California Among 36 States Targeting Google's App Store In Antitrust Suit
SAN RAMON, Calif. (AP/CBS13) — Dozens of states, including California, are taking aim at Google in an escalating legal offensive on Big Tech.
This time, attorneys general for 36 states and the District of Columbia have filed a lawsuit targeting Google's Play store, where consumers download apps designed for the Android software that powers most of the world's smartphones.
The 144-page complaint filed late Wednesday in a Northern California federal court represents the fourth major antitrust lawsuit filed against Google by government agencies across the U.S. since last October.
"Google has violated the trust of Android phone customers by limiting consumer choice and raking in outrageous commissions on app developers. Android customers are effectively stuck using the Google Play Store for apps, where they pay a premium," said California Attorney General Rob Bonta. "This anticompetitive behavior also stings consumers by limiting their options. A more competitive app marketplace could open innovation, leading to more choice, better payment processing, improved customer service, and enhanced data security."
The lawsuit also comes against a backdrop of proposed laws in Congress tailored to either break up or undermine the power amassed by Google, Apple, Facebook and Amazon. The four have built trillion-dollar empires fueled by the immense popularity of services that people have become increasingly dependent upon.
Much of the latest lawsuit echoes similar allegations that mobile game maker Epic Games made against both Google and Apple, which runs a separate app store exclusively for iPhones, in cases brought last August.
Just as Epic did, the states' lawsuit focuses primarily on the control Google exerts on its app store so it can collect commissions of up to 30% on digital transactions within apps installed on smartphones running on Android. Those devices represent more than 80% of the worldwide smartphone market.
A high-profile trial pitting Epic — the maker of the widely played Fortnite video game — against Apple concluded in late May. A decision from the federal judge who presided over the month-long proceedings is expected later this summer. Epic's lawsuit against Google is still awaiting trial.
Although its app commissions are similar to Apple's, Google has tried to distinguish itself by allowing consumers to download apps from other places than its Play store. Apple, in contrast, doesn't allow iPhone users to install apps from any other outlet than its store.
But the lawsuit filed Wednesday alleges Google's claims that its Android software is an open operating system that allows consumers more choices is a sham.
The complaint contends Google has deployed various tactics and set up anti-competitive barriers to ensure it distributes more than 90% of the apps on Android devices — a market share that the attorneys general argue represents an illegal monopoly. What's more, the lawsuit alleges Google has been abusing that power to reap billions of dollars in profit at the expense of consumers who wind up paying higher prices to subsidize the commissions, and the makers of apps who have less money and incentive to innovate.
"Google's monopoly is a menace to the marketplace," said Utah Attorney General Sean Reyes, who is leading the lawsuit along with his peers in New York, Tennessee and North Carolina. "Google Play is not fair play. Google must be held accountable for harming small businesses and consumers."
Google didn't immediately respond to a request for a lawsuit, but it has adamantly defended the way it runs its Play store in its response to the Epic lawsuit and in other instances.
The Mountain View, California, company also is fighting the three other lawsuits that were filed against it last year, including a landmark case brought by the U.S. Justice Department. Those cases are focused on alleged abuses of Google's dominant search engine and its digital ad network that generates more than $100 billion in annual revenue for its corporate parent, Alphabet Inc.
As the scrutiny on their app stores has intensified, both Apple and Google have been taking conciliatory steps. Most notably, both have lowered their commissions to 15% on the first $1 million in revenue collected by app makers — a reduction that covers most apps in their respective stores.
But those measures haven't lessened the heat on any of the major tech companies, nor should they, said Sen. Amy Klobuchar, a Democrat from Minnesota, who chairs a subcommittee that oversees antitrust issues.
"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," she said in a statement.
But fighting Big Tech won't be easy. Besides being able to spend heavily to lobby for their positions, the companies also contend they have the law on their side. Facebook, for instance, scored a major victory last week when a federal judge dismissed an antitrust lawsuit against the social media company by the Federal Trade Commission and a coalition of states on the grounds that they hadn't submitted enough evidence to back their monopoly allegations.