Google Receives Antitrust Lawsuit From 36 US States For Google Play Abuse

Alphabet Google has received its fourth antitrust lawsuit filed by US law enforcement agencies in the past year. This time, the authorities are accusing the Play Store of the company’s app store of abuse. Google shares reacted little to the news.

On Wednesday, the attorneys general of 36 states and the District of Columbia filed a lawsuit against Google Alphabet (GOOGL, GOOG) in federal court in San Francisco.

State authorities have accused Google that the company:

  • leverages the dominant position of its Play Store to charge high commissions of up to 30% on app purchases from developers;

  • uses anti-competitive practices to discourage competing app stores from entering the market through original equipment manufacturer (OEM) contracts.

An example was given of Google’s obstruction of a rival Galaxy Store in smartphones from Samsung Electronics, the largest manufacturer of Android smartphones.

The lawsuit added: “Barriers to entry into the licensed mobile operating system market are high and even high-resource contributors such as Microsoft (MSFT) and Amazon (AMZN) have failed.”

According to the lawsuit, in the US, Google Play accounts for 90% of downloaded Android apps.

“Google Play is not fair game,” Utah Attorney General Sean Reyes said in a statement. “The company must stop using its monopoly power and over-dominance in the market to illicitly obtain billions of dollars from small companies, competitors and consumers over and above what it has to pay for.”

Megan DiMusio, executive director of the Application Fairness Coalition, believes that such “anti-competitive policies stifle innovation, limit consumer freedom, inflate costs, and limit transparent communication between developers and their customers.”

On Wednesday, state authorities also said they did not rule out taking similar measures against Apple (AAPL) because of its App Store. In fact, a duopoly of Google Play and the App Store has developed in the global application market today.

Google, in its defense, said the lawsuit concerns support for several large app developers who want preferential treatment, rather than helping small businesses or consumers.

A company spokesman argued that, unlike Apple with its App Store on the iPhone, Android supports its competitors in the Play Store.

“Android and Google Play provide openness and choice that other platforms simply do not have,” the company said in a statement.

Popular international game developer Epic Games filed a private antitrust suit in California federal court against these app store politicians last year.

A court ruling in the Epic Games – Apple case is expected in the coming weeks, and a hearing in the Epic Games – Google case is scheduled for July 22.

Attorneys attorneys intend to pursue pecuniary damages and the court to impose other remedies to stop Google’s alleged anti-competitive behavior.

The Play Store misuse lawsuit is not the only US government’s antitrust lawsuit with Google – the previous three concerned Google’s search engine practices and anti-competitive digital ad dominance practices.

Google is also under investigation in several European countries, both antitrust and consumer data and copyright investigations.

In addition, Google and other tech giants may face significant changes in how they pay taxes in countries where they are not registered but have a large user base. Read more in the article “G7 Countries Reach Historic Agreement on Minimum Tax for Large Corporations”.

It’s also worth noting that Google isn’t the only company facing a number of investigations and lawsuits. In recent years, Apple, Amazon (AMZN), Facebook (FB) and others have also received accusations of monopoly or anti-competitive practices.

The authorities are also looking to get companies to be more transparent in how they use user data.

Why isn’t Google stock responding to news of antitrust lawsuits?

Despite a growing number of large lawsuits, shares of Alphabet (Google’s parent company) rose 0.24% on Wednesday and fell 1.66% before trading opened on Thursday. That’s not a significant move when you factor in the growth of Alphabet shares by 15.6% in the last quarter, 48.5% since the beginning of 2021 and 75% in the last year.

Alphabet shares are at a new high in 52 weeks before trading opens today.

The stocks are probably not falling because investors do not believe that the decisions of the courts can somehow significantly harm the earnings model of the giant Google.

The new lawsuit against Google comes amid a court rejection of an antitrust lawsuit against Facebook last week. A lengthy trial of illegal suppression of competition through the purchase of Instagram and WhatsApp culminated in a court ruling that states had waited too long to challenge the Facebook acquisitions.

In addition, all previous high-profile judicial antitrust investigations ended only with large fines for the giant companies, but their size did not cause big problems for the monopolists.

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