U.S. States Weighs New Google Suit Over App Store Fees

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At least three U.S. states are investigating Alphabet Inc.’s Google over the fees it takes from developers for purchases and subscriptions inside apps, and they may file an antitrust lawsuit against the company early next year, according to people familiar with the matter.

The attorneys general of Utah, North Carolina and New York are among states that are preparing a lawsuit, which hasn’t been previously reported and could be filed as soon as January, said the people, who asked not to be identified because the matter isn’t public.

An antitrust lawsuit against Google over its app store would mark a new attack against the search engine giant’s business practices. On Thursday, a group of 38 attorneys general, including New York, North Carolina and Utah, sued the company in federal court in Washington, accusing it of abusing its dominance in online searches. That case went beyond claims brought by the Justice Department in an October lawsuit — and came a day after a suit by 10 states that claimed Google illegally thwarted competition in online display advertising.

The investigation into Google’s app store practices is examining the 30% cut that its Google Play store takes from developers for in-app-purchases. That’s the feature that allows users to subscribe to services or buy upgrades within apps. Google’s 30% cut drops down to 15% for users that subscribe to an app for a year or longer. Apple Inc. has the same policy.

The investigation shows that attorneys general across the U.S. are continuing to pressure dominant tech companies for conduct they say has damaged competition in digital markets. New York, North Carolina and Utah were among states that sued Facebook Inc. earlier this month, arguing its acquistions of Instagram and WhatsApp violated antitrust laws and should be unwound.

Attorneys general in Utah, North Carolina and New York didn’t immediately respond to requests for comment after regular business hours.

Google said in a response to a query on the investigation that Android lets customers use app stores other than Google Play.

“Android has always allowed people to get apps from multiple app stores,” Sameer Samat, vice president of Android and Google Play, said in a statement. “Each store is able to decide its own business model and consumer features. This openness means that even if a developer and Google do not agree on business terms the developer can still distribute on the Android platform.”

Google has long sought apps to give the company that cut, but several apps and services, including Netflix Inc. and Spotify Technology SA, have been exempt. In September, Google decided that it will step up efforts to take the fees and eventually remove apps from its store that don’t implement Google’s payment system that gives the company the percentage it’s set.

The 30% cut is the same that Apple takes from developers, but the iPhone maker in recent months has pared back that amount. It started allowing some services to not pay the percentage for in-app-purchases and recently launched a program for developers that generate $1 million in revenue or under per year to pay only a 15% cut of their app sales to Apple.

— With assistance by Tina Davis

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