This blog covers software patent news and issues with a particular focus on wireless, mobile devices (smartphones, tablet computers, connected cars) as well as select antitrust matters surrounding those devices.
Sometimes the best defense is a strong (counter)offense. That’s the spirit of Google’s answer and counterclaims to Match Group’s antitrust action in the Northern District of California over the Google Play app tax. Here’s the document, and I’ll comment further below:
Less than two months ago, Google acted defensively and agreed to keep Bandcamp, a music marketplace recently acquired by Fortnite maker Epic Games, on the Google Play app store for Android despite its use of a third-party payment system. Google changed its rules (though it mislabeled it as a mere clarification) to the effect that everyone, even such media marketplaces and dating apps, would henceforth have to use Google Play Billing. Near-simultaneously with Epic’s motion for a temporary restraining order (which Judge James Donato of the United States District Court for the Northern District of California didn’t have to rule on as Google backed down, thereby mooting the motion for the time being), Match Group also brought an antitrust complaint against Google in the same district and sought emergency relief.
Two months ago, Google issued a rapid response to Match Group’s complaint on its website. I criticized Google’s blog post, parts of which I said were “somewhere between grossly misleading and utterly nonsensical.”
Now Google has filed its formal answer to the complaint, and it is countersuing Match Group for damages. Apple did the same against Epic. One of Google’s counterclaims is based on the in pari delicto doctrine, which I find puzzling, but we’ll see in the further process how Google seeks to substantiate that one.
Those claims are all about Match Group allegedly having entered into the Google Play distribution agreement in bad faith, without ever intending to comply. That may very well be so, but that’s because of Google’s enormous market power. If Match Group prevails on its antitrust claims, Google’s counterclaims are toast. And if Match Group doesn’t win the antitrust part, the damages it may owe Google are the smallest problem.
The counterclaims are just tactical. This way Google can demand a jury trial on some claims, and will appear less defensive in the further proceedings.
“[. ] Match Group aims to undermine user experience to improve its own bottom line. A senior vice-president at Match Group shockingly acknowledged that Match Group’s true concern about Google Play’s billing system is the ease with which users can cancel their subscriptions using Google’s account management tools. [. ] Match’s deceptive approach to subscription cancellation has been called out by the Federal Trade Commission (FTC) and other consumer protection agencies. The FTC filed a complaint alleging that Match requires a cumbersome process to cancel certain subscriptions that leads consumers to think they have canceled when they have not. Match executives have acknowledged that the Match cancellation process is ‘hard to find, tedious and confusing.’ In 2017, Match’s head of customer service admitted that it takes ‘up to 7 or 8 chinesische Dating-Seiten clicks to complete the flow to turn off [subscriptions] if you can even figure out how to do it’” [. ]”
“Match Group’s financial success has also resulted from a long history of deceptive and unfair business practices specifically in connection with its billing and subscription services. Match Group consistently makes it difficult, if not impossible, for users to cancel recurring paid subscriptions to its apps. Match Group’s billing and subscription practices have been the subject of repeated scrutiny as deceptive by federal and state law enforcement and consumer protection agencies. Match Group has been named as a defendant in litigation relating to its billing and subscription practices filed by multiple California District Attorneys relating to such practices, People of State of California v. Match Group [. ], and by the Federal Trade Commission, FTC v. Match Group [. ].”
Google believes that the fact that “Google Play offers more convenience to Android customers than Match Group and other app stores”–as opposed to obstructing cancelation–are “the actual reason for Match Group’s objection to Google’s billing policies.”
I’m totally in favor of efforts to protect consumers (and the right to easily terminate a subscription is one of the most fundamental ones), and don’t doubt that Google may be more consumer-friendly in this particular regard than Match Group. But Google’s abuse of its superdominant market position in Android app distribution is a serious issue, and whatever one may criticize Match Group for doesn’t justify that Google wants to tax and tyrannize app developers. Google’s app tax is the subject of legislative initiatives (such as in South Korea, where Google is now likely to be fined), public antitrust enforcement, and private litigation around the globe. Match Group may not be a saint, but it is making some very valid points as an antitrust plaintiff against Google.