Why are dozens of US states targeting Google with an antitrust lawsuit?

Google has been hit with an antitrust brought by 36 states and Washington, D.C.
9 July 2021 | 14 Shares

Why are there dozens of states targeting Google’s app store in an antitrust lawsuit? (Photo by SPENCER PLATT / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)

  • The attorney generals for 36 states and the District of Columbia have filed a lawsuit targeting Google’s Play store recently.
  • The antitrust suit specifically targets Google’s plans to force all app developers who traffic in its Google Play Store to pay a 30% commission on sales of digital goods or services.

There was a 144-page complaint filed this week in a Northern California federal court. It marks the fourth major antitrust lawsuit filed against Google by government agencies across the US since last October. This time, attorney generals 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.

Filed in a California federal court and led by Utah, North Carolina, Tennessee, New York, Arizona, Colorado, Iowa, and Nebraska, the antitrust suit specifically targets Google’s plans to force all app developers who traffic in its Google Play Store to pay a 30% commission on sales of digital goods or services. 

The new rule was scheduled to go into effect in September, and when announced, had the unintended effect of agitating some of the most prominent companies Google works with, including Netflix, Spotify, and Match Group. The resultant outcry forced Google to respond by lowering commissions to 15% on the first US$1 million in sales, but the company still defended its practices. 

The company however argued during a Senate hearing in April, that its commissions were in line with the industry standard, and said that those payments help fund developer tools and updates to Android.  Truth be told, although antitrust enforcers in the UK and Australia have investigated Google for monopolistic practices in the past, this week’s lawsuit — which is being brought by a bipartisan group of state attorneys general — represents the first major attempt to challenge Google’s alleged dominance in the mobile app store market in the US.

To recall, in the first suit, filed October 2020, the Justice Department and 14 states accused Google of attempting to dominate the mobile search market. In a second suit filed in December of that year, 38 states and territories claimed that Google used anticompetitive tactics to achieve a monopoly in general search and search advertising. In the third suit, filed by 15 states and territories, Google stands accused of using its considerable power to crush competitors in the digital ad space.

The argument of the latest lawsuit against Google

The complaint claim 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.”

“Through its illegal conduct, the company has ensured that hundreds of millions of Android users turn to Google, and only Google, for the millions of applications they may choose to download to their phones and tablets,” James said in a press release, according to Tech Crunch. “Worse yet, Google is squeezing the lifeblood out of millions of small businesses that are only seeking to compete.”