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Google filing says EU’s antitrust division is investigating Play Store practices

A Google regulatory filing appears to have confirmed rumors in recent months that the European Union’s competition division is looking into how it operates its smartphone app store, the Play Store.

However TechCrunch understands that no formal EU investigation into the Play Store has been opened at this stage.

The SEC Form 10-Q, filed by Google’s parent Alphabet (and spotted earlier by Reuters), does make mention of “formal” investigations being opened into Google Play’s “business practices” back in May 2022 — by both the European Commission and the UK’s Competition and Markets Authority (CMA).

Thing is, the Commission’s procedure on opening a formal competition investigation is to make a public announcement — so the lack of that standard piece of regulatory disclosure suggests any EU investigation is at a more preliminary stage than Google’s citation might imply.

The UK antitrust regulator’s probe of Google Play is undoubtedly a formal investigation — having been publicly communicated by the CMA back in June — when it said it would probe Google’s rules governing apps’ access to listing on its Play Store, looking at conditions it sets for how users can make in-app payments for certain digital products.

While, back in August, Politico reported that the Commission had sent questionnaires probing Play Store billing terms and developer fees — citing two people close to the matter. And potentially suggesting an investigation was underway. Although the EU’s executive declined to comment on its report.

A Commission spokeswoman also declined to comment when we asked about the “formal investigation” mentioned in Google’s filing (at the time of writing Google had also not responded to requests about it).

But we understand there is no “formal” EU probe into Play as yet — at least not how the EU itself understands the word.

This may be because the EU’s competition division is still be evaluating responses to enquiries made so far — and/or assessing whether there are grounds for concern.

Alternatively, it might have decided it does not have concerns about how Google operates the Play Store. Although developer complaints about app store commissions levied by Google (and Apple) — via the 30% cut that’s typically applied to in-app purchases (a 15% lower rate can initially apply) — haven’t diminished. If anything, complaints have been getting louder — including as a result of moves by the tech giants to expand the types of sales that incur their tax. So lack of competition concern here seems unlikely.

Last year, the Commission also charged Apple with an antitrust breach related to the mandatory use of its in-app purchase mechanism imposed on music streaming app developers (specifically) and restrictions on developers preventing them from informing users of alternative, cheaper payment options.

So app store T&Cs are certainly on the EU’s radar.

More than that: The EU has recently passed legislation that aims, among various proactive provisions, to regulate the fairness of app store conditions. So the existence of that incoming ex ante competition regime seems the most likely explanation for why there’s no formal EU investigation of Google Play today.

Where Google is concerned, the Commission has already chalked up several major antitrust enforcements against its business over the last five+ years — with decisions against Google Shopping, Android, AdSense; as well as an ongoing investigation into Google’s adtech stack (plus another looking at an ad arrangement between Google and Facebook). 

Another consideration here is that EU lawmakers have had a very busy year hammering out consensus on a number of major pieces of digital regulation — including the aforementioned ex ante competition reform (aka, the Digital Markets Act; DMA) which will cast the Commission in a centralized enforcement role overseeing so-called Internet “gatekeepers”.

That incoming regime is requiring the Commission to rapidly spin up new divisions to oversee DMA compliance and enforcement — so the EU may be feeling a little stretched on the resources front. But — more importantly — it may also be trying to keep its powder dry.

Essentially, the Commission may want to see if the DMA itself can do the job of sorting out app developer gripes — since the regulation has a number of provisions geared towards app stores specifically, including a prohibition on gatekeepers imposing “general conditions, including pricing conditions, that would be unfair or lead to unjustified differentiation [on business users]”, for example.

The regulation is due to start applying from Spring 2023 so a fresh competition investigation into Google’s app store at this stage could risk duplicating or complicating the enforcement of conditions already baked into EU law. (Although the process of designating gatekeepers and core platform services will need to come before any enforcement — so the real DMA action may not happen before 2024).

For its part, Google denies any antitrust wrongdoing, anywhere in the world its business practices are being investigated.

In the section of its filing rounding up antitrust investigations targeting its business, it writes: “We believe these complaints are without merit and will defend ourselves vigorously.”

Its filing also reveals that it intends to seek to appeal to the EU’s highest court after its attempt to overturn the EU’s Android decision was rejected last month. (The CJEU will only hear appeals on a matter of law so it remains to be seen what Google will try to argue.)

Privacy Sandbox

Also today, the UK’s CMA has released its second report on ongoing monitoring of commitments made by Google as it develops a new adtech stack to replace tracking cookies (aka Privacy Sandbox).

The regulator said it had found Google to be complying with commitments given so far — and listed its current priorities as: Ensuring Google designs a robust testing framework for its proposed new tools and APIs; continuing to engage with market participants to understand concerns raised by them, challenging Google over its proposed approaches and exploring alternative designs for the Privacy Sandbox tools which might address these issues; and embedding a recently appointed independent technical expert (a company called S-RM) into the monitoring regime.

The CMA’s report also reveals that — along with the UK’s privacy watchdog, the ICO — it’s in discussions with Google about the design of user controls for when Privacy Sandbox reaches general availability in 2023.

So it will be interesting to see if the UK regulators are switched on enough to stop the usual manipulative design tricks from being cynically baked into these future ad consent interfaces.

“Google has presented its current proposed user interfaces for controls relating to Topics, FLEDGE and ad measurement. Together with the ICO, we are continuing the dialogue with Google about this and what underlies current design decisions on the consent flow for opting in or out,” the CMA notes on that.

“A key feature of our final assessment of the Privacy Sandbox will be evaluating both the privacy impacts of the technologies themselves and how they compare with their performance against the Development and Implementation Criteria, including competition,” it goes on, adding: “We are continuing to work with the ICO on approaches to measuring and assessing the impacts of Google’s changes on data privacy.”

Google filing says EU’s antitrust division is investigating Play Store practices by Natasha Lomas originally published on TechCrunch

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