Google Answers Amended Complaint in AGs’ App Distribution Antitrust Case

On Monday, Google LLC and five corporate relatives answered the revised allegations in an ongoing antitrust case filed by several states. The 38-page response contains denials, a warning that the states’ case actually threatens to undermine competition, and affirmative defenses. The August-filed amended complaint consists of the same causes of action under federal antitrust law and more than three dozen state laws, but adds factual allegations to the initial complaint, which was filed in July.

The suit alleges that Google violates the Sherman Act by illegally dominating the market for Android app distribution, of which no other competitor allegedly holds more than 5% compared to Google’s 90%. The complaint asserts that Google restricts competition by, among other things, erecting technical barriers that prevent third-parties from effectively distributing Android-compatible apps outside its app store, Google Play, and forcing smartphone manufacturers to enter contracts that in effect block the entry of competing app stores.

The attorneys general also allege that with monopoly power and through related exclusionary conduct, Google charges supracompetitive commissions of up to 30% on Play Store apps and in-app content. This, they contend, harms consumers who pay more than they would, were it a competitive marketplace.

In this week’s response, Google claims that Android, the company’s open-source mobile operating system (OS), is vital to competition against other operating systems. The defendant touts the benefits received by developers and users, as well as smartphone manufacturers to whom Google provides the OS for free.

“Google LLC has expanded access to smartphones and the marketplace for mobile apps, creating enormous incentives for developers to invest in apps that make virtually every sector of the economy more efficient, affordable and accessible for users,” the answer says.

In addition, the defendant explains Google Play’s popularity as a function of app developer and user preference. The answer references Google’s practices with regard to the pre-installation of Google Play and other app stores in one sentence, explaining, “Android device manufacturers can choose to pre-install their own or third-party app stores on Android devices, right alongside Google Play, and over 60% of Android devices come with more than one app store pre-installed.”

Google’s defenses include failure to state a claim for relief, legitimate and pro-competitive business justification, and bar by the Foreign Trade Antitrust Improvements Act (FTAIA). As to the FTAIA defense, the answer asserts that the states’ claims are prohibited to the extent they concern transactions or alleged conduct involving trade or commerce with foreign nations.

Google is represented by O’Melveny & Myers LLP, Morgan, Lewis & Bockius LLP, and Munger Tolles & Olson LLP.