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Wednesday, December 6, 2023
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Dating app company Match Group sues Google over payment policies

Accusing Google of lies and broken promises, Match Group says the Alphabet subsidiary used its market power to force developers to use the Google Play billing system for in-app purchases, from which it takes a supra-competitive cut of all transactions.

SAN FRANCISCO (CN) — Match Group, the online dating service company that runs the popular apps Match, OkCupid and Tinder, says Google is abusing is market power to block competitors and make its billing system the exclusive way for people to pay for apps on Android

"Ten years ago, Match Group was Google’s partner. We are now its hostage,” said Match in its lawsuit filed Monday in San Francisco federal court. “Google lured app developers to its platform with assurances that we could offer users a choice over how to pay for the services they want. But once it monopolized the market for Android app distribution with Google Play by riding the coattails of the most popular app developers, Google sought to ban alternative in-app payment processing services so it could take a cut of nearly every in-app transaction on Android.”

The complaint says Google always intended to dominate app distribution and payments on Android, but “it had to be sly about doing so.” Match claims Google enticed billions of people to use its Android mobile operating system offering an “open ecosystem” with flexibility in how developers could distribute their apps to Android users, unlike Apple, which forbids developers to bypass its App Store to reach customers.

Once its Google Play Store became the most dominant store in the world for Android Apps, Match says Google reneged on its promise to allow Match to offer its own payment system for purchases users make inside its apps, instead requiring developers to use Google Play Billing.

“Now, Google seeks to eliminate user choice of payment services and raise prices on consumers by extending its dominance to the separate market for in-app payment processors on Android. It is conditioning app availability on Google Play with exclusive use of its own in-app payment processing product, Google Play Billing, where it can charge supra-competitive prices and monetize the personal data of billions of digital app users,” Match Group’s complaint says.

Match says Google imposed these requirements to come between app developers and users, and collect as much consumer data as possible that it can monetize through its search and advertising business.

It also allows Google to extract lucrative fees for every in-app purchase. “Google’s motivation is obvious: monopolizing the Android in-app payment processing market allows Google to impose a 15-30% tax on the billions of dollars users spend on so-called ‘digital goods or services’ on Android,” the complaint says.

Match says failure to comply will result in banishment from the Google Play Store.

The claims are largely reminiscent of those advanced by Epic Games, the company behind the popular mobile game Fortnite, in its antitrust battle with Apple that challenged the tech giant’s practice of taking a 30% cut on all in-app purchases. A lengthy bench trial culminated in U.S. District Judge Yvonne Gonzalez Rogers ordering Apple to allow developers to direct app users to payment services outside the App Store. She declined, however, to rule that Apple violated antitrust laws

Both sides have appealed her ruling to the Ninth Circuit.

Following a similar move by Apple, Google announced its intent in March 2021 to cut fees it charges app developers to 15% for the first $1 million they earn each year.

In its lawsuit, Match says the move is merely a tactic to avoid mounting legislative and regulatory scrutiny over their dominance in the app store market.

“Google’s dominance in the market has only increased, but so has the external scrutiny that threatens that dominance. And Google has been careful to leave the full 30% tax intact on the app developers and digital products that are most profitable for Google,” the lawsuit states.

Congress is also considering a bill to rein in app store commissions and prohibit Apple and Google from requiring developers to use their in-app payment system’s exclusively.

Match Group did not immediately respond to a request for comment.

In a statement, Google assailed Match. "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. Like any business, we charge for our services, and like any responsible platform, we protect users against fraud and abuse in apps,” said Google spokesman Peter Schottenfels.

He said Match Group is facing a regulatory probe of its own by the Federal Trade Commission, which sued the company in 2019 for tricking consumers into purchasing paid subscriptions.

“Match Group is currently attracting regulator concerns over things like deceptive subscription practices, and with this filing they continue to put money ahead of user protection,” he said. “Match Group’s apps are eligible to pay just 15% on Google Play for digital subscriptions, which is the lowest rate among major app platforms. But even 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.”

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Categories / Business, Financial, Technology

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