The deal, disclosed in a court filing late Monday, calls for changes to Play Store policies to reduce barriers to competition in the markets for app distribution and payment processing. The lawsuits, grouped together in federal court in California, threatened billions of dollars in revenue generated by the sale and distribution of apps through Google Play.

“This settlement builds on Android’s choice and flexibility, maintains strong security protections and retains Google’s ability to compete” with makers of other operating systems, Wilson White, Google’s vice president for government affairs and public policy, said in a statement. White said the agreement also maintains the company’s ability to invest in the Android ecosystem for users and developers.

Google is facing mounting antitrust challenges at home and abroad. The US Justice Department alleges it has illegally maintained a monopoly over search and advertising, in a case expected to be decided next year. The US is also trying to break up its ad technology business, in a case filed earlier this year. And European Union competition chief Margrethe Vestager said in June that the only way to restore competition in that sector was for Google to spin off its ad tech business.

Monday’s deal comes after a federal jury in San Francisco this month sided with Epic Games Inc. over its claims that Google Play app distribution, payment and fee policies are unlawful. US District Judge James Donato will decide next year how Google must revamp its Play Store rules. 

Donato is also presiding over the states’ and consumers’ case and must approve the settlement for it to take effect, with a hearing scheduled for Feb. 8. Alphabet announced a tentative pact in September without disclosing financial details. The filing says all 50 states, the District of Columbia and two US territories have now joined the accord. 

What’s in the Accord

The pact includes a number of changes to the company’s app market policies.

For at least five years it would block Google from entering or enforcing agreements requiring mobile device makers to preload or feature the Play Store exclusively on home screens of their products. It would also force Google to make it easier for users to install apps outside the Play store, “including by combining certain warning screens and updating user interface language.” 

Some developers have complained that consumers trying to install their apps without going through Google Play have to grapple with multiple steps and security warnings.

The accord extends a pilot program Google launched last year that lets certain developers offer an alternative payment option alongside Google Play’s billing system to all developers, including game developers who were excluded from the program, for at least five years. 

Moreover, for at least six years Google must permit developers to steer users to alternative purchase methods, including buying apps directly from websites, by reaching out through means such as email. But the company can block developers from including external links to outside payment systems in their apps, according to the deal.

The settlement creates a $630 million common fund to benefit consumers and a $70 million fund to resolve state claims for penalties, restitution, disgorgement and fees. 

‘No True Relief’

Corie Wright, Epic’s vice president of public policy, said the settlement offers “no true relief for consumers or developers.”

“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,” Wright said in a statement. “Consumers will continue to overpay for digital goods as a result of Google’s imposition of supracompetitive 30% fees for Google Play billing or 26% junk fees on top of payments Google isn’t involved in processing.”

A lawyer representing consumers declined to comment on Wright’s statement. Lawyers for the states didn’t immediately respond to a request for comment.

The state AGs alleged in their complaint, filed in 2021, that Google used unlawful tactics to block competition and ensure that developers have no choice but to go through the Play Store to reach users. In a separate class action on behalf of almost 21 million consumers, Google was accused of inflating Android app prices by taking as much as a 30% cut of Google Play transactions. 

Alphabet separately settled claims by Match Group Inc. ahead of the trial with Epic in San Francisco, which kicked off in early November.

The case is In Re Google Play Store Antitrust Litigation, 21-md-02981, US District Court, Northern District of California (San Francisco).

 

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Published: 19 Dec 2023, 11:48 PM IST