Google Is Sued for Alleged Anticompetitive Practices on its Play Store Platform
Consumers do not really know the mechanics of the Google Play platform. All they know is that they pay to download an app and the bill shows up on their credit card. Now, the dynamics of the market are coming into play in a class-action lawsuit that has been filed against Google. The internet giant has been accused on anticompetitive and monopolistic practices with regard to the platform. Right now, there is one plaintiff in the case, but the plaintiff's attorneys are seeking more developers to join the class.
Google Takes a 30% Cut of Play Store Sales
The lawsuit claims that app developers end up at the mercy of Google, which completely controls the platform. The plaintiff alleges that Google exploits its market power to stifle innovation discourage competition. As a result, Google is able to charge developers a 30% cut of the download price of their apps. Google claims that the fee is to compensate it for distributing the apps and its services.
Where Google has a competitive advantage is that it can bundle its Play Store with the Android operating system. This keeps competitors such as Amazon from being able to be on a level playing field since they do not have their own operating system. Theoretically, Amazon could distribute apps at a lower cost, charging the developers a lower percentage of their sales.
Google is not the only app store that has been sued over allegedly anticompetitive practices. Apple is also the defendant in a private lawsuit that was filed by Epic Games that has accused it of similar conduct to Google. Apple is also being investigated by the federal government for antitrust law violations over this fact pattern. Epic has also sued Google for taking the popular Fortnite game off of the Play Store platform. The company now claims that Google puts apps that are downloaded outside of its own platform at a relative disadvantage to Play Store apps.
Fortnite's Developer Tried to Go Around Apple and Google
Taking the allegations in these lawsuits as true, the companies' behavior makes life more difficult for consumers. This would drive up the price of apps as developers will need to raise their prices to factor in the outsize cut that Google takes. In the case of Epic Games' consumers have had to pay higher prices when they buy V-Bucks for the game through Play Store. Epic has now tried to sell V-Bucks to players through direct sales, charging them less since Google is not able to take their cut. This was the direct predicate for Google and Apple kicking Epic Games off of their platforms. Epic seemingly provoked this action so that it could file its lawsuits.
Consumers will also have few choices for where to buy their apps as Apple and Google make it more difficult for consumers to access apps outside of their platform. These lawsuits represent the latest legal headache for Big Tech as its behavior is under increasing scrutiny in the media and from government.
Google has fought hard to exert control over the Play Store platform. The company has aggressively removed apps that do not comply with its rules. It has even taken apps off when their developers have cooperated with the federal government.
To be clear, gamers can still play Fortnite on the Apple and Google devices. They just need to work a little harder to find and download the game. If Apple and Google completely blocked the app, it would be an egregious violation of antitrust law. Epic has its own app and website that players can use to download the app. However, they will need to specifically look for the app as opposed to finding it in Play Store.
The stakes in these lawsuits are high. Apple rakes in billions of dollars each year from its cut of app and in-app purchases. This is a cash cow for both of these tech giants so it is highly unlikely that they will be compromising and settling this case. Epic's lawsuit will likely go all the way to trial because the tech companies would lose a major slice of revenue if they settled the case. There are estimates that Apple and Google make almost $20 billion combined from App Store and Play Store respectively. In the meantime, these cases represent part of the growing scrutiny of the alleged monopoly power that these companies have and their resulting costs for American consumers.
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