California State Attorney Gen. Rob Bonta announced that a multi-state lawsuit was filed against Google for allegedly “monopolizing the smart phone application market in violation of state and federal antitrust laws.”
The alleged anti-competitive practices of Google, through its Play Store, was deemed detrimental to consumers by California and at least 36 other states that opened a case against the Mountain View CA-based tech company.
The other states in the case, through their own Attorneys General, include the District of Columbia, New York, Colorado, Utah, North Carolina, Tennessee, Alaska, Arkansas, Arizona, Connecticut, Delaware, Florida, Idaho, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Virginia, Washington, and West Virginia.
In the complaint, the multi-state coalition alleges that Google violated the federal Sherman Anti-trust Act and California’s Cartwright Act, among other statutes, by entering into agreements with smart phone manufacturers to ensure that Android phones offer Google Play as the primary — and often only — application store.
The complaint further alleges that Google, in violation of state and federal law, required apps distributed through Google Play to use its billing system for in-app purchases and the apps would not be distributed if it were integrated in a rival billing system.
The lawsuit alleges that “Google has violated the trust of Android phone customers by limiting consumer choice and raking in outrageous commissions on application developers.”
“Android customers are effectively stuck using the Google Play Store for apps, where they pay a premium,” added Bonta. “This anti-competitive 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.”
Google, one of the world’s largest companies, reportedly operates a web of exclusionary agreements with phone manufacturers and carriers to exert control over applications distribution on Android phones through its Google Play Store.
By leveraging those anti-competitive agreements, Google can demand a 30 percent cut from third-party app developers for using its Google Play Store and for in-app purchases, a captured market practice that raises prices for consumers and limits options for anyone using an Android mobile operating system. The 30 percent commission is 10 times higher than competitive prices through third-party payment systems.
Google does not disguise its intent to dominate Android, which Google acquired more than a decade ago. The Google Play Store icon is displayed prominently on the home screen of nearly every Android device in the nation and cannot be deleted.
The tech giant has supposedly also cornered the market with apps developers who wish to sell on Android platforms. Google apparently requires developers to use Google Play Store in exchange for automatic updates.
Developers are also unable to offer cheaper alternatives to consumers for in-app purchases because of this.
Although, consumers have the option to bypass Google Play Store and install apps directly from developers or purchase apps from competing marketplaces, Google purportedly discourages this type of “sideloading” through a convoluted process that forces users to click through often misleading security warnings and multiple permission screens.
This burdensome series of red flags consequently leave consumers with the impression that alternative application stores are inferior at best and high risk at worst.
Over 90 percent of all Android application distribution in the US is done through Google’s Play Store that leaves competing application store having no more than five percent of the market.
The California Department of Justice is currently litigating a separate anti-trust lawsuit against Google for its exclusionary agreements with smartphone makers and carriers that block out competing search engines, among other violations.
