Key Highlights:
- Google hit with an antitrust lawsuit by 36 states.
- The bipartisan alliance includes the District of Columbia, including California, Florida, Massachusetts, New Jersey, New Hampshire, Colorado, and Washington.
- States point to “enormous profit margins” for Play Store
The battle between lawmakers and Big Tech
A group of 36 state attorneys general launched a second big multi-state antitrust case against Google. The attorneys have accused the firm of abusing its market dominance to restrict competitors and pushing customers into in-app purchases that give the business a large portion.
The complaint is being co-led by New York Attorney General Letitia James, as well as the attorneys general of Tennessee, North Carolina, and Utah. The bipartisan alliance includes 36 states and the District of Columbia, including California, Florida, Massachusetts, New Jersey, New Hampshire, Colorado, and Washington.
“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,” James stated in a press release. “Worse yet, Google is squeezing the lifeblood out of millions of small businesses that are only seeking to compete.”
In December, 35 states filed a second antitrust lawsuit against Google, saying that the corporation engaged in unlawful activity in order to retain its monopoly in the search industry. Last October, the Justice Department filed its own antitrust action centered on search.
Extravagant profit through fees
The bipartisan coalition of states alleges in the latest complaint that Google employs “misleading” security warnings to keep users and developers within its walled app garden, the Google Play store. However, the fees collected by Google from Android app developers are most likely the crux of the issue.
“Not only has Google acted unlawfully to block potential rivals from competing with its Google Play Store, but it has also profited by improperly locking app developers and consumers into its own payment processing system and then charging high fees,” District of Columbia Attorney General Karl Racine said.
Google, like Apple, funnels all app payment processing into its own service, Google Play Billing, and reaps the benefits: a 30% share of all payments. Much of the criticism leveled here could — and almost certainly will — be leveled at Apple, which has much more power over its own app ecosystem. Google does not have an iMessage similar proprietary app that keeps users hooked in the same way.
While the complaint highlights Google’s “monopoly strength” in the app industry, Apple — Google’s biggest direct competitor in the mobile software business — is the elephant in the room. The complaint claims that users are under pressure to remain tied into the Android ecosystem, although on the Android side, much of it is based on familiarity and sunk costs. The case for Apple is expected to be considerably stronger in this case.
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