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Law firm Hausfield has moved for preliminary approval of a $90 million settlement on behalf of developers in a case against Google. The case is an antitrust litigation case and accuses Google of anticompetitive conduct and unlawful practices. The accusations focus specifically on the Google Play Store, where Google requires developers to pay a 30% tax to Google on revenue from paid apps and in-app purchases.
The $90M settlement is on behalf of app developers with less than $2 million in annual sales. As it happens, that’s most of them.
“This settlement is a fitting end to a complex and hard-fought case, and will have a profound impact on the way app developers do business on Google Play for years to come,” said Hausfeld’s Melinda R. Coolidge, in a statement to GamesBeat.
In addition to the $90 million payout to developers, Google confirmed the litigation was the reason for the 2021 launch of a program which let developers pay a reduced 15% service fee on their first $1 million in annual revenues. Google is also maintaining that reduced fee for at least three more years. Google posted its comment here.
The app store owner is also committing to a series of structural reforms, which include the further development of an “Indie Apps Corner” on the homepage of the Google Play Store. Google is also going to be publishing an annual transparency report going forward.
Anticompetitive app stores all over are getting sued
This isn’t the first lawsuit to have focused on anticompetitive conduct. Back in May 2022 Apple failed to dismiss a lawsuit from competitor Cydia. The rival app store pointed to a series of software updates between 2018 and 2021 which it argued were “overt” acts that harmed iOS developers, like itself.
The 30% tax is something of a sticking point, too. In 2020 Fortnite developer Epic Games sued Apple over the removal of Fortnite from Apple’s app store. Fortnite utilized an in-app purchase method which bypassed Apple and its 30% tax, resulting in Apple removing Fortnite from the platform.
That specific case didn’t quite go in Epic’s favor.
The different lawsuits aren’t entirely the same. All of them focus on slightly different things, and aim for different results. But the similarities are striking. Apple basically won, a few years ago. This time, Google lost. In both cases, that 30% tax was a key factor.
So now the question is whether or not this lawsuit against Google paves the way for a new lawsuit against Apple. Or whether or not Apple cutting commission fees from 30% to 15% for apps with less than $1 million yearly revenue will protect it.
The CAF sees the Google settlement as an empty gesture
The Coalition for App Fairness isn’t very happy with the Google settlement. The group came together to fight for fairer practices for developers on the Play Store and the Apple App Store.
Originally a coalition of 13 companies, including Epic Games, the CAF has grown to over 40 members since 2020. The CAF is quick to point out that this settlement doesn’t actually change enough for developers on the Play Store.
“This agreement does nothing to open up the mobile app ecosystem to competition or solve the underlying problem. Even if it’s approved, Google would maintain control over how consumers obtain apps and make purchases inside those apps, which has resulted in high fees and less innovation,” said The Coalition for App Fairness’ Rick VanMeter. “This settlement makes it clear that policy solutions like the Open App Markets Act would help ensure a free and fair mobile app ecosystem.”
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