Google has agreed to pay $700 million and will make changes to its app store it has resisted for years in order to resolve a an antitrust lawsuit brought by state attorneys general, the company announced on Monday.
As part of the deal, Google said it would now allow app developers to charge consumers directly, instead of being billed through Google, where the company can take up to a 30% cut.
The tech giant said it will also simplify the process of making apps available for download outside of its own app marketplace, known as the Google Play store.
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These changes to Google’s app store are significant considering that app developers, policymakers and others have long pushed for Google to loosen its grip over how apps are downloaded and paid for on Android devices. But only now, as legal and regulatory pressure coalesces around the app store, is Google making major concessions.
“We’re pleased to resolve our case with the states and move forward on a settlement,” Wilson White, Google vice president of government affairs and public policy, said in a company blog post.
Millions of consumers to be given payments from Google
While states announced a settlement with Google back in September, the details were unknown until the company publicly revealed the terms of the agreement on Monday.
In the suit that prompted the settlement, filed back in July 2021, more than 30 states accused Google of operating its app store like an illegal monopoly by suppressing competition and overcharging consumers for subscriptions to mobile apps, and other purchases within Google’s app store. Eventually, though, every U.S. state joined the legal action.
Google will contribute $630 million into a settlement fund for consumers and $70 million will be provided to the dozens of states that brought the legal action against the tech behemoth.
Lawyers for the states wrote in a court submission on Monday that an estimated 71 million people out of the 102 million eligible consumers will receive automatic payments without having to file a claim.
Eligible consumers include anyone with a legal address in the U.S. who purchased an app or subscription, or made an in-app purchase through the Google Play store between August 2016 and September 2023.
Pressure from the E.U. and South Korea builds against Google Play Store
Terms of the settlement were kept confidential as another legal case aimed at Google’s app store unfolded, as the judge in the states’ case feared influencing the jury in a related case.
That one, filed by Epic Games, the maker of the hit video game Fortnite, ended last week with a California jury unanimously deciding that Google’s Play Store violated U.S. competition laws by squelching competition and harming consumers.
A federal judge will hold hearings in January about what changes Google must make in order to remedy the anti-trust issues raised in court at the trial.
Google’s app store has been in the crosshairs of lawmakers around the world. In both South Korea and the European Union, laws have been passed mandating that Google open up its app store by doing things like allowing consumers to download and pay for apps directly from developers.
On iPhones, Apple operates an app store under terms similar to Google, and it, too, has been the target of scrutiny in lawsuits and by policymakers. Epic Games also sued Apple over its app store policies. In September 2021, a federal judge largely sided with Apple, but Epic Games is appealing the ruling to the U.S. Supreme Court.
White, the Google executive, said the company is appealing last week’s jury verdict against the app store, saying the case is “far from over.”
Google, one of the most valuable companies in the world, is now confronting more antitrust challenges than it ever has, as several other legal battles over whether the company abuses its immense power remain pending. Among them, a case brought by the Justice Department centered on Google allegedly breaking the law in maintaining its dominance of online search and advertising.
A federal judge is expected to rule on the case sometime in 2024.
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