Last month, Google was hit with its
fourth antitrust lawsuit in recent years, where 36 attorneys general and one district attorney accused the company of anti-competitive behavior related to the Play Store. Specifically, the search giant is accused of making it difficult for developers to distribute their apps through alternative app stores and signing contracts with phone makers and carriers that prevent them from creating their own competing app stores.
According to court filings that were
unsealed this week, the Play Store generated revenue of $11.2 billion in 2019, $8.5 billion which was profit. While this isn't quite on the same level as the earnings generated by Apple's App Store, the profit margin is a healthy 62 percent, which compares quite favorably with the
80 percent margin achieved by the latter app distribution platform.
This suggests that just like Apple, Google could very well afford to charge developers a much lower fee and still make a profit from essentially hosting their apps and weeding out the malicious ones. The company currently takes up to a 30 percent share of app revenue, but internal communication suggests the number is just a reflection of what Apple was doing with its App Store. The lawsuit even cites internal figures that show Google's Play Store could break even on a revenue share of just six percent.
Perhaps a more troubling finding is that Google offered to take a "significantly reduced" cut of the Play Store revenue for Netflix after the latter company expressed its "displeasure" with the standard fee. Netflix, Tinder, Spotify -- and most famously,
Epic -- have all
tried circumventing Google's Play Store billing system in recent years, but the search giant
wouldn't have it for fear of losing more than $1.1 billion in annual revenue. This behavior also looks like a carbon copy of what Apple has done with companies like
Amazon and
Netflix.
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