NJ Sues Google Over App Store, Android Billing 'Monopoly'

NEW JERSEY — Could it be game over for the Google Play Store? Thirty-seven attorneys general, including New Jersey's, sued Google for an alleged app-store monopoly that they claim drives up prices. But Google claims the lawsuit ignores choice on Android and Google Play.

The lawsuit, filed Wednesday, claims Google failed to keep its promise to maintain Android as an "open source" operating system, instead maintaining a monopoly for its own Play Store in the market for distributing Android-compatible apps.

“As I’ve said before, big tech companies like Google have incredible power over our daily lives,” said New Jersey Attorney General Gurbir S. Grewal. “How they acquire and exert their power and influence over our behaviors must be scrutinized. Today’s lawsuit sends the message that no company is too powerful to avoid real accountability.”

New Jersey also alleged that Google has conducted "deceptive and misleading" business that violates the state's Consumer Fraud Act. Among other claims, the federal lawsuit says Google uses a series of technological barriers and pretextual warnings to discourage or prevent users from sideloading — directly downloading — apps and app stores onto their Android devices.

For example, Google "purposely misled" would-be direct download consumers with pop-up warnings that falsely describe popular apps from well-known develops as "unknown apps," the lawsuit says.

“Google displays these misleading warnings in order to ensure that users exclusively use the Play Store to download apps, and thus keep users within Google’s walled garden,” the complaint says.

But Google claims that its economic model benefits developers.

"About 97% of developers today don’t sell digital content on Google Play and therefore aren't subject to a service fee," Wilson White, Google's senior director of public policy, wrote in a blog post. "Less than 0.1% of developers — who are the largest and most profitable on Google Play — are subject to a 30% service fee on some transactions. This lawsuit is essentially on behalf of that 0.1% of developers."

When Google acquired the Android operating system in 2005, the company offered Android to essentially all non-Apple mobile device makers for free. Subsequently, Google marketed Android to app developers and device manufacturers for several years with a promise that it would maintain Android as an “open source” operating system — one that would let developers create compatible apps and distribute them without unnecessary restrictions, the Office of Attorney General said.

But Google abandoned that promise, according to the complaint, taking steps “to close the ecosystem from competition and insert itself as the middleman between app developers and consumers.”

Google Play Store distributes more than 90 percent of all Android apps in the United States, and no competing Android app store has more than 5 percent of the market.

According to the complaint, Google also requires app developers to use Google Billing as a middleman for in-app purchases. This arrangement, which ties a payment processing system to an app distribution channel, forces app consumers to pay Google's commission up to 30 percent, the lawsuit claims.

New York, Utah, North Carolina and Tennessee are lead states in the lawsuit. Also suing are the attorneys generals of Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Idaho, Indiana, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Virginia, Washington and West Virginia.