Introduction
On Monday, Google announced that it would pay $700 million and make changes to payment options in its app store to settle an antitrust lawsuit filed by attorneys general in 36 states and the District of Columbia. This is the latest effort by the tech giant to address increasing regulatory scrutiny regarding its size and power.
Key Facts
In a blog post outlining the settlement, Google’s Vice President of Public Policy and Government Affairs, Wilson White, stated that the company would pay $630 million “to be distributed for the benefit of consumers according to a court-approved plan.”
Google will also pay $70 million to a fund used by the states.
In a major change for the app market on Google’s mobile operating system, “Android,” the company will now allow developers to “implement an alternative billing option alongside the billing system in the Play Store” for in-app purchases.
As part of this system called “User Choice Billing,” developers will be allowed to present different pricing options within the app itself – something they were only allowed to communicate outside the app previously.
Google added that it will simplify the process of installing apps loaded from the web without using the app store, although the company warned that this process comes with “unique” risks.
Throughout the announcement, White compared the new changes in the Play Store and Android operating system to Apple’s iOS – which he noted is much more locked down.
Main Background
Previously, Google required app makers to use its payment system for apps loaded from the Play Store – one of the main digital stores on mobile phones alongside the Apple App Store. Google’s billing system takes a fee that ranges from 15% to 30% of all transactions, but “User Choice Billing” will reduce this to between 11% and 26%. The ability to present different pricing options within the app means that users will be offered a slight discount for choosing the app developer’s billing system instead of Google’s.
What to Watch
When news of the settlement first broke, Epic CEO Tim Sweeney stated that his company was not a party to it. The federal court overseeing the Epic judgment has yet to decide on what actions Google must take, and the tech giant has announced that it plans to appeal the ruling.
Main Criticism
Sweeney criticized the settlement, saying: “The state attorneys general’s settlement is a disservice to all Android users and app developers. It supports the false horror screens and competition that Google has deliberately designed to undermine competing stores and direct downloads.”
Further Reading
Google to Pay $700 Million in Play Store Settlement (Wall Street Journal)
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