Google to Pay $700m to Settle Android App Store Lawsuit

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An application developer has since criticized the lawsuit as insufficient, saying that the agreement does not address the “core” of Google’s allegedly anticompetitive behavior.


Google has agreed to pay $700 million to settle a lawsuit alleging that it intentionally stifled competition on its Android app store.

According to The Associated Press, the company reached an agreement with state attorneys general in September. However, the terms of the settlement were not revealed until earlier this week, shortly after a federal jury condemned Google for using anticompetitive strategies in its management of the Google Play Store.

“No company, no matter how large or powerful, is allowed to corner a market and use its influence to overcharge consumers and smother competition,” said New York Attorney General Letitia James. “For too long, Google abused its market share to unfairly raise prices and block developers from selling products in other app stores.”

The settlement, writes The Associated Press, includes more than $630 million in compensation for U.S. consumers who were funneled into a “payment processing system” that purportedly increased the price of Play Store transactions.

Google, the attorney generals said, went to great lengths to ensure that developers could not easily authorize in-application transactions using individual payment portals or third-party transaction services. Instead, most purchases were routed through the Play Store, which collected commissions ranging between 15% and 30%.

In total, these commissions constituted a multibillion-dollar source of profit for Google.

New York Attorney General and former city council member Letitia James. Image via Wikimedia Commons/user:Matthew Cohen. (CCA-BY-2.0).

By depriving other companies of the chance to use other payment processing services, developers often raised transaction prices to cover the difference.

Eligible consumers will receive at least $2 each; some may be entitled to additional compensation, depending on the amount of money they spent on the Play Store between August 16, 2016, and September 30, 2023.

Under the terms of the settlement, eligible consumers should be “automatically notified” about their options for collecting compensation.

An additional $70 million of the pre-trial settlement will cover penalties and legal costs, payable to those states party to the claim.

Google has since released a statement, in which it indicated that it is “pleased” to have resolved the lawsuit.

“Android and Google Play have continuously evolved to provide more flexibility and choice in response to feedback from developers and regulators, as well as intense competition form Apple and app stores across the open Android ecosystem,” said Wilson White, Google’s vice president of government affairs and public policy. “This settlement builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other OS makers, and invest in the Android ecosystem for users and developers.”

However, some application and game developers have already criticized the agreement, saying that a $700 million settlement will do little to discourage a company of Google’s size from engaging in similar misconduct.

Epic Games, for instance, said that it will seek more “meaningful” penalties as the case progresses into its remedies phase.

“After originally seeking $10.5 billion in antitrust damages identified as Google’s unjustly collected fees, the states’ attorneys general settled for a $700 million payout,” said Corie Wright, the company’s vice president of public policy. “The states’ settlement does not address the core of Google’s unlawful and anticompetitive behavior.”

Sources

Google to pay $700 million to settle a lawsuit over how it runs its app store

Google to pay $700 million to US states, consumers in app store settlement

Google users will share $630 million in a Play store settlement

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