Google Sued in U.K. for Overcharging Millions of Users
(Bloomberg) -- Alphabet Inc.’s Google faces a London suit over claims it overcharged nearly 20 million U.K. customers for app store purchases, just a month after it was sued in a similar U.S. case.
Google Play Store’s 30% surcharge for digital purchases is “excessive and unfair,” the claimants said in a press release Thursday. The suit, filed at London’s Competition Appeal Tribunal on Wednesday, says Google breaches European and U.K. competition laws at the “expense of millions of loyal customers in the U.K.”
App stores are facing increasing scrutiny with Apple Inc.’s the target of a European Union investigation and a U.S. lawsuit from app developer Epic Games. The same lawyers behind the Google claim also filed a similar suit in London against Apple in May. The two tech giants also face a U.K. antitrust probe into the “duopoly” power of their mobile ecosystems.
Last month, Google was sued by three dozen states in the U.S. alleging that it abused its power over the sale and distribution of apps through its Google Play store. It was accused of collecting an “extravagant” commission on app purchases.
A Google spokesperson said the lawsuit ignores the benefits and choice Google Play and its Android operating system provide, and the competitive market in which it operates.
“We compete vigorously and fairly for developers and consumers,” Google said by email. 97% of developers on Google Play don’t pay any service fee at all, which means their apps are free to consumers, according to the company. Less than 0.1% of developers are subject to a 30% service fee and only when they’re earning over $1 million, which is comparable with competiors, says Google
The lawyers behind the class-action suit have estimated damages of 920 million pounds ($1.3 billion). Anyone who has made purchases on on the Google Play Store on an Android smartphone or tablet since October 2015 in the U.K. is entitled to compensation from Google, they said.
“Google created the Android app marketplace, and controls it with a vice-like grip,” said Liz Coll, former Head of Digital at Consumers International who is leading the class-action. “Customers are herded towards the Google Play Store, and once there have no option but to pay a 30% fee whenever they buy an app or make an in-app purchase.”
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