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Google Settles App Store Case: $700 Million Paid to States and Consumers
Google has reached a settlement of $700 million and additional concessions to address allegations of stifling competition against its Android app store. This settlement parallels a similar case that recently went to trial, potentially leading to more significant changes.
Details of the Settlement
- Financial Terms:
- Google agreed to pay $700 million to settle allegations.
- The settlement terms were disclosed after a federal court jury criticized Google for anticompetitive tactics in its Play Store for Android apps.
- Compensation for Consumers:
- The settlement includes $630 million to compensate U.S. consumers affected by alleged inflated prices for digital transactions within apps downloaded from the Play Store.
- Eligible consumers will receive at least $2, with additional payments based on their spending on the Play store between Aug. 16, 2016, and Sept. 30, 2023.
- Penalties and Costs:
- Another $70 million will cover penalties and other costs imposed on Google by the states.
Changes to Enhance Competition
- Payment Processing:
- Google will make changes to its app ecosystem, making it easier for consumers to download and install Android apps from sources other than its Play Store.
- More flexibility will be provided to app makers to offer alternative payment choices to consumers.
- Reduced Security Warnings:
- Google will decrease the issuance of security warnings, or “scare screens,” when users opt for alternative choices.
Investor Reaction and Google’s Perspective
- Investor Response:
- Investors showed minimal concern, with shares in Google’s parent company, Alphabet Inc., experiencing a slight rise.
- Google’s Perspective:
- Google views the settlement positively, emphasizing its commitment to choice, flexibility, security, and competition in the Android ecosystem.
Epic Games’ Response
- Epic Games’ Stance:
- Epic Games, which initiated an antitrust lawsuit against Google, rejected the settlement, opting to continue its case at trial.
- The states’ settlement was criticized by Epic Games for providing “no true relief for consumers or developers.”
Potential Future Changes
- Legal Outcomes:
- The outcome of the Epic trial raises the possibility of Google facing more substantial penalties and making significant changes to its Android app ecosystem.
- U.S. District Judge James Donato, who presided over the Epic Games trial, will determine the next phase of changes in 2023.
- Antitrust Challenges:
- Google faces an additional antitrust challenge related to its dominant search engine, with closing arguments scheduled for early May in a trial against the Justice Department.
Note: The settlement is subject to approval by U.S. District Judge James Donato.