The internet giant Google is facing another antitrust lawsuit over its alleged abuse of market power. The attorneys general of 36 states and the District of Columbia claim the company is stifling competitors and forcing consumers to make in-app payments that have negatively impacted app makers and returned Google a hefty profit. AGs from New York, Tennessee, North Carolina, and Utah are co-leading the suit.
New York Attorney General Letitia James explained the reasoning in a press release saying, “Through its illegal conduct, the company has ensured that hundreds of millions of Android users turn to Google, and only Google, for the millions of applications they may choose to download to their phones and tablets. Worse yet, Google is squeezing the lifeblood out of millions of small businesses that are only seeking to compete.”
Lawsuits, Lawsuits, Lawsuits
The bipartisan coalition of states alleges Google has unlawfully blocked potential rivals from competing with its store while forcing app developers and consumers to pay their high fees. Google takes a 30% cut of all payments made through apps/games downloaded via their store, and app operators cannot accept mobile payments outside of Google’s payment system. That is a huge proportion of sales, with Android devices making up more than 80% of the world’s smartphone market. Google claims its Android software allows consumers more options, but those spearheading the suit say otherwise.
According to the complaint, Google has enabled various tactics and anticompetitive barriers that ensure it distributes over 90% of the apps on Android devices. The attorneys argue this market share signifies Google is an illegal monopoly.
In December of 2020, 35 states filed a separate antitrust lawsuit against Google, accusing the company of maintaining a monopoly in the search engine business through illegal activity. In addition, the Department of Justice filed an independent suit in October focusing on the internet giant’s operation as a monopoly and citing multiple violations of antitrust laws. The goal of the department’s complaint was to restore competition in search and search-advertising markets. The company’s search engine generates more than $100 billion in annual revenue.
Creators Fed Up With Fees
The issue of tech giants squeezing money out of app developers is not new. Fed up with Apple taking a cut of its in-app purchases, Epic Games set up an alternate way for its consumers to process their payments outside of the App Store. As a result, the gaming app was faced with an exile from Apple’s App Store. In response, Epic Games filed a lawsuit in August last year against Apple for the restrictions on alternate in-app purchase options.
Google has historically defended its methodology and the processing system of its Play Store. But, facing three lawsuits, the internet powerhouse has taken a step in appeasing the uproar it faces: It lowered its commission to 15% on the first $1 million in revenue collected by app creators. That small adjustment did not seem to deter lawmakers, including Senator Amy Klobuchar (D-MN), who chairs a subcommittee that oversees antitrust issues. Referencing new legislation, the senator said in a statement, “This is exactly the type of aggressive antitrust enforcement that we need to rein in the power of big tech and address America’s monopoly problem.”
Antitrust Bills
The 144-page complaint sets a nice backdrop for the antitrust bills in Congress that Senator Klobuchar referenced, aimed at breaking up or limiting the power Big Tech has managed to accumulate. Apple, Facebook, Google, and Amazon are all on the chopping block.
With vague guidelines in current laws and a bottomless pit of money to spend on lobbying, the outcomes of these lawsuits remain uncertain.
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Read more from Keelin Ferris.
