By Natalie Decoste
The gift that is antitrust lawsuits keeps on giving as more complaints against Google have been released as part of a multistate suit against the company for engaging in monopolistic behavior through its play store.
Following Epic Games’ lawsuit against Google, a separate lawsuit was filed by state attorneys general against Google in July. Attorneys general from 36 states and one district sued Google for alleged anticompetitive practices over its Google Play app store.
The attorneys general claimed that Google controls 90% of the market for the Android apps and undermines competing app stores by refusing to let other app stores advertise on YouTube or its search engine. Additionally, the complaint alleged that Google represented an illegal monopoly by using various tactics and anticompetitive barriers to ensure it is the distributor for the majority of the apps on Android devices.
Now, a new document in the ongoing legal battle furthers the story of Google’s anticompetitive conduct in a way that echoes Epic Games’ lawsuit against Apple.
Epic Games sued Apple in August of 2020, alleging the tech giant engaged in monopolistic behaviors when Apple pulled Epic’s game Fortnite from its App Store. Apple removed Fortnite from its App Store after Epic added a direct payment option to the game to circumvent the 30% cut that Apple takes from all digital transactions.
A newly unredacted filing from the attorneys general’s lawsuit reveals that Google had $8.5 billion in gross profit and $7 billion in operating income for an operating margin of over 62% in 2019. Attorneys are using the financial figures to illustrate the scope of Google’s alleged monopoly behaviors.
One of the most revealing pieces of information from the new filing mentions that popular subscription services like Spotify, Netflix, and Tinder have made attempts to circumvent Google Play Billing and the 30% cut that Google takes.
“Similarly, Netflix, Spotify, and Tinder, some of the nation’s largest and most popular subscription services, have repeatedly sought to bypass Google Play Billing. In particular, Netflix wanted an alternative payments system. Apparently in an effort to ameliorate this displeasure, Google offered to take a significantly reduced revenue share percentage to Netflix. Not all developers, however, have met with Netflix’s success, even though many have sought to use their own payment systems,” read the complaint.
This is not very shocking for those familiar with Netflix and Google’s payment services relationship. Direct collection of credit card info by Netflix and Spotify reportedly resulted in Google posting a “clarification” explaining that apps downloaded through Google’s Play Store must use Google’s billing system. Google gave the companies a year to adhere.
The new filing reveals that, similar to Apple’s methods, Google offered Netflix a significantly reduced revenue share with the intention that by doing so, Netflix would drop its insistence to use an alternative payment system.
In the case of Apple, it was revealed that an Apple manager met with employees at Netflix in 2018 about the App Store’s payment services and wrote an email to his colleagues summarizing the meeting. The email detailed how Netflix ran a test to see if it could stop accepting in-app purchases on Apple products to circumvent Apple’s 15% to 30% commission. The test raised questions about whether Apple should take “punitive measures,” such as ceasing to promote Netflix on the App Store or escalating concerns to Netflix executives.
“All developers are subject to the same policies as all other developers, including the payments policy. We’ve long had programs in place that support developers with enhanced resources and investments. These programs are a sign of healthy competition between operating systems and app stores and benefit developers,” said a spokesperson from Google on the matter.