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Thursday, December 28, 2023

Google agrees to new app payment options

Google can no longer restrict app developers from using third-party payment processors. This is under terms of an agreement resolving allegations the tech giant violated the antitrust laws of 53 states and territories through various practices, including some involving payments to developers. Google was ordered to pay a total of $700 million to settle claims that it monopolizes the market for Android smartphone apps. Most of the money ($630 million) is earmarked as compensation to consumers who purchased apps through the Google app store at inflated prices between August 2016 and September 2023.

An estimated 102 million Americans can expect restitution under the agreement. The states, in their court filing, estimated 70 percent of eligible consumers will receive payments automatically without filing claims. The 50 states and three territories (District of Columbia, and the Virgin Islands) will share $70 million to settle additional claims.

Reforms required

North Carolina Attorney General Josh Stein, who co-led the bipartisan coalition of attorneys general in suing Google, said "the settlement requires Google to reform its business practices." One of those business practices was requiring app developers to use Google's billing system exclusively.

Three required reforms under the settlement are specific to payments and payment processing. These are:

  • Giving developers the ability to allow users to pay through in-app billing systems other than Google Play billing for at least five years;
  • Allowing developers to offer cheaper prices for their apps and in-app products to consumers who use alternative, non-Google billing systems,for at least five years; and
  • Permitting developers to steer consumers toward alternative, non-Google billing systems by advertising cheaper prices within the apps themselves for at least five years.

"No company is too big to play by the rules," Stein said.

"For too long Google abused its market share," added New York Attorney General Letitia James, another co-leader of the coalition.

Putting a different spin on things

James, Stein and the other attorneys general sued Google in 2021, alleging the company unlawfully monopolized the market for Android app distribution and payment processing. They said Google violated antitrust laws by:

  • Entering into anticompetitive contracts that prevented other app stores from being preloaded onto Android devices;
  • Buying off key app developers who might otherwise open competing app stores;
  • Creating technological barriers to deter consumers from directly downloading apps onto their Android devices; and
  • Requiring developers to process payments through the Google billing system.

The agreement was reached in September, but details were only released this month. "Google's anticompetitive behavior hurt consumers by limiting their options, inflating prices on in-app purchases, and creating an unfair marketplace designed to funnel ill-gotten profits back to the company," said California Attorney General Rob Bonta.

In a blog post about the settlement, Google tried to put a different spin on things. The blog post carried the headline "Reaffirming choice and openness." Wilson White, vice president for government affairs and public policy at Google, wrote "We have been piloting user choice billing in the U.S. for over a year and now will expand this option further."

Google revealed in a March 2022 blog post that it was "exploring user choice billing." There are strict eligibility requirements, however. For example, gaming apps are not eligible to participate.

Google still faces federal charges over additional alleged monopolistic practices. One case is focused on Google's dominant position in the online search market; the other concerns online ads. end of article

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