Dozens of states are suing Google over App Store practices

By Brian Fung, CNN Business

(CNN) — Dozens of states have filed an antitrust lawsuit against Google that zeroed in on its App Store practices.

The suit alleges that Google abused its dominance in the mobile ecosystem in favor of its own Google Play Store, reducing competition in the process. The suit also targets the fee that Google charges developers for in-app purchases.

Bloomberg was the 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 have been designated as participants, including New York, California, Colorado, Utah, Massachusetts, and others.

According to Wednesday’s complaint, Google has 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 apps like Google Maps and Gmail with the Play Store.)

Part of Google’s alleged purpose was to stem the rise of third-party app stores. According to the complaint, Google made “a direct attempt to pay Samsung to relinquish relationships with top developers” so that Google’s App Store remains the most lucrative source of Android apps.

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

This is similar to the allegations made against Apple in the case involving Epic Games.

District of Columbia Attorney General Carl Racine said in a statement, “Google is using its dominant position in the market to undermine competition and extort billions of dollars in commissions on in-app purchases from unsuspecting consumers—and This anti-competitive behavior must stop.” “Google has not only done illegal things to prevent potential rivals from competing with its Google Play Store, but has also taken advantage of app developers and consumers by unfairly locking them into its payment processing system and then charging high fees. “

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

Google could not be immediately reached for comment on Wednesday evening.

News of the trial was met with some cheers. For example, 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 for abusing their dominant market position for too long,” the group said. “Their anti-competitive policies stifle innovation, stifle consumer freedom, drive up 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 had a monopoly on iOS app sales and abused its power against app makers. Epic, maker of the online video game “Fortnite,” had sought to circumvent Apple’s proprietary in-app payment system, which allows the iPhone maker to cut digital goods and services sold on iOS by 30%. This sparked a contractual dispute that prompted Apple to remove Fortnite from its App Store, eventually leading to Epic’s lawsuit, which could have disrupted Apple’s business model.

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

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