36 US states have sued Google over “luxurious” app commissions in the Play Store. Will users end up footing the bill? And why is Apple’s App Store running under the radar?
Google’s lawyers truly can’t complain about a lack of work. On Wednesday, 36 states and the Washington DC government district filed a competition lawsuit against the Alphabet subsidiary in federal court in San Francisco. It is the fourth lawsuit filed by US states against Google since October. But it is the first to target the lucrative app store.
“Luxurious” fee on app purchases.
According to the lawsuit, Google uses anti-competitive business practices to ensure that there is no way around the Play Store for app developers if they want to reach their customers. Google also pockets a “luxurious” commission of up to 30 percent on app purchases from developers. This forces developers to charge higher prices to their app customers.
Leading the plaintiffs are the states of New York, Utah, North Carolina and Tennessee. “Google was the gatekeeper of the Internet for many years. But lately, it has also become the gatekeeper of our digital devices – with the result that we all have to pay more for the software we use every day,” New York Attorney General Letitia James emphasized in a statement. The “Google monopoly” is a threat to the market, added her colleague from Utah, Sean Reyes.
Google’s business practices in court
The new lawsuit casts Google’s business practices in a grim light. The public image of the Internet giant, especially in the eyes of advocates of free competition, had already been tarnished by numerous other lawsuits.
Google is said to have paid the largest Android smartphone manufacturer, Samsung, to prevent the Korean company from developing its own app store. The allegedly illegal monopoly position of Google in the search engine and online advertising business is also the subject of complaints.
When “Fortnite” maker Epic Games started to distribute its apps outside of Google’s Play Store, Google is said to have even “bought up” developers to dissuade them from doing the same to Epic. And that’s just a small sample of the lawsuits that have been filed against Google’s business practices in recent years.
The Google view of things
With the new lawsuit, the Play Store is now also in the sights of US prosecutors – a completely incomprehensible process from Google’s point of view. The company called the lawsuit “worthless” in a blog post. The plaintiffs would ignore that Google would compete with Apple for developers and consumers. “We don’t impose as many requirements as other mobile operating systems,” Wilson White, responsible for public relations at Google, emphasized.
He said he found it disconcerting that a group of prosecutors had chosen a system for their attacks that had more openness and choice than other systems. It can be safely assumed that by “other systems” White meant Apple with its iOS operating system and App Store.
The app duopoly
In fact, the Google view of things cannot be dismissed so easily. After all, the app business in the Western world is by no means a pure Google monopoly, but rather a duopoly: Apple and Google divide the market between them. So it is only logical that “Fortnite” maker Epic has filed two competition lawsuits: one against Google, one against Apple.
In contrast to the private sector, the attorneys general of the US states and the Department of Justice actually seem to be aiming their lawsuits more at Google and less at Apple. Apple is still running a bit under the radar at the moment. At least in the USA. In Germany, the Federal Cartel Office is currently taking Apple to task for its business practices in the App Store.