More than 30 states sue Google over anticompetitive tactics used to thwart competition
07/13/2021 / By Nolan Barton / Comments
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More than 30 states sue Google over anticompetitive tactics used to thwart competition

Three dozen states and the District of Columbia sued Google on Wednesday, July 7, alleging that the company illegally abused its power over the sale and distribution of apps through the Google Play store on mobile devices.

State attorneys general said in a complaint filed in California federal court that Google used anticompetitive tactics to thwart competition and ensure that developers have no choice but to go through the Google Play store to reach users. In their complaint, the states alleged that Google controls 90 percent of the market for Android apps, and no other Android app store has more than a 5 percent market share.

According to the complaint, Google does not allow other app stores to be downloaded from its Google Play Store, which comes preinstalled on all Android smartphones; refuses to let other app stores buy advertising on its search engine or popular video streaming platform YouTube; has taken steps to keep Samsung, whose devices account for about 60 percent of U.S. Android smartphones, from gaining ground with its Samsung Galaxy Store; and has paid app developers to prevent them from removing their app from its Play Store and encouraging customers to directly download updates.

Antitrust crusade moves on following first major setback

The antitrust case has opened a new front in regulators’ attempts to rein in the tech giant. Google is also facing a suit that the Department of Justice and 14 states filed in October last year. It was focused on Google’s efforts to dominate the mobile search market. Another case filed by 38 states and territories in December also focused on search. A third suit filed by 15 states and territories was about Google’s power over advertising technology.

The new case was filed just nine days after the antitrust crusade suffered its first major setback. A federal judge in Washington dismissed the Federal Trade Commission‘s antitrust suit against Facebook on the grounds that the agency failed to offer enough evidence that the world’s largest social network is a monopoly.

That case accused Facebook of illegally crushing competition by buying Instagram and WhatsApp because it saw them as threats to its business. The judge said the states waited too long to challenge the acquisitions. (Related: Free-market conservatives are wrong: It will take federal government action to break up the monopolies of Google and Facebook.)

New York is leading the latest case against Google, along with Utah, North Carolina and Tennessee, Arizona, Colorado, Iowa and Nebraska.

“Google has served as the gatekeeper of the internet for many years, but more recently, it has also become the gatekeeper of our digital devices – resulting in all of us paying more for the software we use every day,” New York Attorney General Letitia James said in a statement.

Utah Attorney General Sean Reyes said Google’s conduct led to inflated costs for consumers who made purchases through apps. “Google’s monopoly is a menace to the marketplace,” Reyes said.

The bipartisan group of state attorneys general filed the case in the same court as those other app store lawsuits. It will be heard by the same judge, James Donato, who has scheduled a trial in Epic’s suit against Google for April 2022.

Google accuses state attorneys general of favoring “others”

The company said the lawsuit “gets it wrong” by limiting the definition of the app marketplace to Android devices and ignoring that Google competes with Apple Inc. for developers and consumers.

“We don’t impose the same restrictions as other mobile operating systems do,” Google’s Senior Director of Public Policy Wilson White said in a blog post. “So it’s strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others.”

Google’s Play Store is the default app store on Android phones, although users of those devices can also download apps from stores operated by companies like Amazon or Samsung. That differs from the setup on iPhones, where Apple’s App Store is the only place where users are allowed to obtain apps.

The new case is the latest challenge to the tech giant’s plan to force all app developers who use its Google Play Store to pay a 30 percent commission on sales of digital goods or services.

While Google has long had a policy that app developers must use its payment system for purchases made through the Play Store, the company has only loosely enforced the rule. Last year, the company said it would start enforcing its payment rules this coming September.

Companies like Netflix, Spotify and Match Group, which have bypassed Google’s commissions, did not like it.

At a Senate hearing in April, Google said its commissions are in line with what others in the industry charge and help fund developer tools and updates to the Android ecosystem. Android also allows users to use multiple app stores or download apps directly from a developer’s website, a technique known as sideloading.

“This lawsuit isn’t about helping the little guy or protecting consumers,” the company said. “It’s about boosting a handful of major app developers who want the benefits of Google Play without paying for it.”

Google has sought to quell some of the unhappiness by lowering commissions to 15 percent on the first $1 million in sales, which mirrors the small business program introduced by Apple in 2020.

Follow BigTech.news for more on companies such as Google and Facebook.

Sources include:

Politico.com

Bloomberg.com

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