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36 states sue Google over how it manages its Play Store, alleging damage to both...

 2 years ago
source link: https://www.washingtonpost.com/technology/2021/07/07/google-play-store-lawsuit/
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36 states sue Google over how it manages its Play Store, alleging damage to both consumers and app developers
Sundar Pichai of Google, seen on a laptop via YouTube, testifies before the House Judiciary Committee. (Carolyn Van Houten/The Washington Post)
July 7, 2021|Updated today at 9:55 p.m. EDT

A bipartisan group of state attorneys general filed an antitrust lawsuit targeting Google’s app store Wednesday, addingto the tech giant’s mounting regulatory woes, as government officials at both the federal and state level bring challenges to its business practices.

Thirty-six states, including Utah, New York, North Carolina and Tennessee, as well as the District of Columbia, brought the suit.

It argues that Google maintains a monopoly in the market for distributing apps for the Android operating system, which it owns and develops and is used by most of the world’s smartphones. The suit claims that Google favors its Play Store over other app stores available on Android devices and argues that developers have “no reasonable choice” but to distribute their apps through the store.

“Google has taken steps to close the ecosystem from competition and insert itself as the middleman between app developers and consumers,” the state attorneys general allege.

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The group of states says that this conduct has harmed both consumers and app developers, especially when it comes to in-app purchases for which the company takes a commission.

“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.

App developers have publicly criticized Google’s rules for participating in its Play Store, which figures in a lawsuit brought against the company by Fortnite maker Epic Games. For years, the Internet giant charged a 30 percent commission for the sale of apps and in-app purchases on the Play Store. Facing mounting pressure, it dropped that to 15 percent at the beginning of July, but only on the first $1 million generated by an app developer.

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The state attorneys general argue that commission is “extravagant” and say it is not the result of a competitive market, but rather one where Google has maintained unfair advantages through a mix of technological barriers and special contracts. They say because of this “exclusionary conduct,” even other tech giants such as Amazon have been unable to build a competitive Android app store. (Amazon founder Jeff Bezos owns The Washington Post.)

The states are asking the judge to prohibit some of the company’s long-criticized practices, including its use of contracts that require device makers to give the Play Store premium placement and its requirements that app developers use Google’s payments services. Google should be required to stop “imposing needless technological obstacles or inaccurate warnings in the user experience of sideloading Android apps for apps that meet reasonable industry safety standards,” the lawsuit requests.

The app stores controlled by Apple and Google have been a major target of antitrust authorities around the world. Competitors and critics say the stores allow the two giants to play gatekeeper to the world’s mobile phones, giving them immense power over the Internet and the digital economy.

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Unlike Apple, Google does allow other companies to sell apps on the Android operating system. But in most countries, the official Play Store is the main place to get apps, and Google has required device makers to preload the store on phones, which competitors say gives it an unfair advantage.

A group of Google’s critics, including Match Group, Spotify and Epic Games, said they felt vindicated by the suit and that they were encouraged by its “robust bipartisan support.”

“App stores have been given a pass to abuse their dominant market position for far too long,” Meghan DiMuzio, executive director for the Coalition for App Fairness, said in a statement. “Their anti-competitive policies stifle innovation, inhibit consumer freedom, inflate costs, and limit transparent communication between developers and their customers.”

Google published a lengthy blog post defending its store Wednesday night. Calling the suit a “meritless lawsuit that ignores Android’s openness,” it said it benefits developers and competes with Apple.

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“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,” wrote Wilson White, Google’s senior director of government affairs and public policy.

White testified before a Senate Judiciary antitrust subcommitteein April that developers have alternatives beyond the Play Store and that the fees it charges are in line with others in the industry.

Google is already the target of a historic federal antitrust complaint, which was brought in October and focuses on the special agreements and other business practices the company used to secure its dominance in online search. In December, more than 40 state attorneys general sued the company, arguing that it gives its own products and services preferential treatment in search results. That same month, 10 Republican state attorneys general filed an antitrust lawsuit targeting the company’s online ad business.

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A storm of antitrust activity has swept Washington in recent weeks as House lawmakers advance legislation that would overhaul Silicon Valley companies’ business practices and President Biden named a prominent tech critic, Lina Khan, to chair the Federal Trade Commission.

Sen. Amy Klobuchar (D-Minn.) praised the suit as “exactly the type of aggressive antitrust enforcement that we need.” The chairwoman of the Senate Judiciary antitrust subcommittee is among the Democrats and a handful of Republicans who are advocating that Congress overhaul existing competition laws. Earlier this year, she hosted a hearing specifically about developers’ concerns about both Google and Apple’s app stores.

“The case for sweeping antitrust reform is clear, and I will continue to fight in Washington to reinvigorate competition policy so our economy can thrive and consumers can get the fair treatment they deserve,” she said in a statement.

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Not all the antitrust developments have gone against Big Tech, however. Less than two weeks ago, a federal judge threw out a Facebook antitrust case brought by state attorneys general, saying they had waited to long to file. The judge also dismissed a lawsuit from the FTC, saying it hadn’t proved Facebook was a monopoly, but said the agency could refile with more evidence within 30 days.

NetChoice, a tech trade group whose members include Google, said in a statement that once again, the state attorneys general have “no case” against the Mountain View, Calif., giant.

“By no means is Google forcing consumers into an Android ecosystem,” said NetChoice Vice President and General Counsel Carl Szabo. “Rather, Google has actively made conscious efforts to download and use Google’s competitors on their infrastructure, even if it’s at their own expense.”


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