Google tried to pay strongest competitor to bow out, AGs’ suit says

Google offered to bribe Samsung to keep it from developing a competing app store, 36 states and the District of Columbia alleged in a previously unreported claim in this week's antitrust lawsuit against the Alphabet-owned company.

"Google intended to pay its most threatening competitor to stop competing," the complaint filed on Wednesday in federal court in San Francisco said.

Google emphasized in a blog post that its distribution model for apps on the Android operating system "increases competition and choice."

"Android and Google Play provide openness and choice that other platforms simply don't," wrote Wilson White, senior director of public policy at Google.

While the state attorneys general also pointed to allegedly anticompetitive deals that Google has made with smartphone manufacturers and mobile carriers that have already been the subject of other complaints, they added new claims they said were uncovered through internal company documents that showed Google attempted to buy off Samsung to scale back competition through its app store.

Samsung did not respond to a request for comment.

Previous lawsuits from state and federal prosecutors against Google, each of which vary slightly from one another, have largely focused on its lucrative search and advertising business. The Department of Justice first sued the company last year challenging its monopoly over online search and was followed by a pair of complaints joined by several states.

The lawsuit filed on Wednesday, led by Utah, New York, Tennessee and North Carolina, accused Google of abusing its market power over the distribution of apps to force unfavorable terms on developers. State of Utah, v. Google LLC, 21-cv-05227 (N.D. Cal., filed July 7, 2021).

Developers of mobile apps have long argued that they have no choice but to accept the company's terms if they want to market apps to millions of Android users. Google takes a 30% cut on all transactions made through its app store.

Google has maintained in response to the criticism that users are free to download apps directly from developers, where it cannot exact a commission. It has pointed to app stores that compete with the Play Store, such as the Samsung Galaxy Store and Epic Games Store.

But this lawsuit alleged that Google arranged anticompetitive deals with Samsung and developers to stifle competition.

In 2018, Samsung partnered directly with developer Epic Games to launch a mobile version of Epic's massively popular Fortnite game exclusively on the Samsung Galaxy Store. The agreement, state attorneys general alleged, threatened Google's monopoly over the distribution of apps.

"First, it represented an attempt by Samsung to build out its app store by competing on substantially more generous terms for top app developers," the complaint said. "Second, Samsung was allowing Epic to launch not merely an app in its store, but also an app installer that would allow Epic in the future to offer content directly to its customers."

Google moved to "preemptively squash" competition from the Galaxy Store, the lawsuit claimed, by trying to pay Samsung a lump sum to abandon relationships with Epic Games and other top developers. The company viewed the effort as part of its larger goal of eliminating the threat of more developers following Epic Games' lead by partnering with Samsung or distributing apps directly to consumers, according to the complaint.

"Google was willing to offer Samsung myriad benefits and concessions in order to prevent Samsung's Galaxy Store from being built out," the complaint said.

If Samsung agreed to the deal, state attorneys general argued that the agreement would "make the Samsung Galaxy Store essentially a white label for Google's app distribution services, eliminating a nascent competitor."

App developers were offered similar payments to deter them from making their apps available outside of the Play Store as part of an overarching scheme by Google to maintain its monopoly, the lawsuit alleged.

Epic Games has sued Apple and Google, alleging they've abused their control over the distribution of apps on their mobile operating systems.

A ruling in the case against Apple is expected to come down in August.