Dozens of states are suing Google over app store practices

By Brian Fung, CNN Business

Dozens of states have filed an antitrust lawsuit against Google that zeroes in on its app store practices.

The suit alleges that Google abused its dominance in the mobile ecosystem to favor its own Google Play Store, reducing competition in the process. The suit also takes aim at the fees that Google charges developers for in-app purchases.

Bloomberg was first to report the lawsuit.

Court records reviewed by CNN Business on Wednesday showed that the case against Google has been opened in the US District Court for the Northern District of California. The District of Columbia and 36 states are named as participants, including New York, California, Colorado, Utah, Massachusetts and others.

According to Wednesday’s complaint, Google holds a monopoly on Android app distribution in the United States, and has used restrictive contracts to force Android device makers to promote the Google Play Store at the expense of competition. (Similar allegations in Europe prompted Google to announce in 2018 that it would stop bundling must-have apps such as Google Maps and Gmail with the Play Store.)

Part of Google’s alleged objective was to deter the rise of third-party app stores. According to the complaint, Google made “a direct attempt to pay Samsung to abandon relationships with top developers” so that Google’s app store would remain the most attractive source of Android apps.

The complaint also challenges Google’s developer terms that “make Google Play Billing the only in-app payment processor that an Android developer may use” when an app sells digital content through an Android app.

That’s similar to the allegations leveled at Apple in its case involving Epic Games.

“Google is using its dominant position in the marketplace to stifle competition and extract billions of dollars in commissions on in-app purchases from unsuspecting consumers—and this anticompetitive behavior must stop,” District of Columbia Attorney General Karl Racine said in a statement. “Not only has Google acted unlawfully to block potential rivals from competing with its Google Play Store, it has profited by improperly locking app developers and consumers into its own payment processing system and then charging high fees.”

Google responded to the lawsuit in a blog post, saying “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.”

The allegations mark the latest legal headache for Google, which is already facing multiple antitrust suits by the federal government and the states. They also reflect rising criticism by app developers and regulators who have increasingly scrutinized Google’s and Apple’s app stores in the mobile technology space.

News of the lawsuit was met with some cheers. For instance, the Coalition for App Fairness — a nonprofit industry organization whose members include Spotify, Tile and Match Group — said it supports the lawsuit.

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

In the spring, Apple and Epic Games faced off in a non-jury trial over whether Apple holds a monopoly on iOS app sales and has abused its power against app makers. Epic, the maker of the online video game “Fortnite,” had sought to circumvent Apple’s proprietary in-app payment system that allows the iPhone maker to take a 30% cut of digital goods and services sold on iOS. That led to a contractual dispute that prompted Apple to remove Fortnite from its app store, ultimately leading to Epic’s lawsuit, which could disrupt Apple’s business model.

Apple argued at trial that it competes vigorously to distribute video game apps, including Fortnite. A decision in the case is expected in the coming months.

The-CNN-Wire
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