Google users will share $630 million in a Play store settlement

By Melissa Alonso, Diksha Madhok and Brian Fung, CNN

(CNN) — Google has agreed to pay $700 million and allow more competition in its Play app store, according to the terms of an antitrust settlement with US states and consumers filed in federal court on Monday.

Roughly 102 million US consumers will be eligible to receive a total of $630 million in compensation as part of the settlement, which resolves long-running allegations that Google harmed competition through its app store terms and fees. The other $70 million will be paid to the dozens of states that participated in the suit.

The vast majority of affected consumers, about 71.4 million, will not need to file a claim in order to benefit from the agreement, according to the settlement terms. Consumers eligible for a payment will each receive $2 or more, depending on how much they spent through the Google Play Store between Aug. 16, 2016 and Sept. 30, 2023.

The deal stands to reshape Google’s app store business amid intense scrutiny of its control over Android app distribution and its relationship with independent software developers. It comes as a federal jury last week decided Google’s app marketplace was an illegal monopoly. That verdict was the result of a years-long battle with Epic Games, maker of the hit video game “Fortnite.”

Google is challenging that decision.

“No company, no matter how large or powerful, is allowed to corner a market and use its influence to overcharge consumers and smother competition,” said New York Attorney General Letitia James, one of the officials involved in the lawsuit. “For too long, Google abused its market share to unfairly raise prices and block developers from selling products in other app stores.”

In addition to Google’s payments to consumers and states, the settlement requires Google to change its app store practices in several ways for a certain period of time.

For example, Google agreed for five years to expand a pilot program that lets users choose whether to pay for in-app purchases through its proprietary billing system or through a third-party payment channel. The program, which Google calls user choice billing, has been undergoing worldwide testing for more than a year. Developers that take payments through a third-party billing system can receive a slight discount on Google’s fees.

App makers will also have a multi-year guarantee under the settlement that they can tell users about promotions and alternative billing systems, Google’s commissions and ways to avoid the tech giant’s fees.

Google must also simplify the process by which consumers are allowed to install apps from unofficial app stores and third-party websites, a practice known as sideloading, including by changing the warning screens Google displays to users when they attempt to sideload.

Google has said it supports sideloading to promote an open Android ecosystem, but has warned that it could come with security or privacy risks as the tech giant does not review software offered outside of its own app store.

The states involved in Monday’s proposed settlement had been slated to litigate their case this fall beside Epic Games, but withdrew from the trial after announcing the settlement’s existence — without disclosing its specific terms — in September. Another would-be plaintiff in the trial, the dating conglomerate Match Group, dropped out in late October after it reached its own settlement with Google.

Google said in a statement it was pleased to have resolved the lawsuit brought by the attorneys general, a group that included California, Florida, Utah, Washington and the District of Columbia, among others.

“Android and Google Play have continuously evolved to provide more flexibility and choice in response to feedback from developers and regulators, as well as intense competition from Apple and app stores across the open Android ecosystem,” said Wilson White, Google’s VP of government affairs and public policy. “This settlement builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other OS makers, and invest in the Android ecosystem for users and developers.”

In its own statement on the settlement, Epic Games characterized the deal as weak and insufficient, arguing that as its case against Google moves into a remedies phase, the company will seek more “meaningful” penalties.

“After originally seeking $10.5 billion in antitrust damages identified as Google’s unjustly collected fees, the states’ attorneys general settled for a $700 million payout,” said Corie Wright, Epic’s vice president of public policy. “The states’ settlement does not address the core of Google’s unlawful and anticompetitive behavior.”

The battles over app store practices are just one of several fronts Google is defending in court. This fall, Google went to trial against the US government and multiple states in a high-profile antitrust challenge to the company’s search business. That lawsuit claimed Google had abused its dominance in online search through deals with wireless carriers and smartphone makers that made Google Search the default or exclusive option on products used by millions of consumers, such as Apple devices.

Google is also embroiled in another antitrust legal battle over its advertising technology. The US government has alleged that Google risks illegally monopolizing its dominant position in the online advertising industry.

This story has been updated with additional developments and context.

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