Dozens of states – including North Carolina – are taking aim at Google in an escalating legal offensive on Big Tech.
This time, attorneys general for 36 states and the District of Columbia have filed a lawsuit targeting Google’s Play store, where consumers download apps designed for the Android software that powers most of the world’s smartphones.
“No matter how big a company is, it has to play by the rules,” said Attorney General Josh Stein in a statement. “Google isn’t. It is using its monopoly power to cut off competition and increase its power and profits at the expense of North Carolina consumers by forcing Google Play Store customers to overpay for apps. I will continue to fight on behalf of millions of North Carolina consumers for a marketplace that encourages competition and innovation at a fair price.”
The 144-page complaint filed late Wednesday in a Northern California federal court represents the fourth major antitrust lawsuit filed against Google by government agencies across the U.S. since last October.
The lawsuit also comes against a backdrop of proposed laws in Congress tailored to either break up or undermine the power amassed by Google, Apple, Facebook and Amazon. The four have built trillion-dollar empires fueled by the immense popularity of services that people have become increasingly dependent upon.
Much of the latest lawsuit echoes similar allegations that mobile game maker Epic Games made against both Google and Apple, which runs a separate app store exclusively for iPhones, in cases brought last August.
Just as Epic did, the states’ lawsuit focuses primarily on the control Google exerts on its app store so it can collect commissions of up to 30% on digital transactions within apps installed on smartphones running on Android. Those devices represent more than 80% of the worldwide smartphone market.
Major points in suit
The lawsuit alleges that Google:
- Broke its promise to app developers and device manufacturers that it would keep Android “open source,” allowing developers to create compatible apps and distribute them without unnecessary restrictions, but did not keep that promise. Google has not allowed Android to be “open source” for many years, effectively cutting off potential competition.
- Imposes technical barriers that strongly discourage or effectively prevent third-party app developers from distributing apps outside the Google Play Store.
- Forces Google’s proprietary apps to be “pre-loaded” on essentially all devices designed to run on the Android OS, which cuts off potential competition.
- Forces app developers and app users alike to use Google’s payment processing service, Google Play Billing, to process payments for in-app purchases of content consumed within the app. By requiring this, Google is able to extract an exorbitant processing fee as high as 30 percent for each transaction, which is more than 10 times as high as the fee charged by Google’s competitors.
Source: NC AG office
A high-profile trial pitting Epic — the maker of the widely played Fortnite video game — against Apple concluded in late May. A decision from the federal judge who presided over the month-long proceedings is expected later this summer. Epic’s lawsuit against Google is still awaiting trial.
Although its app commissions are similar to Apple’s, Google has tried to distinguish itself by allowing consumers to download apps from other places than its Play store. Apple, in contrast, doesn’t allow iPhone users to install apps from any other outlet than its store.
But the lawsuit filed Wednesday alleges Google’s claims that its Android software is an open operating system that allows consumers more choices is a sham.
The complaint contends Google has deployed various tactics and set up anticompetitive barriers to ensure it distributes more than 90% of the apps on Android devices — a market share that the attorneys general argue represents an illegal monopoly. What’s more, the lawsuit alleges Google has been abusing that power to reap billions of dollars in profit at the expense of consumers who wind up paying higher prices to subsidize the commissions, and the makers of apps who have less money and incentive to innovate.
“Google’s monopoly is a menace to the marketplace,” said Utah Attorney General Sean Reyes, who is leading the lawsuit along with his peers in New York, Tennessee and North Carolina. “Google Play is not fair play. Google must be held accountable for harming small businesses and consumers.”
Google didn’t immediately respond to a request for a lawsuit, but it has adamantly defended the way it runs its Play store in its response to the Epic lawsuit and in other instances.
The Mountain View, California, company also is fighting the three other lawsuits that were filed against it last year, including a landmark case brought by the U.S. Justice Department. Those cases are focused on alleged abuses of Google’s dominant search engine and its digital ad network that generates more than $100 billion in annual revenue for its corporate parent, Alphabet Inc.
As the scrutiny on their app stores has intensified, both Apple and Google have been taking conciliatory steps. Most notably, both have lowered their commissions to 15% on the first $1 million in revenue collected by app makers — a reduction that covers most apps in their respective stores.
But those measures haven’t lessened the heat on any of the major tech companies, nor should they, said Sen. Amy Klobuchar, a Democrat from Minnesota, who chairs a subcommittee that oversees antitrust issues.
“This is exactly the type of aggressive antitrust enforcement that we need to rein in the power of big tech and address America’s monopoly problem,” she said in a statement.
But fighting Big Tech won’t be easy. Besides being able to spend heavily to lobby for their positions, the companies also contend they have the law on their side. Facebook, for instance, scored a major victory last week when a federal judge dismissed an antitrust lawsuit against the social media company by the Federal Trade Commission and a coalition of states on the grounds that they hadn’t submitted enough evidence to back their monopoly allegations.
Other states participating in the suit are: New York, Tennessee, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Idaho, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Virginia, Washington, and West Virginia.
