February 27, 2024

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Google pays $700 million in antitrust settlement over Android App Store

Google pays $700 million in antitrust settlement over Android App Store

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Google will pay $700 million to settle a lawsuit brought by a group of US states accusing it of suppressing competition on the Play Store on Android devices, according to court filings released on Monday.

The announcement of the terms of the settlement, which was reached in September, comes after the famous online game maker Epic Games fortnite, He won a related case against the technology company last week.

The court document showed that Google agreed to pay $630 million to a consumer settlement fund, with another $70 million to a state fund. Under the settlement, Google also agreed to make changes to the way Android operates in the United States, such as allowing developers to implement an alternative billing method for in-app purchases.

At issue in the case were Google’s contracts with smartphone makers, network operators and game developers, which the US claimed shut out competitors to the Play Store.

The states said Google collected excessive fees on digital purchases on its Play Store by blocking alternative payment methods that could offer lower fees.

Google started a pilot program in November last year called User Choice Billing in partnership with Spotify, which gave users the choice between using Google Play’s billing system or paying Spotify directly to purchase items or subscriptions. Google said the pilot program will test options for alternative payment methods and gather insights from developers on how it will evolve.

The company has now committed to rolling out this option via the Play Store. Google will also allow developers to direct consumers outside its store to other payment methods.

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“The settlement requires Google to give all developers, including game developers, the option to add alternative in-app billing systems for at least five years,” the filings said.

All 50 US states, as well as the District of Columbia, Puerto Rico and the US Virgin Islands, have signed the agreement with Google.

The states said Google’s approval was “unprecedented” in antitrust regulation of big tech companies in the United States.

“The negotiated terms will provide significant, meaningful, and long-lasting relief to consumers across the country,” they said in the filings. “No other US antitrust official has yet been able to secure damages of this size from Google, or, for that matter, from any of the other major digital platforms.”

The settlement requires approval by a federal judge in California overseeing the states’ lawsuit, which was filed in 2021.

The same judge, James Donato, is also tasked with determining what penalties Google should face after a jury found it guilty of violating antitrust law in the Epic Games trial.

The terms of the settlement with the United States were kept secret while the weeks-long trial was underway. Match Group, which owns the dating app Tinder, also reached a settlement with Google before the trial.

In addition to the $700 million payment and commitment to allow alternative billing options, Google said it would make it easier to download apps on Android devices from sources other than the Play Store, a practice known as “sideloading.”

This will include “updating language that informs users about these potential risks of downloading apps directly from the web for the first time,” Wilson White, the company’s vice president of government affairs and public policy, said in a blog post.

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Critics say such warnings prevent consumers from going elsewhere.

White said Google is happy the case has been resolved.

“This settlement builds on the choice and flexibility of Android, maintains strong security protections, and preserves Google’s ability to compete” with other operating systems, as well as investing in the Android ecosystem, he said.

Epic Games criticized the settlement on Monday, saying consumers would continue to overpay for digital goods under the terms.

“The states’ settlement does not address the core of Google’s illegal and anti-competitive conduct,” Corey Wright, Epic’s vice president of public policy, said in a statement.

Wright added that Google will impose “unwanted fees” on developers who choose alternative methods of billing to avoid Google’s automatic fees on digital payments.

“In the next phase of the case, Epic will seek meaningful solutions to truly open up the Android ecosystem so that consumers and developers truly benefit from the competition that US antitrust laws are designed to foster.”

Epic also sued Apple over its App Store in 2020, in a case that is now seeking appeal to the US Supreme Court.