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Google will pay $700 million to settle a lawsuit filed by a group of U.S. states accusing it of eliminating competition for its Play Store on Android devices, according to court filings released Monday.
The announcement of the terms of the settlement, which was reached in September, comes after popular online game maker Epic Games. fortnite, It won a lawsuit against the tech giant last week.
Google has agreed to pay $630 million into a consumer settlement fund, and $70 million will go into a state fund, the court document showed. Under the deal, Google agreed to make changes to the way the Android system works in the US, such as allowing developers to implement an alternative billing system for in-app purchases.
At issue in the case were Google’s contracts with smartphone makers, network operators and game developers, which the US states accused of closing out competitors to the Play Store.
Google charged higher fees on digital purchases on its Play Store by blocking alternative payment methods that could offer lower fees, the states argued.
Google partnered with Spotify in November last year to launch a pilot program called User Choice Billing, which gave users a choice between using Google Play’s billing system or paying Spotify directly to purchase products 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 promised to roll out that option across the Play Store. Google will allow developers to redirect consumers outside of its store to other payment methods.
“Google must provide all developers, including game developers, the option to add in-app billing systems for at least five years,” the settlement says.
All 50 US states, the District of Columbia, Puerto Rico and the US Virgin Islands signed the agreement with Google.
The states said Google’s approval was “unprecedented” in antitrust restrictions by big tech companies in the United States.
“The negotiated terms will provide significant, meaningful, long-term relief to consumers across the country,” they filed. “No other US antitrust activist has ever been able to obtain settlements of this magnitude from Google, or, indeed, any other major digital platform.”
The settlement requires approval by a California federal judge overseeing the states’ lawsuit, filed in 2021.
The same judge, James Donato, is tasked with deciding what penalties Google should face after a jury found it violated antitrust laws in the Epic Games trial.
The terms of the settlement with the U.S. states were kept under wraps while the lawsuit dragged on for weeks. Matchgroup, the owner of dating app Tinder, settled with Google ahead of the trial.
In addition to the $700mn payment and commitment to allow alternative billing options, Google said it would make it easier to download apps onto Android devices from sources other than its Play Store, a process known as “sideloading”.
That includes “updating language that informs users of the risks of downloading apps directly from the Internet,” Wilson White, the institute’s vice president for 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 settlement of the case.
“This solution builds on Android’s choice and flexibility, maintains strong security safeguards and preserves Google’s ability to compete with other operating systems,” as well as investing in the Android ecosystem, he said.
Epic Games criticized the settlement on Monday, saying consumers would continue to pay more for digital goods under the terms.
“The states’ settlement does not address the core of Google’s illegal and anti-competitive conduct,” Corey Wright, Epic’s vice president of public policy, said in a statement.
Google, Wright added, will impose “garbage fees” on developers who choose alternative billing methods to avoid Google’s automatic payment on digital payments.
“In the next phase of the litigation, Epic will seek meaningful solutions to truly open up the Android ecosystem, so consumers and developers can truly benefit from the competition that U.S. antitrust laws are designed to encourage.”
Epic took Apple to court over its App Store in 2020, which it is now seeking to appeal to the US Supreme Court.