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Google’s antitrust woes keep piling up

July 8, 2021, 5:55 PM UTC

Antitrust cases against tech giants keep piling up.

Attorneys general from 36 states and Washington D.C. filed an antitrust complaint on Wednesday against Google, accusing the company of operating its app store as a monopoly. This lawsuit was filed ahead of a policy change later this year that would force developers on the Google Play Store to pay a commission from 15% to 30% for in-app purchases.

Here’s an example: Right now if I create an app and put it on the Play Store, I have two options.

Option 1: I can use Google’s in-app payment system, and then Google takes a 15% commission until I make $1 million in revenue, and then it takes 30%.

Option 2: I could have people who use my app enter their credit card information directly to my payment processor, like PayPal. In this case, Google wouldn’t get a commission, even though I’m distributing my app through its platform.

Google announced last year that it was getting rid of that second option by September 2021, and would then make all apps go through its own in-app payment system. This ensures that Google gets a cut of whatever apps sell on its platform, with the downside of now capturing the interest of antitrust regulators.

In the antitrust complaint, state regulators call out Android’s dominance in the smartphone operating system market, as it’s the only real option for any hardware company that wants to make a phone and license the operating system. They claim Google holds 99% market share of the licensable mobile operating system market, and that the Android Play Store has no real competition either, as it distributes 90% of Android apps in the US.

So while Google claims it’s an open system, regulators claim there are no actual competitors.

And when companies like Samsung or Amazon try to develop their own app store on the Android platform, Google either cuts a deal with that company to stop it or otherwise discourages the creation of the marketplace through its own product decisions, the complaint said.

Here’s another important factor: Regulators make the case that Apple’s App Store isn’t a true competitor to Google’s Play Store, because app developers can’t easily upload the same app to both stores, and consumers need different expensive devices to access each.

Convincing the court of this idea, that Google’s Play Store doesn’t compete with the only other massive app store in the United States, will be crucial to proving that the Play Store is a monopoly.

Google, of course, has denied all of this in a press release.

Apple found itself in similar trouble last year, and both companies are facing a similar lawsuit levied by Fortnite developer Epic Games. To dodge criticisms of its 30% commission crippling smaller developers, Apple started charging 15% until a developers’ first $1 million in revenue, which Google then later adopted.

Apple’s case is slightly different, however, since it has never claimed to be an open ecosystem for competing app stores, and doesn’t license its iOS operating system.

The case will be heard by federal Judge James Donato, according to Politico, who is also presiding over Epic Games’ trial against Google, scheduled to start in April 2022.

Dave Gershgorn

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BEFORE YOU GO

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