Google faces a major multi-state antitrust lawsuit over Google Play fees

A group of 37 attorneys general filed a second major multi-state antitrust lawsuit against Google Wednesday, accusing the company of abusing its market power to stifle competitors and forcing consumers into in-app payments that grant the company a hefty cut.

New York Attorney General Letitia James is co-leading the suit alongside the Tennessee, North Carolina and Utah attorneys general. The bipartisan coalition represents 36 U.S. states, including California, Florida, Massachusetts, New Jersey, New Hampshire, Colorado and Washington, as well as the District of Columbia.

“Through its illegal conduct, the company has 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,” James said in a press release. “Worse yet, Google is squeezing the lifeblood out of millions of small businesses that are only seeking to compete.”

In December, 35 states filed a separate antitrust suit against Google, alleging that the company engaged in illegal behavior to maintain a monopoly on the search business. The Justice Department filed its own antitrust case focused on search last October.

In the new lawsuit, embedded below, the bipartisan coalition of states allege that Google uses “misleading” security warnings to keep consumers and developers within its walled app garden, the Google Play store. But the fees that Google collects from Android app developers are likely the meat of the case.

“Not only has Google acted unlawfully to block potential rivals from competing with its Google Play Store, it has profited by improperly locking app developers and consumers into its own payment processing system and then charging high fees,” District of Columbia Attorney General Karl Racine said.

Like Apple, Google herds all app payment processing into its own service, Google Play Billing, and reaps the rewards: a 30 percent cut of all payments. Much of the criticism here is a case that could — and likely will — be made against Apple, which exerts even more control over its own app ecosystem. Google doesn’t have an iMessage equivalent exclusive app that keeps users locked in in quite the same way.

While the lawsuit discusses Google’s “monopoly power” in the app marketplace, the elephant in the room is Apple — Google’s thriving direct competitor in the mobile software space. The lawsuit argues that consumers face pressure to stay locked into the Android ecosystem, but on the Android side at least, much of that is ultimately familiarity and sunk costs. The argument on the Apple side of the equation here is likely much stronger.

The din over tech giants squeezing app developers with high mobile payment fees is just getting louder. The new multi-state lawsuit is the latest beat, but the topic has been white hot since Epic took Apple to court over its desire to bypass Apple’s fees by accepting mobile payments outside the App Store. When Epic set up a workaround, Apple kicked it out of the App Store and Epic Games v. Apple was born.

The Justice Department is reportedly already interested in Apple’s own app store practices, along with many state AGs who could launch a separate suit against the company at any time.