Critics Disappointed as Google Play Store Deal Maintains Controversial Commissions

Alphabet Inc. has reached an agreement to pay $700 million to consumers and states, and also allow competition in the Google Play Store. However, the controversial commissions charged by the tech giant to mobile app developers will remain unchanged.

The settlement announced in the lawsuit, which was praised by select lawyers who assisted in the negotiations, will make it easier for developers to offer apps to consumers outside of Google Play and use their own payment systems. But there’s a catch: developers still have to pay Google a service fee of up to 26 percent.

Sharp differences of opinion emerged on Tuesday over how much the deal would shape Google Play’s business model and benefit consumers. Some state officials hailed the deal as an end to Google’s abuse of market power, but the head of Fortnite maker Epic Games Inc., which has been in a three-year legal battle with Google and Apple Inc. over their separate app stores. — said the settlement offers “no real relief to consumers or developers.”

Why 30% App Store Fees Are Under Threat Globally: QuickTake

For years, Google and Apple have faced complaints that their digital stores, the dominant marketplaces in the $200 billion-a-year mobile app industry, collect exorbitant fees from developers who typically have few other options, leading to higher costs for consumers. Those grievances have prompted app makers and regulators to rein in the two smartphone giants to give rival payment and delivery platforms more room to compete.

For all the incremental changes offered by Google’s settlement, it doesn’t dismantle the fee structure. Google continues to reap profits as the settlement extends to all developers a program that requires a service fee of up to 26% — not much less than the current 30% commission charged to developers who make more than $1 million each. year.

Google claims that such payments help support the company’s investments in its app store and Android operating system platform.

“Significant Changes”

“The settlement probably wouldn’t have happened if it had brought significant changes to the Play Store,” said Jennifer Rie, senior antitrust analyst at Bloomberg Intelligence.

U.S. District Judge James Donato will decide whether to approve the settlement on the grounds that it is fair and reasonable.

Donato also served on a jury trial that Epic won against Google this month, alleging that the Play Store’s app distribution, payment and payment practices are monopolistic. In the Epic case, Donato must come up with a Remedy to cure the violations committed by Google that the jury found.

The settlement with the states covers 102 million consumers, who will each receive at least $2 in surcharges based on the amount they spent on the Play Store between August 2016 and September of this year.

“Tremendous Value”

Wilson White, Google’s vice president of government affairs and public policy, said that “developers see tremendous value in Play as an engaging and secure distribution, discovery and engagement platform.”

“We offer a wide range of training, tools and services to help developers grow their business and acquire, engage and retain users – and like any other company, we charge for these services,” he said in a statement.

California Attorney General Rob Bonta said that while the $700 million award is “nothing,” the settlement’s “beating limit” is the policy changes Google Play must make.

“Harming consumers and gouging developers” is no longer allowed, he said, adding that Google must “allow competition into the market through app stores and direct billing.”

“Unjustly Collected Fees”

But Corie Wright, Epic’s vice president of public policy, said that Google’s “unfairly collected fees” remain unchanged and “consumers continue to pay too much for digital products.”

Criticism of Wright’s decision was joined by Gene Burrus, the former head of global competition policy at music streaming service Spotify.

The absence of a requirement to reduce service fees is “the single biggest piece” of why the deal is weak, said Burrus, who expressed disappointment that states did not get more concessions from Google in the wake of the company’s jury loss. experiment with Epic.

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