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Google’s Historic $700 Million Antitrust Settlement Deciphered

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According to the Verge, a milestone moment unfolded in the tech realm on 11 December. On the day, the jury ruled Google guilty of maintaining an unlawful monopoly with its Google Play app, leading to a victory for Epic Games.

This legal battle involved all 50 state attorneys general. Additionally, the recently disclosed settlement of $700 million shed light on Google’s concessions.

Key Highlights:

  1. Financial Implications:
    • Google’s payment of $700 million, equivalent to roughly 21 days of the app store’s operating profit.
    • $629 million allocated for consumers who might have overpaid for apps or in-app purchases via Google Play.
    • Additional $70 million designated for states to be used at the discretion of state attorneys general.
    • $1 million allocated for settlement administration.
  2. Operational Changes:
    • Google commits to enabling Android to support the installation of third-party apps on mobile devices through channels other than Google Play for seven years.
    • Developers gain the ability to offer alternative in-app billing systems alongside Google Play (User Choice Billing) for five years.
    • Google refrains from enforcing developers to offer their best prices exclusively to customers using Google Play and Google Play Billing for a period of five years.
  3. Market Dynamics and Competition:
    • Developers are not obliged to release titles on Google Play simultaneously with other platforms for four years, fostering fair competition.
    • Exclusive placement of Google Play on phones or home screens is prohibited for five years, promoting an open app marketplace.
    • OEMs are free to grant installer rights to preloaded apps without interference from Google for four years.
    • Google will not demand consent before an OEM preloads a third-party app store for five years.
  4. User Choice and Billing Program:
    • For six years, Google allows developers to utilize contact information obtained outside the app to communicate with users.
    • Consumption-only apps, like Netflix, can inform users about better prices elsewhere without linking to external websites for six years.
    • Developers are not prohibited from disclosing service or other fees associated with Google Play or its billing system for six years.

In-Depth Analysis

While the concessions may seem substantial, Google’s argument during the trial that users could already install third-party apps raises questions about the long-term impact of these changes. Notably, the concessions have expiration dates, and some are arguably not true concessions.

The User Choice Billing program, despite its name, offers developers only a 4 percent discount on Google’s fee.

This discounted rate remains unchanged post-settlement, challenging the notion of genuine user choice. Moreover, Google reserves the right to prevent developers, like Netflix, from linking to their websites to offer discounted rates.

Looking Forward

The states seek approval for the settlement on February 8th, leaving the tech community eagerly anticipating the ramifications.

The settlement’s nuances and Epic Games’ ongoing legal battle with Google set the stage for continued scrutiny of app store practices and the broader landscape of digital competition.

As we delve into 2023, the ramifications of this settlement and its ripple effects across the tech industry remain to be seen.

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