Google to pay $700mn in antitrust settlement over Android app store

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Google will pay $700mn to settle a lawsuit brought by a group of US states accusing it of quashing competition to its Play Store on Android devices, according to court filings released on Monday.

The announcement of the terms of the settlement, which was reached in September, comes after Epic Games, the maker of popular online game Fortnite, won a related case against the tech company last week.

Google agreed to pay $630mn into a settlement fund for consumers, with another $70mn going to a fund for the states, the court document showed. Under the settlement, Google also agreed to make changes to the way the Android system works in the US, such as allowing developers to implement an alternative billing method for in-app purchases.

At issue in the case were Google’s contracts with smartphone makers, network operators and game developers, which the US states alleged shut down competitors to the Play Store.

Google collected excessive fees on digital purchases on its Play Store by preventing alternative payment methods that could offer lower fees, the states argued.

Google began a pilot programme in November last year called user choice billing in partnership with Spotify, which gave users the choice between using Google Play’s billing system or paying Spotify directly to purchase items or subscriptions. Google said the pilot programme would test options for alternative payment methods and gather insights from developers on how it might evolve.

The company has now committed to rolling that option out across the Play store. Google will also allow developers to steer consumers outside its store to other payment methods.

“The Settlement requires Google to give all developers, including game developers, the option to add alternative in-app billing systems for at least five years,” the filings said.

All 50 US states, plus the District of Columbia, Puerto Rico and the US Virgin Islands, signed on to the agreement with Google.

The states said Google’s acquiescence was “unprecedented” in antitrust regulation of Big Tech companies in the US.

“The negotiated terms will offer significant, meaningful, long-lasting relief for consumers throughout the country,” they said in the filings. “No other US antitrust enforcer has yet been able to secure remedies of this magnitude from Google, or, for that matter, from any of the other major digital platforms.”

The settlement requires approval from the California federal judge overseeing the states’ lawsuit, which was filed in 2021.

The same judge, James Donato, is also tasked with deciding what penalties Google should face after a jury found it guilty of breaking antitrust law in the Epic Games trial.

The terms of the settlement with the US states were kept under wraps while the weeks-long trial was under way. Match Group, the owner of dating app Tinder, also settled with Google ahead of trial.

In addition to the $700mn payment and the commitment to allow alternative billing options, Google said it would make it easier to download apps on Android devices from sources other than its Play Store, a practice known as “sideloading.”

This will include “updating the language that informs users about these potential risks of downloading apps directly from the web for the first time”, the company’s vice-president for government affairs and public policy, Wilson White, said in a blog post.

Critics say such warnings deter consumers from going elsewhere.

White said Google was pleased with the resolution of the case.

“This settlement builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete” with other operating systems, as well as invest in the Android ecosystem, he said.

Epic Games criticised the settlement on Monday, saying that consumers would continue to overpay for digital goods under the terms.

“The States’ settlement does not address the core of Google’s unlawful and anti-competitive behaviour,” Corie Wright, Epic’s vice-president of public policy, said in a statement.

Google, Wright added, would impose “junk fees” on developers who opt for alternative billing methods to avoid Google’s automatic fee on digital payments.

“In the next phase of the case, Epic will seek meaningful remedies to truly open up the Android ecosystem so consumers and developers will genuinely benefit from the competition that US antitrust laws were designed to promote.”

Epic also took Apple to court over its App Store in 2020, in a case it is now seeking to appeal to the US Supreme Court.