassed the company’s payment system to avoid paying fees on its Play Store. Google said at the time that it is clarifying what types of transactions are required with its payment system. It had announced that it would force companies to integrate their payments into Google’s billing system in September 2021.

But when the antitrust review of its Play Store began, Google said earlier this year that it would cut developer store fees from 30 percent to 15 percent on the first $ 1 million in revenue per year.

Wednesday’s lawsuit also puts pressure on how Apple operates its own app store. While Android allows people to bypass the Play Store and add apps to their phones in other ways, Apple’s mobile software does not. In fact, it means that there is no alternative to installing software on an iPhone without going through the App Store.

“The app store problems are so clearly in the strike zone for Apple,” said Alex Harman, a competition policy advocate for Public Citizen, a group that has pushed for more aggressive antitrust enforcement against tech giants.

Sean Reyes, the Utah attorney general, said in an interview that he was interested in the issues raised by Apple’s practices. “Nothing in this lawsuit or investigation prevents us from investigating or filing any other company,” he said.

Apple has not returned a request for comment.