In early July, 36 states and the District of Columbia filed an antitrust lawsuit against Google. According to Naomi Nix, David McLaughlin and Mark Bergen reporting for Bloomberg, the suit alleges that “[Google] illegally abused its power over the sale and distribution of apps through the Google Play store on mobile devices.”
What Specifically Does The Play Store Lawsuit Against Google Allege?
This complaint is just the latest antitrust action to be taken against one of the big four tech companies, and the fourth antitrust lawsuit filed against Google since October 2020. However, this lawsuit represents the first time Google Play has been the subject of a complaint. The lawsuit alleges that Google used anticompetitive tactics to impede competitors and that Google extracts “exorbitant processing fees” for each app purchase. “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,” said Letitia James, New York Attorney General. New York is leading the case with Utah, North Carolina and Tennessee.
Specifically the suit alleges, that, as part of Google’s “anticompetitive tactics,” Google “enticed” companies including Samsung and Verizon to adopt Android and forgo developing their own app stores. In particular, Google’s interactions with Samsung, related to the Galaxy app store, are a subject of scrutiny in the lawsuit, although details are redacted.
Reporting on the lawsuit has focused on the condemnation of payment practices related to the Google Play store. According to the complaint, “Google mandates that consumers who download apps from the Google Play store also use Google Play Billing for all in-app purchases. This unlawful tie effectively precludes an Android app consumer from purchasing additional digital content directly from the app developer or via the app developer’s chosen payment processing service; Google forces the consumer to continue doing business with it and to indefinitely pay Google’s supracompetitive commissions.”
The issue of payment in the Google Play app store isn’t new, with Google recently following Apple’s lead and halving the percentage it takes from app developers in Google Play store sales. According to David McCabe and Daisuke Wakabayashi, reporting for The New York Times, Google said, after tangling with Netflix and Spotify, that it was going to start “forcing companies to integrate their payments with Google’s billing system in September 2021.” Instead the company cut fees, likely trying to get ahead of incoming scrutiny.
How Is Google Responding To The States' Lawsuits Regarding Its Play Store?
In a blog post addressing the suit, Google said:
We understand that scrutiny is appropriate, and we’re committed to engaging with regulators. But Android and Google Play provide openness and choice that other platforms simply don’t. 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. Doing so risks raising costs for small developers, impeding their ability to innovate and compete, and making apps across the Android ecosystem less secure for consumers.
Google also asserts, in its response, that consumers are free to download apps elsewhere and that what the lawsuit calls exorbitant fees are actually in line with what other app stores charge, impacting less than 3% of developers.
How Does The Lawsuit Against Google Play Impact Digital Marketers?
Apps are big business – $143 billion was spent in mobile app stores in 2020 – and Google and Apple are, according to Bloomberg, the “duopoly dominating the app economy of the Western world.” That dominance is unlikely to change, and most app developers and digital marketers know that any changes that do take place would take quite some time to have an effect. As with other lawsuits, there isn’t much for marketers to do but watch, wait and stay the course. It’s unlikely that app downloads will be impacted while the lawsuit works its way through the system, so marketers should continue encouraging app downloads as part of multichannel strategies, leveraging the popularity of mobile apps for the consumer engagement and revenue growth they provide.
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