Press Pause: Antitrust lawsuit seeks to interrupt Google Play Store monopoly
July 31, 2021
3 min read
What's going on here?
Google is facing an antitrust lawsuit from 37 US states over “monopolistic” policies on its app store, Google Play.
What does this mean?
The antitrust lawsuit against Google is over its payment system on Google Play. Developers are charged a 30% commission on top of any sales of digital goods or services. Until recently, this payment policy was not strictly enforced, but the claim emerged after Google announced plans to start enforcing the requirement for developers on the Play Store to use their billing system from September 2021.
The multi-state claim criticises Google for unfairly wielding its dominant market share to generate profits from app store purchases. It alleges that Google paid developers to prevent them from removing their content from Google Play, or encouraging customers to download updates directly as opposed to via the Play Store (also known as “sideloading”). Furthermore, the claims extend to Google spreading misleading information about the security risks of external content, as well as offering an undisclosed sum and a portion of Play Store revenue to Samsung to encourage its rival to stop pursuing exclusive deals.
What's the big picture effect?
The lawsuit is one of four antitrust actions filed against Google in the US since October 2020. It forms part of a larger global crackdown on anti-competitive behaviour among tech giants, with Google’s most prominent rival, Apple, also the focus of several similar lawsuits. This increased scrutiny comes from developers as well as regulators: in January, Epic Games filed against Apple and Google over their anti-competitive practices, and in May, the Competition and Markets Authority began an investigation into Apple’s terms for app developers.
The similarity between the opposition being faced by Google and Apple was not lost on Wilson White, Google’s Senior Director of Public Policy, who seemed keen to draw attention to Apple’s even stricter practices. White questioned the Attorney General’s choice to target Google, which “provides more openness and choice than others”. It is true that Google’s service fees are comparable to that of its competitors and that it promised to reduce developer fees from 30% to 15% on the first $1m earned every year, albeit as a response to antitrust scrutiny. However, while Google’s approach is in some ways more flexible, it does not allow other app stores to be downloaded from the Play Store or permit other app stores to buy advertising space on its central search engine or Youtube.
In a statement from the Coalition for App Fairness, Director Meghan DiMuzio praised the suit for challenging Google’s practices, which she said: “stifle innovation […] inflate costs, and limit transparent communication between developers and their customers”. DiMuzio urged lawmakers and regulators to “level the playing field for developers and provide consumers with more choice”. This sentiment was unsurprisingly countered by Wilson White, who stressed that the lawsuit “isn’t about helping the little guy”, but instead benefits the most lucrative app developers who “want the benefits of Google Play without paying for it”. Lawsuits like this certainly threaten the lucrative business model of Google and other large competitors. Any measures imposed to curb alleged anti-competitive behaviour could have a considerable impact on Google’s global revenues, and potentially see it losing long-standing consumers to smaller players that were previously unable to break into the market.
The outcome of this case will be closely watched by other players operating at Google’s level. G7 recently announced the implementation of tax reform, setting a global minimum rate of at least 15% in each country in which a business operates (although thinktank TaxWatch has predicted that Google, Amazon, eBay and Facebook would pay £232.5m less in UK tax under this plan than the UK’s current digital services tax). This broader push from international economies to have Big Tech pay its fair share is another threat to the highly lucrative tech sector.
The Google lawsuit is indicative of growing intolerance for anti-competitive behaviour in the tech sector. It is becoming inevitable that industry giants like Google and Apple will no longer be able to reap the benefits of the market dominance they have established over the last few decades without being held to account.
Report written by Laura Wiles
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