Written by Haim Ravia and Dotan Hammer
Google has agreed to pay $700 million and implement changes to its Play Store, to settle the antitrust lawsuit that nearly all 50 states in the U.S. asserted against it. This lawsuit alleged that the Play Store operates as an illegal monopoly. The settlement was approved by a federal district court in San Francisco. The separate lawsuit asserted by Epic Games, the creator of the popular game Fortnite, played a pivotal role in the outcome of this lawsuit of the states. The Epic Games’ litigation led to a finding that Google violated U.S. antitrust laws by exploiting its monopoly in marketing Android apps and in-app billing services. This exploitation harmed competition and illegally linked its Play Store with its “Google Billing” services.
The states involved in the lawsuit also claimed that Google imposed 15-30% fees on in-app purchases, leading to annual profits significantly higher than those possible in a more competitive and free market. Additionally, they alleged that Google engaged in anti-competitive practices by entering into contracts with developers that prevented them from launching competing app stores and required the Play Store to be the exclusive app store on devices. Google was also accused of creating technological barriers that made installing or updating apps difficult, thereby discouraging consumers from downloading apps outside of the Play Store.
As part of the settlement, $630 million will be used to compensate consumers who may have overpaid for app purchases through the Play Store. The remaining funds will go to the states. For at least the next seven years, Google is required to simplify the process of downloading and installing Android apps from sources other than the Play Store. Moreover, the company must avoid using technological barriers and security warnings that could dissuade consumers from using alternative platforms not owned by Google. The agreement also includes provisions for Google to offer alternative billing options alongside its “Google Billing” system, allowing consumers to choose their preferred payment method. Furthermore, Google is prohibited from entering into exclusivity contracts that mandate the Play Store as the only app store preloaded on a phone or its home screen. The company is also obligated to provide technical support and automatic security updates for other app stores, fulfilling several other commitments as well.
Click here to read the settlement.
