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Google will pay $700 million to settle a lawsuit brought by a group of U.S. states that accused the company of stifling competition to its Play Store on Android devices, according to court documents released Monday.
The announcement of the terms of the agreement reached in September comes after Epic Games, the maker of the popular online game Fortnite, won a related case against the technology company last week.
Google agreed to pay $630 million into a consumer settlement fund, with another $70 million going to a state fund, according to the court filing. As part of the deal, Google also agreed to make changes to the way the Android system works in the US, such as allowing developers to adopt an alternative billing method for in-app purchases.
The case concerned Google’s contracts with smartphone manufacturers, network operators and game developers, through which the US states allegedly closed off competition to the Play Store.
Google collected excessive fees for digital purchases on its Play Store by preventing alternative payment methods that could offer lower fees, the states argued.
Google launched a pilot program called User Choice Billing in November last year in collaboration with Spotify, giving users the choice of using Google Play’s billing system or paying Spotify directly to purchase items or subscriptions. Google said the pilot program will test options for alternative payment methods and gather insights from developers on how it might evolve.
The company has now committed to rolling out this option across the entire Play Store. Google will also allow developers to direct consumers to other payment methods outside of its store.
“The settlement requires Google to provide all developers, including game developers, with the opportunity to add alternative in-app billing systems for at least five years,” the documents say.
All 50 US states as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands have signed the agreement with Google.
The states said Google’s acquiescence was “unprecedented” in antitrust regulation of major technology companies in the United States.
“The negotiated terms will provide significant, meaningful and lasting relief to consumers across the country,” the documents say. “No other U.S. antitrust agency has been able to secure remedies of this magnitude from Google or any of the other major digital platforms.”
The settlement requires approval from the California federal judge overseeing the states’ lawsuit filed in 2021.
The same judge, James Donato, will also decide what penalties Google will face after a jury found the company guilty of antitrust violations in the Epic Games trial.
The terms of the agreement with the US states were kept secret during the week-long process. Match Group, the owner of the dating app Tinder, also reached an agreement with Google before the trial.
In addition to the $700 million payment and a pledge to enable alternative billing options, Google said it would make it easier to download apps to Android devices from sources other than the Play Store, a practice known as “sideloading.” “ is known.
This includes “updating the language informing users of these potential risks when downloading apps directly from the Internet for the first time,” Wilson White, the company’s vice president of government affairs and public policy, said in a blog post.
Critics say such warnings deter consumers from going elsewhere.
White said Google was pleased with the resolution of the case.
“This agreement builds on Android’s choice and flexibility, ensures strong security, and preserves Google’s ability to compete with other operating systems” and invest in the Android ecosystem, he said.
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Epic Games criticized the settlement on Monday, saying consumers would continue to pay too much for digital goods under the terms.
“The states’ settlement does not address the core of Google’s unlawful and anticompetitive conduct,” Corie Wright, vice president of public policy at Epic, said in a statement.
Google, Wright added, would impose “junk fees” on developers who choose alternative billing methods to get around Google’s automatic fee for digital payments.
“In the next phase of the process, Epic will seek meaningful remedies to truly open up the Android ecosystem so that consumers and developers can truly benefit from the competition that U.S. antitrust laws are designed to encourage.”
Epic also sued Apple over its App Store in 2020 and is now trying to appeal to the US Supreme Court.