Google allegedly offered Netflix a discount on the Play Store commission
A state attorney general filed an antitrust suit against Google and the Play Store. This lawsuit echoes Epic vs. Apple's battle. A new document details how and why Google's App Store is so similar. MLex senior correspondent Michael Acton points out the new complaint, which arrived Friday night from lawyers appointed to represent consumers (that's us) in a potential class-action lawsuit that joins the states and Epic Games in accusing Google of abusing its monopoly power and of anti-competitive behavior.
The most striking thing is a mention of popular subscription services like Tinder, Spotify and Netflix trying to avoid Google Play Billing and the 30% cut. It isn't hard to see why, after Spotify and Netflix collected credit card data directly, Google posted a clarification explaining that Play Store apps must use Google billing and giving them a year in which to make changes. In the filing, the lawyers allege that Google offered Netflix a "significantly lower revenue share" with the apparent intent of squashing the company's desire to use another payment system.
We haven't yet seen the details and timing of this pitch but it is an echo of what we learned from the Epic Vs. Apple trial. Apple emails revealed that it offered a number of sweeteners in order to keep Netflix on its app-purchase system.
The App Store cannot be altered.
A Google spokesperson said in a statement to the Verge that developers are subject the same policies as all developers, including the payment policy. Programs that offer support to developers have been in place for a long time. They provide them with additional resources and investments. These programs are a result of healthy competition between operating system and app stores, and benefit developers." You can argue that it's a sign Google is trying to be healthy, since Google's efforts closely match Apple's. Google also cut the commission on subscriptions in half after a year. But, developers get a 15% discount on their first $1million in revenue.
Google's standard 30% commission is still a significant target. However, the suit cites internal Google numbers that indicate the break-even for revenue sharing at about six percent. In a complaint, the complaint cites internal Google communications which admit that Google set the "arbitrary fee" of 30 percent because it "no other reason than to copy Apple."
In terms of competition, lawyers cite Google estimates which show that even a large player like Samsung could only manage $100m in revenue for 2019, while Play Store made around $4billion just from Samsung smartphones. Reuters reports that a state AGs antitrust lawsuit against Google revealed that the Play Store generated $11.2 billion in revenue in 2019 with $8.5 billion gross profit and $7.4 billion operating income.
Google's response to the state AGs in June said the Play Store "provides more openness and choice than others," and that on Android, "you can choose to download the app from a rival app store or directly from a developer's website." However, this filing pokes holes in that argument as well, pointing out that Google's OEM agreements with phone manufacturers interfere with making other app stores as easy to access as the Play Store, which they must include on a device's home screen to pre-load Google apps like Gmail and Google Maps.
In a timely call-out, it cites the Google Play Developer Distribution Agreement that forbids developers from using information about customers that they get from the Play Store, like email addresses, to reach them directly. Below is the relevant section.
4.9 Google Play will not allow you to make Your Products available through Google Play. This includes any activity that damages, interferes with, disrupts or damages any device, network, or property or service of any third parties, including Google and any Authorized Providers. You are not allowed to use any user information from Google Play for the purpose of selling or distributing Products.
According to the suit, it is "impossible" for developers to contact customers to offer alternatives Google Play Store. Apple >sought to make a few concessions in its class action settlement. This includes allowing developers to use the App Store information to contact customers with information including alternative payment options. But companies such as Epic and Spotify argue that this doesn't go enough.
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