The allegations about Google's Play Store stem from an
investigation involving nearly every U.S. state that began in September 2019
and have already resulted in three other lawsuits against the company. The
cases threaten to force major changes to how it generates billions of dollars
in revenue across its businesses, including advertising, in-app purchases and
smart home gadgets.
Google said on Wednesday the litigation was about boosting a
handful of major app developers that want preferential treatment rather than
about helping small businesses or consumers. It maintains that unlike Apple Inc
with its App Store on iPhones, Android supports competitors to the Play Store.
"Android and Google Play provide openness and choice
that other platforms simply don't," the company said in a blog post.
The states, led by Utah, New York, North Carolina and
Tennessee, argue that Google has generated "enormous profit margins"
from the Play Store by engaging in illegal tactics to preserve monopolies in
selling Android apps and in-app goods.
In the United States, Google Play accounts for 90% of
Android apps downloaded, according to the lawsuit.
"Google leverages its monopoly power with Android to
unlawfully maintain its monopoly in the Android app distribution market,"
the lawsuit stated.
The states pointed to agreements already targeted in other
lawsuits such as those Google has with mobile carriers and smartphone makers to
promote its services.
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But they added fresh claims after newly reviewing internal
company documents. The states alleged that Google bought off developers so they
would not support competing app stores, and that through numerous secret
projects it intended to pay Samsung Electronics Co, whose rival app store posed
the biggest threat, to stop competing.
Samsung did not immediately respond to a request for
comment.
The plaintiffs, which include California and the District of
Columbia, also say Google has unlawfully mandated that some apps use the
company's payment tools and give Google as much as 30% of digital goods sales.
The "extravagant commission," compared with the 3% other marketplaces
charge, has forced app makers to raise prices and consumers to spend more, the
states said.
"Google Play is not fair play," Utah Attorney
General Sean Reyes said in a statement. "It must stop using its
monopolistic power and hyper-dominant market position to unlawfully leverage
billions of added dollars from smaller companies, competitors and consumers
beyond what should be paid."
The states want the consumers to get their money back. They
also called for civil penalties and a court-imposed monitor to ensure Google
eases the process for consumers, app developers and smartphone makers to use or
promote alternatives to the Play Store and the official payment system for 20
years. In addition, the states seek to stop Google's payments to Samsung and
developers.
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The states said on Wednesday they have not ruled out taking
similar action against Apple over its App Store.
The filing drew praise from Meghan DiMuzio, executive
director for the Coalition for App Fairness, which represents companies
including Match Group Inc and Spotify Technology SA that oppose some of the
Play Store rules.
"Anti-competitive policies stifle innovation, inhibit
consumer freedom, inflate costs, and limit transparent communication between
developers and their customers," DiMuzio said.
Fearing Samsung
The lawsuit said that while Google does enable consumers to
avoid the Play Store, it displays "generally misleading warnings and
hurdles" to discourage such activity.
Google does not break out Play Store's financial performance
but has said the unit along with several others together generated $21.7
billion in revenue last year, or about 12% of overall sales.
Google's worries about Samsung grew after the South Korean
company worked with video game maker Epic Games Inc to exclusively launch
"Fortnite" for Android devices in 2018, according to the lawsuit.
Epic's bypassing of the Play Store cost Google some millions
of dollars in revenue, the states said.
Google "immediately launched multiple coordinated
initiatives designed to block the emergence of a competing Galaxy Store,"
the lawsuit said. "Google viewed these projects as an integrated approach
to eliminating the threat of more developers following Epic's lead."
Last year, Epic itself sued Google and Apple separately in
federal court in California over app store policies. Proposed classes of
developers and consumers have joined the cases.
A judge's decision in the Apple fight is expected in the
coming weeks, and a hearing on Google's effort to dismiss the case against it
is scheduled for July 22.
The lawsuits come amid growing antitrust scrutiny of big
tech companies, but regulators suffered an early blow last week when a judge
dismissed a Federal Trade Commission lawsuit against Facebook Inc.
The ruling should not affect the Play Store case because it
covers different circumstances, the states suing Google said. -Reuters