‘Google is like Godzilla.’ 37 states join Utah in suit against tech giant over app store fees

The lawsuit alleges Google takes up to 30% of purchases made on Android devices.

(Chris Samuels | The Salt Lake Tribune) Utah Attorney General Sean Reyes speaks in his office about a lawsuit filed by Utah and other states against Google, Wednesday, July 7, 2021.

Utah will take the lead in a multistate lawsuit against Google that alleges the search engine giant used its dominance to take advantage of app developers, capturing a larger cut of in-app purchases than what could be considered reasonable.

“We believe these are monopolistic actions that need to be addressed immediately,” Utah Attorney General Sean Reyes said Wednesday. “Most consumers have no idea that for years Google has imposed fees far beyond market rates for in-app purchases.”

The lawsuit alleges Google, through its Play Store, takes up to 30% of purchases made on devices running its Android operating system, which the attorneys general assert hurts both app developers and businesses.

“If you’re a gamer and you’re trying to purchase an upgrade to get more powers,” Reyes said, “a pot of gold, a certain skin, you are paying more for getting less.”

The suit is similar to the court battle that Epic Games, which produces the massively popular online game Fortnite, waged against Apple.

Epic alleged Apple’s 30% commission on revenue was exorbitant and attempted to allow users to pay them directly instead of going through Apple’s App Store. Apple responded by removing Fortnite from the App Store for violating its rules, which do not allow for outside purchases. Epic sued, claiming Apple was operating a monopoly. The two sides are currently awaiting a decision in that case.

The Android ecosystem is a little different than what you find on Apple. There are alternative ways for Android users to download apps outside of the Play Store. Amazon and Samsung have their own app stores. Today’s filing asserts Google makes it difficult for users to find and download apps from third-party sites.

“There is a small percentage of apps that exist outside of the Google Play environment. But if you try to use those, Google purposely downgrades the effectiveness of its own operating system so it doesn’t work nearly as well,” Reyes said. “Because of that, it’s a huge disincentive to try and skirt the Google Play Store. It’s more costly. It’s less effective, and consumers are not getting as much value.”

Utah is already part of a pair of ongoing lawsuits against Google.

One accuses the company of abusing its dominance in internet advertising to overcharge for advertisements. The second alleges, among other things, that Google cut deals with phone-makers to prioritize Google’s online search engine over rivals like DuckDuckGo.

The Department of Justice filed a similar lawsuit against Google last year for making exclusive deals to make sure it’s the default search engine on browsers and mobile phones. The DOJ says this amounts to an illegal monopoly over search.

Late last month, a federal judge threw out two antitrust lawsuits against Facebook. The Federal Trade Commission argued the company holds a monopoly over social networking. A separate suit brought by more than 40 states, including Utah, maintained Facebook’s purchase of Instagram and WhatsApp were made to stifle possible competitors. The lawsuit asked that Facebook be forced to sell the two companies. The judge said the states waited too long to challenge those sales.

Reyes says he’s not against Big Tech, but there must be guardrails to protect consumers from damaging business practices.

“Google is kind of like Godzilla in terms of size. Even when Godzilla is trying to save Tokyo or New York, he may not realize he’s squashing cars and smashing buildings along the way,” Reyes said. “I think they have to be more diligent and careful about not hurting people.”

The lawsuit is just the latest salvo in a number of governmental actions against Big Tech companies. On Thursday, former President Donald Trump unveiled a quixotic class-action lawsuit accusing Facebook, Twitter and YouTube of “censoring” conservative voices online. Legal experts say the claims are likely doomed to fail in court.

Utah Sen. Mike Lee has also been seeking to reform antitrust laws around Big Tech. He has suggested breaking up what he has described as monopolies for their “heavy-handed censorship” of conservatives.

Reyes did not put a dollar figure on the size of damages that might result from the suit.

“Google has a record of all the transactions they charged on,” Reyes said. “If you look at the [difference] between the up to 30% they charged and what the market rate could have been, it’s not too hard to come up with a number that’s in the billions.”

The attorneys general from North Carolina, Tennessee and New York are also taking the lead with Utah on the legal action.