Epic Lawsuit Exposes Google Play Store Fee Concerns - Details

Alphabet Inc.'s Google considered a significant shift in its app store pricing model through Project Everest in 2021, as revealed in documents released amid an antitrust lawsuit filed by Epic Games Inc. The proposed change involved charging developers incremental service fees for various Play Store transactions, but concerns about potential losses ranging from $1 billion to $2 billion for apps and $6 billion to $9 billion for games led to the abandonment of this approach. Google aimed to address mounting pressure over the Play Store's 30% commission, driven by regulatory scrutiny and developer dissatisfaction.

Google said in the presentation. “We can defend the status quo for a few months. Making proposed changes sooner may help support reasonable legislation, position Google as a leader, and prevent more draconian legislation.”

Instead, the documents showed a recommendation to allow app developers to handle payments independently, resulting in a lower fee paid to Google. This alternative, estimated to reduce annual revenue by $250 million to $1.3 billion, closely aligns with the $700 million settlement announced by Google last week with state attorneys general and consumers. The recent legal defeat to Epic Games adds momentum to challenges against app store practices, threatening the lucrative duopoly with Apple Inc., generating nearly $200 billion annually.

Epic's longstanding objection to the 30% commission charged by both Apple and Google has contributed to global regulatory scrutiny. Mobile app developers, echoing concerns over high commissions, have influenced changes in regulations, such as Korea's requirement for open app stores to alternative payment systems. Upcoming EU rules also mandate Google and Apple to open up their stores, adding to the growing pressure on app store regulations.

In 2021, dozens of state attorneys general sued Google, alleging anticompetitive practices. The recent $700 million settlement, allowing developers to use their payment systems, aligns with the direction Google was internally moving. Google's spokesman, Dan Jackson, defended the fees, emphasizing their role in maintaining Android and Play Store investments. Google has already reduced subscription fees and the initial $1 million earned by developers in the store, indicating a response to industry demands and regulatory challenges.

Titled “User Choice Billing,” the company launched the program in 2022 that allows app developers to process payments themselves and give Google a slightly lower fee of 26% or 11% on subscriptions.