July 7, 2021
Bipartisan Coalition of States Say Google Illegally Maintains an App Store Monopoly;
Unfairly Edges Out Competition
Carson City, NV – Today, Attorney General Aaron D. Ford joined a coalition of
37attorneys general, to file a lawsuit against Google in California. The suit alleges
exclusionary conduct relating to the Google Play Store for Android mobile devices and
Google Billing. This antitrust lawsuit is the newest legal action against the tech giant,
claiming illegal, anticompetitive, and unfair business practices. The States accuse
Google of using its dominance to unfairly restrict competition with the Google Play
Store, harming consumers by limiting choice and driving up app prices.
“Many consumers do not know that Google has imposed fees far beyond market rates
for in-app purchases for years,” said AG Ford. “Not only has Google violated antitrust
law but it has deceived and manipulated consumers into paying more money without
their knowledge. Big tech companies, while in competition with others, still have to be
held accountable and follow the law.”
According to the lawsuit, the heart of the case centers on Google’s exclusionary
conduct, which substantially shuts out competing app distribution channels. Google also
requires that app developers that offer their apps through the Google Play Store use
Google Billing as a middleman. This arrangement, which ties a payment processing
system to an app distribution channel forces app consumers to pay Google’s
commission—up to 30%—on in-app purchases of digital content made by consumers
through apps that are distributed via the Google Play Store. This commission is much
higher than the commission that consumers would pay if they had the ability to choose
one of Google‘s competitors instead.
The lawsuit alleges that Google works to discourage or prevent competition, violating
federal and state antitrust laws. Google had earlier promised app developers and
device manufacturers that it would keep Android “open source,” allowing developers to
create compatible apps and distribute them without unnecessary restrictions. The
lawsuit says Google did not keep that promise.
Google Closed the Android App Distribution Ecosystem to Competitors
When Google launched its Android OS, it originally marketed it as an “open source”
platform. By promising to keep Android open, Google successfully enticed “OEMs”—
mobile device manufacturers—such as Samsung and “MNOs”—mobile network
operators such as Verizon—to adopt Android, and more importantly, to forgo competing
with Google’s Play Store at that time. Once Google had obtained the “critical mass” of
Android OS adoption, Google moved to close the Android OS ecosystem—and the
relevant Android App Distribution Market—to any effective competition by, among other
things, requiring OEMs and MNOs to enter into various contractual and other restraints.
These contractual restraints disincentivize and restrict OEMs and MNOs from
competing (or fostering competition) in the relevant market. The lawsuit alleges that
Google’s conduct constitutes unlawful monopoly maintenance, among other claims.
In aid of Google’s efforts discussed above, the AGs allege that Google also engaged in
the following conduct, all aimed at enhancing and protecting Google’s monopoly
position over Android app distribution:
- Google imposes technical barriers that strongly discourage or effectively prevent
third-party app developers from distributing apps outside the Google Play Store.
Google builds into Android a series of security warnings (regardless of actual
security risk) and other barriers that discourage users from downloading apps
from any source outside Google’s Play Store, effectively foreclosing app
developers and app stores from direct distribution to consumers.
- Google has not allowed Android to be “open source” for many years, effectively
cutting off potential competition. Google forces OEMs that wish to sell devices
that run Android to enter into agreements called “Android Compatibility
Commitments” or ACCs. Under these “take it or leave it” agreements, OEMs
must promise not to create or implement any variants or versions of Android that
deviate from the Google-certified version of Android.
- Google’s required contracts foreclose competition by forcing Google’s proprietary
apps to be “pre-loaded” on essentially all devices designed to run on the Android
OS, and requires that Google’s apps be given the most prominent placement on
device home screens.
- Google “buys off” its potential competition in the market for app distribution.
Google has successfully persuaded OEMs and MNOs not to compete with
Google’s Play Store by entering into arrangements that reward OEMs and MNOs
with a share of Google’s monopoly profits.
- Google 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. Thus, Google is unlawfully tying
the use of Google’s payment processor, which is a separate service within a
separate market for payment processing within apps, to distribution through the
Google Play Store. By forcing this tie, Google is able to extract an exorbitant
processing fee as high as 30% for each transaction and which is more than ten
times as high as the fee charged by Google’s competitors.
In addition to Nevada, other states joining the lawsuit includes: Alaska, Arkansas,
Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida,
Idaho, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi,
Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York,
North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota,
Tennessee, Utah, Vermont, Virginia, Washington, and West Virginia.
The filed complaint is attached.