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Three-dozen US states plus DC sue Google over Play Store's revenue cut, payment system, and more

Chocolate Factory rolls its eyes at 'meritless' antitrust lawsuit

As expected, Google is facing a fresh legal assault regarding its Play Store, the 30 per cent cut it took from developers' revenues via the software souk, and other rules and restrictions.

In an antitrust lawsuit [PDF] filed in a federal district court in San Francisco on Wednesday, 36 US states and commonwealths, plus Washington DC, alleged Google ran roughshod over the Sherman Act, screwing over users and software makers by abusing its monopoly on Android and the distribution of apps.

Those states include New York, California, Florida, Washington, New Jersey, North Carolina, and Arizona, though not Texas, Pennsylvania, Ohio, nor Illinois, among others. There doesn't appear to be an obvious partisan split.

The complaint is wide-ranging and extensive, from criticizing Google's commission from app and in-app purchases and that it must handle payments, to undue pressure on phone makers, to a ban on advertising by non-Play stores on Google's web properties, like YouTube, and more.

"Google’s anticompetitive conduct harms consumers and app developers, both at the point of app distribution and when a consumer later purchases in-app digital products," the complaint stated, for instance.

"Consumers are harmed because Google forces them to pay a supracompetitive commission of up to 30% to purchase any non-'free-to-download' app. Google’s anticompetitive conduct further harms consumers by depriving them of the potential benefits of true competition in app distribution, including better features or improved data security."

It went on:

Google also requires all app developers that sell content through the Google Play Store to sell any digital in-app content through Google Play Billing.

Though it has been inconsistent in the past, Google now stringently enforces this tie by preventing apps distributed through the Google Play Store from using, directing consumers to, or even informing consumers about alternative payment processing options that may provide lower prices. Consumers who want to purchase any such content must, therefore, do so through Google Play Billing. This illegal tie gives Google an additional monopoly in the market for Android in-app payment processing for digital products.

The lawsuit is slightly odd in that, of the two major mobile operating systems in America, Android is the only one that allows third-party app stores. Apple's position with iOS and its walled garden wasn't mentioned. That said, as the complaint notes, these third-party Android souks make a tiny dent in Google's dominance in the marketplace. Phone makers are under pressure from Google to include Play, and leave out or hobble their own stores, so Google ultimately wins anyway, we're told.

"Google has focused its anticompetitive strategies on Samsung, the largest manufacturer of Android devices sold in the United States," the lawsuit stated.

"Google has taken the extraordinary step of attempting to buy off Samsung to limit competition from the Samsung Galaxy app store by, among other things, offering incentives for Samsung to turn the Galaxy store into a mere 'white label' for the Google Play Store — meaning that Samsung would use the backend services of the Google Play Store, including Google Play Billing, while retaining its Samsung Galaxy Store branding."

If the lawsuit is successful – a big if given recent rulings – Google could be on the hook for billions. The plaintiffs want the right to get damages for citizens as well as profits deemed illicit. And don't forget, Epic Games is suing Google as well over the Play Store's rules and restrictions.

In March, Google dropped its cut of app sales from 30 to 15 per cent for the first $1m a developer makes. The move mirrored a similar decision by Apple last year, matching the same terms almost exactly. This was not enough, it seems, to hold off attorneys general.

In a statement, Google's senior director of public policy Wilson White said this latest legal action is "meritless," adding: "This lawsuit isn’t about helping the little guy or protecting consumers. It’s about boosting a handful of major app developers who want the benefits of Google Play without paying for it." ®

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