Dive Brief:

• Technology behemoth Google agreed this week to change its in-app billing and payment options, at least temporarily, as part of a $700 million settlement agreement with a bipartisan group of state attorneys general.
• As part of a lengthy list of ways in which Google agreed to change, it will give application developers the option to let users pay via alternatives to the tech company’s billing system for at least five years, according to press releases from state AGs on Monday and Tuesday.
• Developers will also be able to offer and advertise lower prices for their products and services within their apps to lure users to their alternative payment and billing options for at least five years as well, according to the states’ releases. 

Dive Insight:

The attorneys general painted the settlement as a win for consumers, not only because of the restitution they will receive, but also because of the changes Google will be forced to make in selling through its app store.

The settlement follows a San Francisco jury verdict against Google earlier this month in a federal case also alleging antitrust behavior tied to the in-app billing system. In that case brought by Fortnite maker Epic Games, the jury found in favor of the plaintiff on all counts and against Google, dealing a blow to its Android ecosystem.

In the 2021 lawsuit against the tech company, states alleged that Google had monopolized the “in-app payment processing market,” among other infractions, according to the settlement agreement.

“Google took advantage of Android phone customers by limiting consumer choice and capitalizing on commissions for in-app purchases, all while limiting alternative ways to download apps,” California Attorney General Rob Bonta said in that state’s release. “Google’s anticompetitive behavior hurt consumers by limiting their options, inflating prices on in-app purchases, and creating an unfair marketplace designed to funnel ill-gotten profits back to the company.” 

Google will also be required to change its Android operating system to support third-party app stores with their varied payment options on that system for four years, including letting those stores automatically update offerings. 

New York’s AG suggested the changes that Google will make to ameliorate its anti-competitive practices will provide better payment options for consumers.

“No company, no matter how large or powerful, is allowed to corner a market and use its influence to overcharge consumers and smother competition,” New York Attorney General Letitia James said in a release from that state regarding the settlement. “For too long, Google abused its market share to unfairly raise prices and block developers from selling products in other app stores.”

For its part, Google said in a statement that it was “pleased” to have resolved the case, with a settlement reached initially in September, and to move forward. “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,” the company said.

The company also said that it has been piloting a new U.S. billing system providing more user choice for more than a year and plans to expand it further.