Update: Google Agrees Truce With Match Group Over Billing Complaint

May 23, 2022
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Match Group, owner of popular dating apps Tinder, Match and OKCupid, has agreed to a temporary ceasefire with Google after accusing it of establishing an in-app payments monopoly in a California lawsuit.

Match Group, owner of popular dating apps Tinder, Match and OKCupid, has agreed to a temporary ceasefire with Google after accusing it of establishing an in-app payments monopoly in a California lawsuit.

On May 20, Match Group announced that it has withdrawn its request for a temporary restraining order (TRO) against Google after the technology giant agreed to concessions that would benefit Match Group app users.

In exchange for withdrawing the TRO, Google agreed that Match Group apps will not be rejected or removed from the Google Play Store for offering alternatives to Google Play Billing.

Similarly, Google agreed to approve future Match Group app updates that offer alternatives to Google Play Billing.

Google also agreed to work towards “fixing” the deficiencies of Google Play Billing raised by Match Group, including lack of user choice, safety and data privacy protections.

When Google addresses these problems, Match Group said it will test Google Play Billing alongside its own payment options, giving users the freedom to choose.

As part of the agreement, Match Group also said it plans to put up to $40m aside in an escrow account in lieu of paying fees to Google directly for Android app payments that happen outside Google Play’s payment system, arguing that those fees are “illegal under federal and state law”.

This measure will remain in place until the California Northern District Court hears and adjudicates the complaint filed against Google on May 9 for alleged antitrust violations.

Both Match Group and Google can terminate the agreement, but Match Group said it retains the option to reinstate its request for a TRO if that should happen. The date for the trial is currently set for April 2023.

Another major app developer, Epic Games, publisher of Fortnite, has scored a similar victory against Google over payment options.

In March this year, Epic Games acquired Bandcamp, a music streaming company, and one month later it filed a lawsuit against Google in California, requesting that Bandcamp be allowed to use its own payment system, instead of being forced to use Google Play Billing.

On May 20, Bandcamp announced that it has agreed with the court to continue using its own payment system while operating on Android devices, at least until its court case against Google is resolved.

Original Story: The Tinder Swindler: Dating Apps Accuse Google Of Anti-Competitive Behaviour In California Lawsuit (May 13, 2022)

Filed this week at a California district court, the lawsuit alleges that Google has monopolised the market for in-app payments processors by forcing its own product, Google Play Billing, on app developers.

In September 2020, Google announced that from September 2021, all apps that sell digital goods or services via Google Play must exclusively use Google Play Billing.

In July 2021, following pushback from Android app developers, an opt-in deadline extension was offered until March 2022.

From June 1, Google said that any app that has still not removed alternative in-app payment services and replaced them with Google Play Billing will be removed from Google Play.

According to Match Group, Google’s removal of payment processor choice allows it to charge “supra-competitive” prices and monetise the personal data of billions of app users.

When users make in-app purchases for digital goods or services using Google Play Billing, Google typically takes 30 percent of every transaction.

In March 2021, again facing pushback from Android developers, Google announced that it would reduce this transaction fee to 15 percent for the first $1m of revenue each developer earns each year.

But Match Group, like other Android developers including Epic Games, publisher of the popular Fortnite video game, have objected on a number of grounds.

For example, Match Group questions Google’s framing of the 30 percent as a “fee”, noting that it is nearly ten times that which is charged by payment processors in other markets, such as credit and debit cards.

Consequently, Match Group believes that Google has established an “extortionate tax” on all Android app developers, and has ring-fenced tens of billions of dollars in revenue for itself, for which it faces almost no competition.

In 2021, for example, Google Play generated gross app revenues of about $48bn — an increase of 23 percent compared with 2020.

This revenue has stair-stepped up every year since at least 2016, when Google Play’s total app revenue was $15bn.

Ten years a slave

Match Group claims that Google’s in-app payments monopoly would not be possible without its concurrent monopoly over Android app distribution.

Through Google Play Store, Google dominates the market for distributing apps on Android devices.

According to estimates from the European Commission, between 2011 and 2016, Google Play accounted for more than 90 percent of all Android app downloads.

During this period, Amazon Appstore, its largest rival, never had more than a 5 percent share of all Android app downloads.

Following Google’s purchase of Android in 2005, Match Group claims that Google lured app developers to its new platform with assurances that users would be able to choose how to pay.

“Ten years ago, Match Group was Google’s partner. We are now its hostage,” the complaint reads.

“Over the last decade, through bait and switch tactics that exploited the very app developers it so ardently courted and claimed to support, and by paying off potential competitors not to compete, Google has grown Google Play into the only viable Android app marketplace.

“But that was not enough for Google. It also wanted to control the much more lucrative in-app payment processing market on Android.”

Up until Google’s change of policy announcement in 2020, Android app developers were allowed to use their own in-app payment services, either exclusively or in combination with Google Play Billing.

“Google’s policy change eliminated the promised exception that had previously enticed Match Group and other popular apps — like streaming services — to offer in-app purchases and spend time, effort, and money to develop their own in-app payment systems,” the complaint notes.

“Now that Google controlled the only real choice for developers to market their apps to Android users, Google held all the power and no longer needed their support.”

According to Match Group, Google further ensures that in-app purchases are monopolised by Google Play Billing by using “onerous, one-sided terms” in its developer agreements.

One of those terms is an “anti-steering provision”, which prohibits developers from communicating with users inside their apps about a user’s ability to purchase upgrades or additional functionality outside the app, including at lower prices, through, for example, the developer’s own website.

“Google therefore controls it all," says the complaint, "the dominant marketplace for Android apps; the only means to purchase apps in the marketplace; and the messaging inside the marketplace so that consumers cannot learn of lower-priced options elsewhere.”

In its defence, Google said that it has to charge fees to cover the cost of its own operations, and that Match Group could use another Android app distribution platform if it is unhappy with Google Play.

“This is just a continuation of Match Group’s self-interested campaign to avoid paying for the significant value they receive from the mobile platforms they’ve built their business on,” said Peter Schottenfels, communications manager at Google, in a statement seen by VIXIO.

“Like any business, we charge for our services, and like any responsible platform, we protect users against fraud and abuse in apps.

“If they don’t want to comply with Google Play’s policies, Android's openness still provides them multiple ways of distributing their apps to Android users, including through other Android app stores, directly to users via their website or as consumption-only apps.”

Match Group takes on bigtech in the Netherlands

The California lawsuit is not the only complaint that Match Group is currently pursuing against Google.

In the Netherlands, Match Group has accused Google of abusing its dominant position in in-app payments, and has requested an enforcement action from the Authority of Consumers and Markets (ACM).

In January, as reported by VIXIO, Match Group also achieved a rare victory in a similar action against Apple in the country, accusing the iOS App Store of anti-competitive practices.

The ACM ruled that Apple must allow dating apps to use third-party payment service providers in the Netherlands — a ruling with which Apple said it would comply.

Prior to this, similar victories have been achieved in other jurisdictions. In August 2020, South Korea passed a bill designed to prevent Apple and Google favouring their own in-app payment services over third-party alternatives.

In a blog post published in November 2021, Google said it would comply with the new legislation, which was dubbed by Korean media outlets as the "Google power abuse prevention law".

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