Google Play
Hausfeld served as interim co-lead class counsel in In re Google Play Store Antitrust Litigation, one of the first cases filed in a wave of antitrust litigation that has disrupted the tech industry. This groundbreaking case challenges Google’s requirement that app developers who create, develop, and maintain the apps distributed on the Google Play Store pay a 30% tax to Google on revenue earned from paid apps and in-app products.
Background
The Google Play Store is Google’s pre-installed application store for mobile phones and tablets using the Android operating system. It is now home to approximately 2 million apps, making it one of the world’s largest app distribution platforms. The vast majority of those apps were not developed by Google, but rather by independent app developers. Software developers that want their apps to be distributed to Android devices have no choice but to use the Google Play Store both to actually make the apps available and to facilitate in-app payments. Google prevented users from “sideloading” apps from other sources or making payments using third-party channels by using actual technological barriers and customer-facing warnings. As a result of this lack of competition, Google maintained, abused, and leveraged its monopoly power through anticompetitive restraints it has imposed on device manufacturers, app developers, and consumers, in order to extract from developers a supracompetitive 30% tax on paid apps downloaded from Google Play and in-app payments made in connection therewith.
The case filed by Hausfeld on behalf of a nationwide class of app developers alleged that Google’s anticompetitive conduct deterred entry by would-be competitors, stifled innovation by controlling the manner in which Android apps are distributed, increased prices to app developers and consumers, and reduced output by reducing app developers’ capital and incentives for creating new apps.
Action
On September 30, 2020 Hausfeld filed a complaint representing a class of nearly 48,000 app developers in the United States District Court for the Northern District of California against Google for alleged anticompetitive and unlawful practices related to its Google Play app store. This antitrust class action focused on Google’s monopolization of the mobile application marketplace.
Peekya App Services, Inc. (“Peekya”) and Scalisco LLC d/b/a Rescue Pets (“Rescue Pets”) served as class representatives of a nationwide class of app developers and litigated their claims alongside a class of consumers, a group of state attorneys general, and several individual plaintiffs including Epic Games.
Google controls an essential bridge to reaching hundreds of millions of app users, and the toll that Google charges to use that bridge has no relationship to the security or cost of maintaining an app store. Sure, Google provides a service, and app developers understand that Google is entitled to make a profit. But Google has abused its dominant position atop the market to charge an unfair, outrageously high and anticompetitive fee to get access to a critical service – and Google intentionally has put up roadblocks to try to build or use other bridges to reach consumers. We aim to change that, to make this market more competitive, to preserve incentives for app developers who bring terrific products to market, and to lower costs for app developers and consumers.
Francois Einwaechter, Director of Peekya App Services, Inc.
Outcome
On January 12, 2024, Judge James Donato approved a groundbreaking $90 million settlement on behalf of the Developer Class.
“Google’s conduct had deterred entry and stifled innovation within the app developer community by controlling the manner in which Android apps are distributed, which increased prices to app developers and consumers, and reduced output by reducing app developers’ capital and incentives for creating new apps. This settlement offers app developers significant compensation for past conduct, and we expect that the changes brought about from this case will lead to a larger number of innovative and diverse app developers bringing more unique apps into the market, thereby increasing competition and paving the way for a greater number of entrepreneurs and start-ups to succeed.” - Melinda R. Coolidge, Hausfeld US Managing Partner
In addition to paying $90 million in monetary relief directly to developers, Google has acknowledged that the litigation was a catalyst for its 2021 launch of a program where developers pay a reduced 15% service fee on their first $1 million in annual revenues and agreed to maintain that reduced fee tier for at least three more years. Google has also committed to a series of structural reforms, including developing an “Indie Apps Corner” on the homepage of the Google Play Store and publishing an annual transparency report.
Hausfeld’s work in this case is emblematic of its commitment to investigate and pursue claims for harm suffered as a result of monopolistic practices of Big Tech firms both here in the United States and in jurisdictions around the world.
*On March 28, 2023, at the Global Competition Review’s Award Ceremony, Hausfeld won the ‘Litigation of the Year – Non Cartel Prosecution’ award for its work in In re Google Play Developer Antitrust Litigation.
