Google's Play Store landed company US$8.5 billion in profit, says lawsuit

Netflix, however, was able to negotiate a deal for a much larger cut of revenue.
Netflix, however, was able to negotiate a deal for a much larger cut of revenue from Play. Photo credit: Getty Images

Google generated US$11.2 billion in revenue from its mobile app store in 2019 according to a new court filing that offers a clear view into the company's financial results for the first time.

Attorneys general for Utah and 36 other US states or districts suing Google over alleged antitrust violations also said in the newly unredacted filing that the business in 2019 had US$8.5 billion in gross profit and US$7 billion in operating income, for an operating margin of over 62 percent.

The figures include sales of apps, in-app purchases and app store ads. Google told Reuters the data "are being used to mischaracterise our business in a meritless lawsuit".

The company and its accusers said in a separate filing a trial in late 2022 is possible over whether Google abuses its alleged monopoly in app sales for Android devices.

In its quarterly financial disclosures, Google groups Play app revenue with that of other services and accounts for the store's ad revenue as part of another broader category.

Attorneys general, as well as Fortnite developer Epic Games and others separately suing Google, have contended that it generates unreasonably huge profits through the Play Store by taking 30 percent of the fee for every digital good sold inside an app.

The plaintiffs say Google's cut is siphoning app developers' profits, and the fee level was chosen for no reason "other than copying Apple".

The iPhone maker, who has also faced legal action over its App Store commission levels, announced last week it was relaxing some of its rules, allowing developers to directly contact users to explain alternative purchasing options.

It also announced it was extending the reduction of commission to 15 percent for developers who earn less than US$1 million per year through the app store.

Developers who earn over US$1 million will continue to pay 30 percent.

Google argues that alternatives exist to Google's store and payment systems, though critics say those routes are unfeasible and were sometimes blocked.

Plaintiffs allege Google, through anticompetitive deals, extended benefits to and imposed restrictions on major developers such as League of Legends maker Riot Games to keep them from leaving the Play Store.

But, according to the lawsuit, Netflix was one of the companies which was able to gain some concessions from the technology giant.

"In particular Netflix wanted an alternative payments system. Apparently in an effort to ameliorate this displeasure, Google offered to take a significantly reduced revenue share percentage to Netflix," the lawsuit details.

"Not all developers, however, have met with Netflix's success, even though many have sought to use their own payment service."

A filing by Epic Games unsealed this month said Google, according to internal documents, feared losing US$1.1 billion in annual app store profit if the Play Store was successfully bypassed.