Google allows more app payment options in antitrust deals with states

Google said Monday it would give developers in its Play app store the ability to offer direct payment options to users and that it would pay $700 million to settle an antitrust lawsuit brought by attorneys general, in the latest move by the company to navigate increased scrutiny of its power.

The lawsuit, filed in July 2021, accused Google’s app store of abusing its market power and imposing aggressive terms on software developers. The tech giant is facing several antitrust challenges in the United States, including a lawsuit in which the federal government claims Google has abused its dominance in online search.

In its announcement on Monday, Google said it would now allow apps to charge consumers directly instead of requiring them to charge through Google. The company will pay $630 million to set up a consumer settlement fund, and $70 million in a fund to be used by the states. To emphasize the choice users have when downloading apps, Google reaffirmed that phone makers, such as Samsung, using the Android mobile operating system, can continue to install multiple app stores on their devices in addition to Google’s Play Store.

The settlement was announced in September, but details were not released.

Google hopes the settlement will serve as a model for resolutions with other critics of Play Store policies, including Epic Games — the maker of the popular game Fortnite — which won an antitrust case against Google last week, according to a person familiar with the matter. matter.

“This settlement builds on Android’s choice and flexibility, maintains strong security protections, and preserves Google’s ability to compete with other OS makers and invest in the Android ecosystem for users and developers,” wrote Wilson White, deputy Google’s president of government affairs, in a blog post.

The settlement is the latest concession from Google regarding its app store, which has come under increased scrutiny in recent years over claims of monopolistic behavior. The Google Play Store has received complaints for being one of the top two marketplaces for mobile apps alongside Apple’s App Store. Google charges app makers a 15 percent fee on customer payments for app subscriptions and up to 30 percent on purchases made in popular apps downloaded from the store.

In 2021, the South Korean government passed a law forcing Google and Apple to allow app makers to charge fees directly. Since then, Google has offered alternative billing options in the country. It also preemptively introduced a pilot program that offered users a choice of how they were billed in the United States before the settlement took place.

The settlement will reduce these costs by four percentage points when app makers handle their own transactions, although consumers won’t necessarily see a reduction in costs because app developers would be able to pocket the cut. It also allows developers to display different pricing options when users make a purchase.

Google has settled the government claims with attorneys general from all fifty states, as well as Washington, DC and Puerto Rico. Had the lawsuit gone to trial, the states would have argued their case in a joint lawsuit that would have been heard alongside lawsuits filed by Epic and the dating app company Match Group, which sued on similar grounds.

But Google and the attorneys general announced that they had reached an “agreement in principle” in September, two months before the start of the trial. The parties had to wait until a week after the Epic verdict to release the details of the September settlement.

Google also settled with Match in October.

Epic won the case last week, convincing a nine-member federal jury in San Francisco that Google’s fees and aggressive terms for developers amounted to antitrust violations, damaging the gaming company’s business prospects. Judge James Donato of the U.S. District Court for the Northern District of California will decide next year what action is needed to address Google’s conduct.

Google has said it will appeal the ruling in the Epic lawsuit. Google’s lawyers argued that it was impossible for the company to act as a monopoly because its Android mobile operating system and Play Store compete with Apple’s iOS software and App Store, which is much more popular in the United States .

Apple largely prevailed in a similar lawsuit filed by Epic that was decided by a judge, although the U.S. Supreme Court may decide to take up the case next year.

Google’s Mr. White wrote in the blog post that the company was “disappointed” by last week’s ruling, but said the case with Epic was “far from over.”