US states sue Google over Play Store abuse

Washington

ALPHABET'S Google was sued by three dozen states alleging that the company illegally abused its power over the sale and distribution of apps through the Google Play store on mobile devices.

State attorneys general said in a complaint filed on July 7 in federal court in San Francisco that Google used anticompetitive tactics to thwart competition and ensure that developers have no choice but to go through the Google Play store to reach users. It then collects an "extravagant" commission of up to 30 per cent on app purchases, the states said.

Google was accused of paying Samsung Electronics, the largest Android manufacturer, to ensure that the Korean company didn't develop its own competing app store. Additionally, after Fortnite maker Epic Games began distributing its app outside of Google's store, Google "bought off" developers to dissuade them from doing the same, according to the complaint. Details of those payouts were blacked out in the complaint.

The company said the lawsuit "gets it wrong" by limiting the definition of the app marketplace to Android devices and ignoring that Google competes with Apple for developers and consumers.

"We don't impose the same restrictions as other mobile operating systems do," Wilson White, Google's senior director of public policy, said in a blog post. "So it's strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others."

New York is leading the case with Utah, North Carolina and Tennessee.

"Google has served as the gatekeeper of the Internet for many years, but more recently, it has also become the gatekeeper of our digital devices - resulting in all of us paying more for the software we use every day," New York Attorney General Letitia James said in a statement.

The complaint, filed by 36 states and the District of Columbia, marks a new attack by government officials in the US against the search engine's business practices. The Justice Department and a group of states filed separate complaints over Google's search business last year, while another state coalition sued over Google's digital advertising business.

The states are taking on Google even after a federal judge in Washington last week threw out their antitrust lawsuit against Facebook. That case accused Facebook of illegally crushing competition by buying Instagram and WhatsApp because it saw them as threats to its business. The judge said the states waited too long to challenge the acquisitions.

Google and Apple are a duopoly dominating the app economy of the Western world. The companies have come under intense pressure from regulators and some developers who complain that high app store fees and complex rules raise costs for consumers.

A total of US$143 billion was spent in mobile app stores in 2020, a 20 per cent jump from the previous year, according to analytics firm App Annie.

Utah Attorney General Sean Reyes said Google's conduct led to inflated costs for consumers who made purchases through apps. The typical consumer may have paid "hundreds if not thousands of dollars more," he said in a statement.

"Google's monopoly is a menace to the marketplace," Mr Reyes said. BLOOMBERG