Multiple States Join Antitrust Lawsuit Against Google Play Store, Citing Pending 30% Sales Commission Hike

Nearly 70% of the U.S. state attorneys general have reportedly joined an antitrust lawsuit filed July 7 against Google and its branded Google Play Store. The suit, which was filed in California federal court, alleges Google is exercising monopoly power with a planned September 30% commission hike on third-party sales of digital goods, i.e. movies and TV shows, in addition to subscription streaming services such as Netflix and Disney+ and Hulu.

Lead states in the suit include Utah, North Carolina, Tennessee, New York, Arizona, Colorado, Iowa and Nebraska — underscoring a trend among conservative states taking on Silicon Valley tech giants such as Facebook, Google and Apple alleging political bias.

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But this suit, similar to litigation filed against Apple’s App Store, is calling out the company’s gatekeeper tactics as non-competitive. Google also faces separate litigation from myriad states regarding its search engine and advertising technology.

Most studios, media companies and over-the-top video platforms use Google and Apple to market their apps to consumers. Apple mandates that anyone using a branded iOS device must access third-party apps through its App Store. For Android device users, Google Play Store has become the default search tool, although consumers can access apps via alternative channels such as Amazon and Samsung.

Google last year began informing companies and services that it would begin enforcing their use of its payment system for all transactions, beginning in September. As the deadline approached companies such as Netflix and Spotify cried foul, which led to Google reportedly proposing a 15% commission on the first $1 million in revenue from video, audio and e-book transactions.

While Apple continues to operate in a closed system, Google does not — a reality Wilson White, senior director of government affairs and public policy at Google noted in written testimony submitted April 21 to the U.S. Senate Judiciary Committee.

In his testimony, Wilson argued that use of the Android mobile operating system, which launched in 2008, is free to anyone and has increased third-party competition as a valuable go-to platform for e-commerce, development and marketing.

More importantly, Wilson contends Google operates the Play Store outside of a bubble.

“Distributors can distribute their app via many other Android app stores, directly to OEMs, or through direct downloads on their websites,” he wrote. “And developers are free to contract directly with device makers [i.e. mobile phone, tablet manufacturers] to preload their apps on Android devices.”

Google Play Store Looking to Stop Third-Party Apps From Avoiding Revenue-Sharing

The days of free co-existence among tech platforms and third-party media apps is coming to an end. Google is telling apps holders on its Google Play Store it would no longer allow them to direct subscribers to their own websites to avoid paying a 30% revenue-sharing agreement for in-app purchases.

Writing in a Sept. 28 blog post, Sameer Samat, VP of product management for Google, said Google Play’s billing system provides an efficient means for Android users to transact using their local, preferred method of payment. He said the platform (specifically Google Play Store) has become a trusted source for the safe, secure and seamless interaction with third-party apps, including Netflix and Spotify.

While only 3% of Google Play Store apps involve fiscal transactions, Samat said some apps automatically re-direct users to their websites rather that going through Google’s paywall — a move that avoids the app holder from paying Google any share in revenue.

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“We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair,” he wrote. “Not only does this approach allow us to continuously reinvest in the platform, this business model aligns our success directly with the success of developers.”

Google is giving app developers until Sept. 30, 2021, to integrate their billing with the Android platform.

“We will require Google’s apps that do not already use Google Play’s billing system to make the necessary updates as well,” Samat wrote.