Google said on Monday that it would allow developers on its Play app store to offer direct payment options to users and would pay $700 million to settle an antitrust suit brought by state attorneys general, in the company’s latest move to navigate increased regulatory scrutiny of its power.
The suit, brought in July 2021, accused Google’s app store of abusing its market power and forcing aggressive terms on software developers. The tech giant is facing several antitrust challenges in the United States, including a trial in which the federal government claims Google has abused its dominance in online search.
In its announcement on Monday, Google said it would now allow apps to charge consumers directly rather than having to charge through Google. The company will pay $630 million to create a settlement fund for consumers, as well as pay $70 million into a fund to be used by the states. To highlight the choice that users have in how they download apps, Google reaffirmed that phone makers, like Samsung, that use the Android mobile operating system can continue installing multiple app stores on their devices in addition to Google’s Play Store.
The settlement was announced in September, though details were not released.
Google hopes that the settlement will act as a template for resolutions with other critics of its Play Store policies, including Epic Games — the maker of the popular game Fortnite — which won an antitrust lawsuit against Google last week, according to a person familiar with the matter.
“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,” Wilson White, Google vice president of government affairs, wrote in a blog post.
The settlement is Google’s latest concession regarding its app store, which has come under increased regulatory scrutiny in recent years over claims of monopolistic behaviors. The Google Play Store has drawn complaints because it is one of two main marketplaces for mobile apps along with Apple’s App Store. Google charges app makers a 15 percent fee for customer payments for app subscriptions and up to 30 percent for purchases made within popular apps that are downloaded from the store.
In 2021, the South Korean government passed a law forcing Google and Apple to allow app makers to charge customers directly. Since then, Google has offered alternative billing options in the country. It also preemptively introduced a pilot program that offered users a choice in how they were billed in the United States before the settlement took place.
The settlement will reduce those fees by four percentage points when app makers handle their own transactions, although consumers would not necessarily see a reduction in fees because app developers could pocket the discount. It will also allow developers to show different pricing options when users make a purchase.
Google settled the government claims with attorneys general from all 50 states, as well as Washington, D.C., and Puerto Rico. If the suit had gone to court, the states would have made their case in a joint trial that would have been heard alongside lawsuits filed by Epic and the dating-app company Match Group, which had sued on similar grounds.
But Google and the attorneys general announced that they had reached an “agreement in principle” in September, two months before the start of the trial. The parties had to wait until a week after the Epic verdict to release the details of the September settlement.
In October, Google also settled with Match.
Epic went on to win its case last week, convincing a nine-person federal jury in San Francisco that Google’s levies and aggressive terms on developers amounted to antitrust violations, which hurt the gaming company’s business prospects. Judge James Donato of U.S. District Court for the Northern District of California will decide the remedies needed to address Google’s conduct next year.
Google has said it will appeal the verdict in the Epic trial. Google’s lawyers argued it was impossible for the company to act as a monopoly because its Android mobile operating system and Play Store compete against Apple’s iOS software and its App Store, which is much more popular in the United States.
Apple largely prevailed in a similar lawsuit that was brought by Epic and decided by a judge, though the U.S. Supreme Court may decide to pick up the case next year.
Mr. White, of Google, wrote in the blog post that the company was “disappointed” by last week’s verdict but said the case with Epic was “far from over.”