Google is facing an antitrust lawsuit by 37 US states over allegations relating to how Google may be abusing its position of power in relation to Android app distribution and competition.
The lawsuit makes allegations in three main areas which are broadly that Google:
- Unlawfully maintains its monopoly in the market for Android app Distribution.
- Has unlawfully maintained a monopoly in the Android in-app payment processing market.
- Is engaging in unfair and deceptive conduct that harms consumers.
The key arguments in the lawsuit focus on allegations that Google is using its market monopoly power as the main Android app distributor through its Play Store to charge 30 per cent fees for in-app purchases (the same as Apple, Amazon, and Microsoft XBox) from developers. The lawsuit also alleges that Google offered to “buy off Samsung” in order to prevent it from developing its competing app store.
Competitors have taken advantage of the situation to make themselves more attractive to developers by charging less. For example, Big G in India, which is a key market of Google, cut its commission to 15 per cent to those app developers who make less than $1 million per year.
In a recent, detailed blog post, Google has argued that the lawsuit appears to ignore the choice that it offers compared to competitors, saying, “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.”
Also, Google has taken a swipe at the group of state attorneys who are filing the lawsuit by saying that it attacks a system “that provides more openness and choice than others.”
There is also an argument in Google’s favour that Google has been relatively loose to date in enforcing app developers use its payment system for purchases made through the Play Store.
Criticism and Other Lawsuits
Critics who are more sympathetic to Google, have also suggested, however, that the lawsuit may be less about consumer protection and fairness, and more about protecting the interests of a number of app developers who are benefitting from Google Play without paying for it,
Other critics have suggested that while Google may allow other app stores, it appears to have taken steps to limit the traction of those stores e.g., other app stores can’t be downloaded from its Google Play Store. Also, the Google Play Store is preinstalled on all Android smartphones, and it has been reported that other app stores can’t buy advertising on the Google search engine or YouTube.
Google has faced other similar lawsuits e.g., Epic Games suing Google over the removal of Fortnite from the Play Store last year (it was also removed from the iOS App Store).
What Does This Mean For Your Business?
With Google’s Play Store being pre-installed on Android phones, it is clearly a very important platform for app developers to be part of. Yes, apps can be downloaded direct from developers, but discovering and downloading apps would appear to be more convenient and likely via a central store. It also seems fair, however, that having access to that route to market should come at some price, and it is inevitable that the level of commission charged is a contentious issue and an area of competition between app stores. The tech market has long been characterised by a group of big players apparently taking the lion’s share of the market, all of whom, including Google have face various antitrust legal challenges before, often with little real success. The fact that this one is from a multi-state group of attorneys, however, appears to give this one the impression of a bit more clout although it still remains to be seen how this plays out.