Google allows more app payment options in antitrust deal with states
The tech giant, Google, will pay $700 million and allow app makers to collect payments directly from consumers in a settlement it hopes will help resolve other legal challenges.
Google announced that it would allow Play app developers to offer direct payment alternatives to consumers and pay $700 million to settle a state attorneys general antitrust suit, it is the best possible way to manage rising regulatory scrutiny of its influence.
Google’s app store was sued in July 2021 for abusing its market advantage and putting onerous terms on software providers. Google faces various antitrust lawsuits in the US, including a federal trial alleging search dominance abuse. Google announced Monday that apps can now charge consumers directly. The corporation will contribute $630 million to a consumer settlement fund and $70 million to a state fund. Google confirmed that Android phone makers like Samsung can install alternative app stores in addition to Google’s Play Store to demonstrate consumers’ app download options. The settlement was announced in September without details. According to a source, Google thinks the settlement would serve as a model for other Play Store policy opponents, including Epic Games, the maker of Fortnite, which won an antitrust lawsuit against Google last week.
South Korea ordered Google and Apple to let app developers charge customers directly in 2021. Google has given alternate billing in the country since. It also preemptively launched a trial program to give US users billing options before the settlement. The settlement will decrease app manufacturer transaction costs by 4 percentage points, but app developers could pocket the discount, so users may not see a reduction. Developers can also offer several pricing alternatives when users buy.
Google settled federal lawsuits with solicitors general from all 50 states, D.C., and Puerto Rico. In a joint trial with Epic and Match Group, who had sued on similar grounds, the states would have presented their case.
The deal is Google’s latest concession on its app store, which has been under regulatory scrutiny for monopolistic practices. Google Play, one of two major mobile app marketplaces along with Apple’s App Store, has garnered complaints. Google takes 15% of app subscription payments and up to 30% of purchases in popular store-downloaded apps. Google and the solicitors announced an “agreement in principle” in September, two months before the trial. Only a week after the Epic ruling did the parties reveal the September settlement.
Also, in October, Google settled with Match. Last Monday, Epic convinced a nine-person federal jury in San Francisco that Google’s levies and demanding terms on developers violated antitrust laws, hurting its business. Next year, U.S. District Court for the Northern District of California Judge James Donato will decide Google’s conduct remedies. Google plans to appeal the Epic verdict. Google’s lawyers argued that the business couldn’t function as a monopoly because its Android mobile operating system and Play Store compete with Apple’s iOS and App Store, which are more popular in the US.
Epic submitted a similar lawsuit before a court, but the U.S. Supreme Court may take it up next year. Apple won.
