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More Than 30 States Sue Google Over 'Extravagant' Fees In Google Play Store

A coalition of more than 30 states on Wednesday sued Google for allegedly abusing its power it has over developers through its Google Play store on Google devices, like Androids.
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A coalition of more than 30 states on Wednesday sued Google for allegedly abusing its power it has over developers through its Google Play store on Google devices, like Androids.

More than 30 states are accusing Google of operating like an illegal monopoly by abusing the power it has over developers and eliminating competition in how people download and pay for apps on their Google devices.

"Google uses anticompetitive barriers and mandates to protect its monopoly power," the attorneys general wrote in the suit, filed in U.S. District Court for the Northern District of California on Wednesday.

The suit was brought by 36 states — including New York, California, Tennessee, and North Carolina and Utah — and the District of Columbia.

It is the latest government assault against the immense power wielded by Google amid a wave of legal and regulatory challenges rising against Big Tech in recent months.

Since last year, prosecutors in the Justice Department or state attorneys general have now filed four lawsuits against Google aimed at parts of its business empire alleged to be anticompetitive.

App store commissions — typically 30% — are charged to developers, who then usually pass the cost off to consumers who are buying apps or making purchases in things like mobile games.

The states' complaint zeroes in on Google's use of those fees, alleging that Google's anticompetitive policies have deprived profits from developers and raised prices on consumers.

"To collect and maintain this extravagant commission, Google has employed anticompetitive tactics to diminish and disincentivize competition in Android app distribution," the suit states. "Google has not only targeted potentially competing app stores, but also has ensured that app developers themselves have no reasonable choice but to distribute their apps through the Google Play Store."

One difference between how Apple and Google operate its devices has to do with what is known as "sideloading," the ability to download apps on a browser, instead of through an app store. Citing security concerns, Apple bans this practice, whereas Google allows it. Google additionally permits third-party app stores to be downloaded on its devices, which Apple does not permit.

However, in its lawsuit, lawyers for the states point out that Google Play's market share of apps downloaded on Google devices is more than 90%, which suggests, according to suit, that Google "faces no credible threats."

Furthermore, Google prohibits competing app stores to be downloaded through its Google Play store, but rival app stores can be sideloaded onto Google devices, a process the state lawyers describe as being "unnecessarily cumbersome and impractical."

In a blog post responding to Wednesday's suit, Wilson White, Google's Senior Director of Public Policy, said the states are ignoring Google Play's openness to sideloading and third-party app stores.

"This lawsuit isn't about helping the little guy or protecting consumers. It's about boosting a handful of major app developers who want the benefits of Google Play without paying for it," White wrote. "Doing so risks raising costs for small developers, impeding their ability to innovate and compete, and making apps across the Android ecosystem less secure for consumers."

The complaint from the attorneys general does not buy this, stating that: "Google's conduct has deterred new entry and/or prevented would-be competitors from achieving the scale that might constrain Google's power."

Starting this month, Google is cutting its commission in half for the first $1 million developers make every year. It follows a similar announcement from Apple.

In May, federal judge Yvonne Gonzalez Rogers told Apple CEO Tim Cook that the commission cuts do not solve larger issues about whether developers are competing on an even playing field.

"The issue with the $1 million small-business program, at least what I've seen so far: that really wasn't the result of competition," she said. "That seemed to be a result of the the pressure you were feeling from investigations, from lawsuits, not competition."

The Coalition for App Fairness, an advocacy group opposed to Big Tech companies having sole control over how in-app payments are processed, said in a statement that the states' action on Wednesday is encouraging.

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

Fortnite maker Epic Games brought Apple to trial this year over how it operates its app store. The federal judge has yet to issue a verdict. Epic has also sued Google in a similar case, and it is awaiting trial.

Editor's note: Google is among NPR's financial supporters.

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Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.