Dozens of states are poised to sue Alphabet’s Google alleging that the company illegally abused its power over developers that distribute apps through the Google Play store on mobile devices, according to people familiar with the situation.
State attorneys general are preparing to file an antitrust lawsuit that targets the fees Google takes from developers for purchases and subscriptions inside apps, said one of the people, who asked not to be identified discussing the case. The lawsuit could be filed as soon as Wednesday in California, a second person said.
It would mark a new attack by government officials in the U.S. against the search engine’s business practices. The Justice Department and a group of states filed separate complaints over Google’s search business last year, while another state coalition sued over Google’s digital advertising business.
Google and Apple are a duopoly dominating the app economy of the Western world. The companies have come under intense pressure from regulators and some developers who complain that high app store fees and complex rules raise costs for consumers. A total of $143 billion was spent in mobile app stores in 2020, a 20% jump from the previous year, according to analytics firm App Annie.
Alphabet fell 0.2% to $2,523.20 at 4:12 p.m. New York time in extended trading. The shares are up 44% this year, outperforming broader U.S. indexes. Google didn’t immediately respond to a request for comment on the pending lawsuit.
The company announced in March that it was halving the percentage it takes from app developers on sales through the Play store, following a similar move by Apple. Mountain View, California-based Google said it was reducing the fees to 15% from 30% for the first $1 million in revenue on sales of apps and in-app-purchases each year. After the first $1 million, developers will pay the typical 30% fee.