Small app developers snatched $90 million from Google in a legal settlement announced on Friday, in the wake of a similar agreement with Apple.
In a Blog After Friday, Google said it had agreed to pay $90 million to settle a lawsuit with app developers who claim the Android maker abused its dominant market position to unfairly charge them fees. 30% off for in-app purchases made through the Play Store. Although the major settlement marks a short-term win for developers, critics tell Gizmodo that Google’s concessions appear to be just another attempt to thwart the proposals. antitrust legislation that threatens Google’s mobile app business at a fundamental level.
“There is clearly a pattern here where they [Google] try to give the impression that they are responding to critics’ concerns without changing their fundamental problem”, American Economic Freedoms Project (AELP) policy director Pat Garofalo told Gizmodo in a phone interview.
Google’s proposed $90 million fund would pay developers who earned $2 million or less in annual revenue through the Play Store between 2016 and 2021. According to Google, this cohort represents the “vast majority of US developers” who earn money on the play store. Additionally, and possibly more permanently, Google has said it will revise its Developer Distribution Agreement to make it clear to developers that they have the ability to use users’ contact information on their app. to contact such users by email or other methods to discuss payments. The settlement will also allow developers who earn less than $1 million in annual fees to Continue pay a reduced service fee of 15% until at least May 25, 2025. The proposed settlement is still awaiting court approval.
Google, presumably with gritted teeth, said it was “satisfied” with the settlement, which it said would avoid “years of uncertain and distracting litigation.” The online advertising company struck a similar deal with Spotify in March this year, allowing Spotify subscribers to pay through the Play Store or Spotify’s own payment system.
Lawsuit accuses Google of monopoly status
The class action court case, originally filed in 2020, claims that Google’s Play Store payment requirements violate antitrust laws. The lawsuit says the rules hurt developers by allowing Google to retain a monopoly in the U.S. market for digital distribution on Android phones and for in-app purchases. Attorneys for Hagens Berman, representing the plaintiffs, said these restrictions forced their customers to pay “exorbitant fees.»Hagens Berman valued around 48,000 app developers have been eligible for a minimum payment of $250. Some developers might even walk away with over $200,000.
“Today, nearly 48,000 hard-working app developers receive the fair payment they deserve for their work product, which Google has sought to capitalize on, at all costs,” the managing partner said. and co-founder of Hagens Berman, Steve Berman.
Richard Czeslawski, chief operating officer and president of Pure Sweat Basketball, one of the developers involved in the lawsuit, welcomed Google’s commission rate changes. “Google’s commitment to maintain a reduced fee through May 25, 2025 gives Pure Sweat and Settlement Class Members the substantial direct benefit of a significant and ongoing 50% reduction in the service fee rate of Google from 30% to 15%,” Czeslawski said in a statement. “We’re proud to know that our work in this lawsuit has helped secure this program that will make it easier for consumers to find apps from small developers who distribute new apps through Google Play.”
Google did not immediately respond to Gizmodo’s request for comment.
Experts say Google feels ‘seriously threatened’ by impending antitrust law
Google’s settlement offer comes as lawmakers consider new antitrust legislation that would effectively ban Google from requiring developers to use its payments system. Introduced by Sen. Connecticut Democrat Richard Blumenthal theOpen Application Markets Act would put in place provisions requiring app stores to allow developers to use separate payment systems. The bill, as currently drafted, would also prevent app store owners like Google from punishing developers or imposing less favorable terms if they choose to use “pricing or different sales via another in-app payment system or on another app store.
Although the settlement may result in immediate positive results for affected developers – more money –corporate responsibility groups like the AELP warn that this could also serve as a defensive measure for Google ward off impending state and federal competition laws, which, if passed, it would likely result in lost revenue that would far eclipse the $90 million settlement.
“This is another move by Google in a series of moves to stave off legislation such as the Open Markets app,” AELP’s Garofalo said. “Google responded to this [proposed legislation] trying to appease the critics. Garofalo said Google’s recent changes and lobbying efforts, both in statehouses and at the federal level, prove he feels “seriously threatened by antitrust action.”
Developers have been crying foul at Google for years supposedly application fee. The problem also extends to Apple. In this case, Apple switched to lower its commission rate of 30% to 15% in 2020 for app developers who make less than $1 million in annual net sales on its platform. Google followed with a similar fee reduction months later. The developers were still dissatisfied, and, in the midst of growth calls for regulationApple agreed to create a $100 million fund for developers who earned $1 million or less from all of their apps each year between June 4, 2015 and April 26, 2021.
Hagens Berman has been involved in Apple and Google settlement cases and said the payments should send a message to the industry as a whole.
“Following our victory against Apple for similar behavior, we believe this pair of regulations sends a strong message to Big Tech: the law watches, and even the world’s most powerful companies are accountable when they stifle competition,” the lawyers said in a statement.
Garofalo acknowledged that Friday’s settlement, if approved, would benefit developers, but said it fully addresses anti-competitive and allegedly monopolistic behavior in app markets.
“It doesn’t change the fundamental fact that there are these two players in this space on app distribution and they have sullied monopolies next to each other,” Garofalo said. “This is no substitute for vigorous government action to break their monopoly on app distribution.”