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Google to pay $700 million to settle a lawsuit over how it runs its app store

AILSA CHANG, HOST:

Google is paying $700 million to settle a lawsuit with states over how the tech giant runs its app store. Most of that money will be given to people who purchased something through Google's Play Store. Google also committed to changing how apps are downloaded and paid for on Android phones. We're joined now by NPR tech correspondent Bobby Allyn to tell us more. And a note - Google is among NPR's financial supporters. Hey, Bobby.

BOBBY ALLYN, BYLINE: Hey, Ailsa.

CHANG: OK. So, wow, $700 million settlement - what do we know about who will be getting this money?

ALLYN: Yeah. The states that brought the case say the bulk of the money is going to about a hundred million people across 50 states - anyone who has recently bought something in the Google Play Store. And, you know, for about 70% of them, they don't have to do anything. They don't have to file a claim. The payments will just be sent to them automatically since Google already has their billing information.

CHANG: Nice.

ALLYN: Now - of course. Right. You might be wondering, OK, how much is each person getting? Well, $700 million, yes, is a lot of money, but it's also a lot of people who are eligible. We don't know how big exactly the eligibility pool will be, like how many people will actually be getting checks. But if it's on the higher end, don't get too excited, Ailsa, because it might be less than 10 bucks.

CHANG: Womp-womp (ph). OK, so why are they getting this money? Like, what's the settlement for?

ALLYN: Yeah. It's about the Google Play Store, how people download and pay for apps on Android phones, as you mentioned. And state authorities alleged that Google basically forced everyone to use its own app store and get charged up to 30% on some purchases. The states said that high commission was maintained because Google boxed out competition and operated the Google Play Store like an illegal monopoly. So to resolve this case, Google agreed to the large payment and to some changes to how the app store is run.

CHANG: Wait. Wait. So how exactly will Android phones change under this deal?

ALLYN: Yeah, it's going to - Androids are going to change in two important ways. First, soon, when someone pays for an app subscription, a little dialogue box will pop up and give them billing options - so, you know, pay through Spotify or pay through Google. Before, you only had one choice, Google. And having choice in billing was really important to the states. Secondly, Google says it will simplify the process of making apps available for download outside of the Google Play Store, so you'll be able to more simply download directly from a website.

CHANG: OK. I am curious. Why is all of this happening now in particular?

ALLYN: Yeah. You know, it's important to note that the states are pushing for these changes as the walls are really closing in on smartphone app stores. The two big ones, of course, are controlled by Apple and Google. And there have been other big legal cases against both companies' app stores. I mean, just last week I was here on ALL THINGS CONSIDERED, talking about a jury verdict against Google that found that its app store is breaking U.S. laws. Regulators in the European Union and South Korea have passed laws mandating changes to how these app stores are operated. And now Google is agreeing to these big concessions. But the same issues that plagued the Google Play Store also apply to Apple.

CHANG: Right. So will this settlement mean anything for people with iPhones like me?

ALLYN: Yeah, you know, not directly. But in a way, it's part of the same story, Ailsa. I mean, Apple's App Store has been in the crosshairs of regulators around the world. And while this settlement with states is just focused on Google, you know, these high fees that are charged on App Store purchases apply to Apple, too. Now, some of the larger forces at play here, in the form of new laws around the world and increased legal and regulatory pressure here in the U.S., could eventually prompt Apple to shake up how its App Store operates. There was a big case against Apple a couple years ago brought by Fortnite maker Epic Games, and Apple mostly won. That's now in appeal to the U.S. Supreme Court. And guess what it's about? You guessed it - Apple's App Store.

CHANG: That is NPR's Bobby Allyn. Thank you, Bobby.

ALLYN: Thank you, Ailsa.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.