On June 30, Google announced in its blog an agreement with a group of U.S. developers to avoid costly and lengthy litigation about terms and conditions of the Google Play Store, including the fees charged. The proposed settlement, which still has to be approved by a court, will establish a $90 million fund to support U.S. developers who earned $2 million or less through Google Play during each year from 2016 to 2021.
But more important than the monetary relief, at least for the regulatory community, is the other commitments that Google is offering in the settlement that come at a crucial moment when important antitrust bills are discussed at Capitol Hill, namely, the American Innovation and Choice Online Act and the Open App Markets Act.
The former, which seeks to impose restrictions on how online platforms may display search results or how they rank their products in their online marketplaces seem to have gained momentum and different lawmakers have claimed that the bill could be sent to a Senate vote soon.
The Open App Markets Act, which will largely affect Google and Apple’s app stores, passed the Senate Judiciary Committee vote in February but the bill hasn’t enjoyed the same push in recent months and it is yet unclear when it will be sent for a full Senate vote. If approved, it would give app developers more power to reach their customers without the control of Google and Apple. The bill would allow app developers to directly reach users, to communicate with them to offer them products or sales, to offer alternative payment methods, circumventing the Big Tech’s own in-app payment systems, which in turn, it could affect the commissions paid to Apple and Google.
However, the settlement reached by Google and a group of U.S. developers included a few commitments that already go in that direction, and it could also signal how far Google is willing to go to minimize the impact of any potential legislation affecting its Google Play store in the U.S.
For instance, according to the announcement, Google will continue with a tiered pricing model, maintaining its 15% commission frate for the first $1 million in annual revenue from the app store, rather than the original 30%. It is worth noting that Google and Apple have already offered a reduced 15% commission to small developers that generate less than $1 million in revenue from Google Play.
A second commitment is that Google will change its Developer Distribution Agreement, which has been challenged in many courts around the world, “to make it clear that developers can continue to use contact information obtained in-app to communicate with users out-of-app, including about subscription offers or lower-cost offerings on a rival app store or the developer’s website. This means that, for instance, Spotify or Epic could reach its users to offer them subscriptions at a lower price in their own websites or app stores. The commitment doesn’t seem to go as far as offering developers the option to communicate with users in Google’s app. This is something that the Open App Markets Act could change.
Another important commitment offered by Google is the possibility for people to use other app stores on their android devices. This seems to open Android to other app stores. Yet, Google added that this would be possible “while being careful not to compromise the safety measures Android has in place,” which may translate into a limitation to download certain apps.
While this settlement is only binding for a group of developers, and needs to be approved by the court, it may show the way for both Google and developers moving forward if the Open Markets App Act doesn’t become law or until it is applicable.
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