Friday, July 1, 2022

Developer class action settlement with Google over Google Play tax on Android apps: same sham as in Apple App Store case, offers material benefits only to monopolists and lawyers--meanwhile, new consumer class actions filed in Australia

I don't mean to engage in media bashing, especially not in connection with mobile app stores where press coverage has really informed many people of the serious issues affecting my fellow developers and me. But Elon Musk does have a point about class-action law firms (often) being "the real plaintiffs, not the puppets they find to masquerade as such":

When class actions are brought against large corporations, they usually appear more formidable than they ultimately turn out to be. In-house lawyers often tell their colleagues in charge of running the business to keep calm because "it's just another class action." In other words, it's only going to be about money, particularly for the lawyers.

However, sometimes good things with a structural effect do come out of class action lawsuits. In the app store context, the Pepper v. Apple case is a great example: it went all the way up to the Supreme Court, which (unlike Judge Yvonne Gonzalez Rogers, and only by a narrow vote) determined that iPhone users are directly harmed by--should there be any--monopoly abuse by Apple in the form of excessive App Store commissions. In a way, Epic Games then jumped on the bandwagon and brought its own cases against Apple and Google, knowing that the class actions (from which Epic opted out as it had to) were not going to be the definitive answer.

Having said that, here's the latest development in mobile app store class actions--a motion for preliminary settlement approval in several cases targeting Google over its Google Play Store terms and practices in the Northern District of California:

This motion didn't come as a total surprise: a May 25 filing had already announced that an agreement on the principal terms had been reached, and the original plan for last night's motion was to be submitted two weeks sooner.

Those class actions were consolidated with the far more serious cases brought in the same district by Epic and the attorneys-general of 36 U.S. states. There's now going to be some back and forth about whether the settlement should be approved, but it's unlikely that the court will say "no, you gotta keep litigating."

There was also a lot of outrage at a similar deal (involving partly the same people) with Apple, such as a statement by the Coalition for App Fairness, from which I'll quote now because this equally applies to the structurally very similar proposal for a class action settlement with Google:

"Apple’s sham settlement offer is nothing more than a desperate attempt to avoid the judgment of courts, regulators, and legislators worldwide. This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem. [...] We will not be appeased by empty gestures and will continue our fight for fair and open digital platforms."

Just like in the Apple case, it's about

  • roughly $100 million to be distributed to small developers,

  • meaningless promises (for instance, Google won't backtrack on its small business program for the next few years, which I'm sure it wouldn't have intended during that timeframe at any rate), and

  • above all, it's about this:

    "Plaintiffs will make a request for attorneys’ fees of up to $27 million, which represents 24% of the sum of the cash Settlement Fund ($90 million) and structural relief ($22 million) that can be reasonably quantified ($112 million total). This does not account for the other forms of structural relief that were likewise included in the Apple settlement and found, at final approval, to be 'valuable to the settlement class.'" (emphasis added)

What could be more befitting of a sham settlement than seeing Google--the company that says it manages the world's information--not even getting the date of its blog post on this deal right? Look at this screenshot (I'm pretty sure they'll fix it shortly, but I took this screenshot around midnight Pacific Time with Chrome for Windows):

The post was made on June 30, but Google (until they fix(ed) it) said July 30.

The real issue, however, is that this is simply a cheap way for Google to be let off the hook and to make it look like the issues that Epic and 36 state AGs are still suing them over have gone away--which they haven't.

The blog post says this about the lower commission rate for little guys:

"To continue to provide developers with a tiered pricing model, we’ll maintain Google’s 15% commission rate for the first $1 million in annual revenue earned from the Google Play Store for U.S. developers, which we implemented in 2021."

What Google omits there is that it's only a short-term commitment. The court filing itself says this:

"The Settlement requires that Google maintain this program for U.S. developers through at least May 25, 2025." (emphasis added)

Like in the Apple case, some out-of-app communication with users will be allowed. With respect to how little value that has, may I just refer you to the Coalition for App Fairness statement mentioned further above.

Google is also leveraging this settlement to make it sound like alternative app stores had a level playing field on Android:

"In new versions of Android, Google will maintain certain changes implemented in Android 12 that make it even easier for people to use other app stores on their devices, while being careful not to compromise the safety measures Android has in place." (emphasis added)

With that safety (security) pretext, Google can still strongly discourage users from using other app stores than Google Play, or "sideloading." Let's again take a look at what the actual court filing says:

"Competing Stores. Developer Plaintiffs have alleged that one impediment to distributing apps outside of Google Play is that apps downloaded from other Android app stores do not automatically update. [...] The Android 12 operating system, released by Google on October 4, 2021, facilitates auto updates by allowing 'installer apps to perform app updates without requiring the user to confirm the action.'" (emphasis in original)

So this is about a feature that is almost a year old. I'm not saying it's totally useless. But this falls far short of addressing the host of issues identified and tackled by Epic and the 36 states.

Google also promises to do something it hasn't done yet, but which I'm pretty sure it intended to do at any rate:

"One of the most significant challenges for small developers is getting their apps discovered. The Settlement improves discoverability by requiring Google to create an 'Indie Apps Corner' on the apps tab on the U.S. homepage of Google Play and maintain it for at least two years following final approval. [...] This feature will spotlight a revolving roster of apps created by independent and small startup developers. Developers within the Settlement Class will be able to submit their apps for inclusion in the Indie Apps Corner, and Google will select qualifying apps based on objective criteria."

This isn't bad at all, but again, the issues are so fundamental that they can't be cured with cosmetics. Also, in my experience, "objective criteria" for app review (whether for the purpose of approval or for the selection of apps to be showcased) don't really exist beyond whatever may be measurable, such as memory footprint.

There's also an item that Google doesn't even mention in its blog post:

"For at least three years from final approval, Google will publish an annual 'transparency report' that (at a minimum) will convey meaningful statistics such as apps removed from Google Play, account terminations, and objective information regarding how users interact with Google Play."

The bottom line is that class action lawyers and Google have agreed on a window-dressing package. The primary beneficiary are the lawyers; the secondary one is Google, which saves litigation costs, avoids the risk of potentially having to pay really large amount to developers (as most developers will likely not care to opt out of the settlement) should Epic and the 36 states prevail, and will way overstate the significance and usefulness of those promises.

Meanwhile, Apple and Google have been slapped with new class action lawsuits in Australia.

The Australian Financial Review was first to report (though largely behind a paywall) on "twin legal actions" against Apple and Google brought on behalf of Australian consumers, arguing that Apple and Google are charging excessive commissions on in-app purchases, which consumers end up paying for. That's the same kind of argument as in the Pepper v. Apple case I mentioned further above. picked up the story as well.