Former FTC, DOJ Officials Skeptical on AGs' Suit Against Google

It will be a challenge for state attorneys general to prove Google has a monopoly over the Android app store market, former FTC and DOJ officials told us Thursday. Consumer groups welcomed Wednesday’s lawsuit from AGs in 36 states and Washington, D.C.

The suit alleged Google unfairly restricted competition with its Google Play Store for Android and forced developers to use Google Billing for in-app purchases. The AGs argued Google maintained its monopoly by creating barriers to app distribution outside the Google Play store, failing on promises to keep Android open source, preloading Google apps on Android devices, paying off potential rivals, and requiring Google Play Billing as a “middleman” for in-app purchases. Google faces three lawsuits from DOJ and state AGs over allegations involving other markets, including search.

It looks like a case “that’s not going to go very far,” said antitrust attorney David Balto, who worked for DOJ and the FTC under President Bill Clinton. The issue will be proving Google is a monopolist when the company has direct competition from Apple and others. “There are other paths for app developers to get to consumers” on Android, he said. He called it the weakest antitrust case against Google, like trying to claim Walmart has a monopoly over Target in one mall, or vice versa.

The complaint addresses Balto’s criticisms effectively, said Kelley Drye’s Bill MacLeod, a former FTC Consumer Protection Bureau director. It’s not just a monopolization case, he said, calling the causes of action under Sherman Act Section 1 and state counterparts “serious.” He cited paragraphs 77, 79, 99 and 100 in the complaint. Paragraph 77 says Google leaves “open the technical possibility for Android consumers to acquire some apps without using the Play Store, [but] this can only be accomplished through a competing app store installed on the device ... or through sideloading of individual apps.” Google pursued its goals by “methods that are substantially more restrictive than necessary,” the suit alleged.

There's much but not universal skepticism. The case is a “stretch,” said Baker & Miller’s Donald Baker, a former DOJ Antitrust Division chief. “Charging a monopolistic price is not illegal in the U.S., yet this seems to be the core of the states' concerns,” he emailed: If the AGs can show Google's app store is a relevant market, they might be able to “sustain a Section 2 case based on proof of some of their allegations about exclusion of others from this market.” But the recent Facebook dismissal (see 2107020039) is a reminder that “proving a relevant market in one of these digital platform cases is a serious challenge, even where the platform has a lot of obvious discretion and monopoly,” he added. The case is weaker than DOJ’s suit because search “seems to be a plausible antitrust market which Google continues to dominate,” he said.

“One of the reasons you may be seeing different antitrust cases coming about is that the different sets of attorneys general are defining the market differently,” said Jennifer Huddleston, American Action Forum technology and innovation policy director. AGs narrowly defined markets in each antitrust case against Google and Facebook, rather than “looking more generally at how consumers experience a lot of these markets,” she said.

The states’ challenge is to convince the court that the app store market is anti-competitive despite Google allowing apps to be sideloaded on Android, the ability for Android users to access other app stores including from Amazon and Samsung, and competition from Apple’s app store for its devices, Huddleston said. “There are a lot of other app stores out there,” and “you already have two players that are pretty clearly in competition with each other from a consumer point of view in Apple and Google.” She said a key question will be if the market encompasses all the different ways people access software, or if it should be more narrowly defined.

“You can have monopolization despite the technical possibility of competition,” said Public Knowledge Director-Competition Policy Charlotte Slaiman. “Sideloading need not be 100% foreclosed for there to be a strong case.” Each antitrust case addresses a different part of Google's business, she said: “It's notable that there are several cases detailing how Google may have violated the law in several different industries.”

The complaint includes “yet another poorly defined relevant market, which excludes Apple’s iOS,” blogged the Competitive Enterprise Institute's Ryan Young. “Another problem is that it is easy for developers and consumers to avoid the Play Store and its commissions.” Two antitrust suits against Facebook got dismissed partly “because prosecutors intentionally excluded direct Facebook competitors such as Twitter and TikTok from their relevant market definition,” he said.

Google said there's app store competition. “If you don’t find the app you’re looking for in Google Play, you can choose to download the app from a rival app store or directly from a developer’s website,” it blogged. “We don’t impose the same restrictions as other mobile operating systems do. ... People sideload successful apps like Fortnite, as well as entire app stores like the Amazon Appstore, neither of which are distributed through Google Play.”

Google Play “is not fair play,” said Utah AG Sean Reyes (R), leading the state suit. “Most consumers have no idea that for years Google has imposed unnecessary fees far beyond the market rates for in-app transactions, unlawfully inflating costs for many services, upgrades and other purchases made through apps downloaded on the Google Play Store.”

Google illegally “ensured that hundreds of millions of Android users turn to Google, and only Google, for the millions of applications they may choose to download to their phones and tablets,” said New York AG Letitia James (D), who earlier joined a December states’ suit alleging anti-competitive search practices. Minnesota AG Keith Ellison (D) said smartphones are “essential tools for folks trying to afford their lives and stay connected to family, friends, and the world,” but “Google’s illegal conduct drives up the cost of doing that for everyone.” Google violates Android users’ trust “by limiting consumer choice and raking in outrageous commissions on app developers,” said California AG Rob Bonta (D).

“From limiting promised open source capabilities to requiring in-app purchases to go through Google Billing, Google’s actions are unacceptable,” said Missouri AG Eric Schmitt (R). Indiana AG Todd Rokita (R) said, “All businesses certainly have the right to seek strategic advantages and maximize their own profits, but in pursuing these goals they must also comply with antitrust laws and consumer protection statutes.”

“This suit against Google is one more example of the bipartisan consensus that the Big Tech party is over,” said Alex Harman, Public Citizen competition policy advocate. “The massive price Google and Apple charge app users and developers is only possible because of the stranglehold these companies have over the way apps are delivered on mobile phones.”