Google paying $700M to settle antitrust allegations with states

Google agreed to pay $700 million to settle a complaint brought by state attorneys general alleging the tech giant engaged in antitrust practices related to its Android app store. 

The deal was initially struck between the parties in September, but the agreement was filed late Monday night in San Francisco federal court.

The settlement — which includes all 50 states — allocates $630 million to pay out U.S. consumers who utilized a payment system within Google’s Play Store that the state attorneys general alleged magnified prices for in-app purchases.

The states accused the company of up charging customers and restraining “trade in the markets for Android app distribution.” Google collects 15 to 30 percent of commissions on in-app purchases, which the states argued inflated prices higher than they would be if there was an open market for payment processing, according to The Associated Press.

“The Complaint also alleges state-law antitrust and consumer protection claims. Specifically, the States allege that Google has unreasonably restrained trade and monopolized Android app distribution and payment-processing services through anticompetitive conduct,” the settlement agreement states.

A majority of the phones used globally operate on Android software, and use the Google Play Store for purchases. Consumers who are eligible to receive part of the settlement will be automatically paid.

Those who are eligible will receive at least $2 and additional payments may be issued depending on their spending on Google Play from Aug. 16, 2016 through Sept. 30, 2023.

Google will also need to pay $70 million to the states in penalties and other costs, according to the court documents. The settlement still needs to be approved by a judge.

Wilson White, Google’s vice president of government affairs and public policy, wrote in a blog post that the settlement “builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other OS makers.”

As a result of the settlement, White said Google will allow app and game developers to implement an alternative billing system alongside Google Play’s existing one.

“Android and Google Play provide choices and opportunities for innovation that other platforms we compete against simply don’t – from allowing for multiple app stores and avenues of app distribution to piloting new ways for users to pay for in-app purchases,” he wrote in the post.

“We’re pleased to reach an agreement that builds on that foundation and we look forward to making these improvements that will help evolve Android and Google Play for the benefit of millions of developers and billions of people around the world,” White added.

This comes just one week after a federal jury in California sided with “Fortnite” maker Epic Games in the company’s antitrust lawsuit against Google’s app store. In a statement about the recent settlement to states, Epic Games said that the agreement does not address the root of the problem.

“In Epic v. Google, a jury unanimously found that Google violated the antitrust laws in its dealings with developers, potential competitors, and OEMs,” the company wrote, referring to original equipment manufacturers. “The States’ settlement does not address the core of Google’s unlawful and anticompetitive behavior,” the company wrote.”