Alphabet Inc.'s GOOG GOOGL Google had considered changing its app store pricing strategy to dodge regulatory scrutiny. However, the tech giant decided against a fixed fee per app proposal that could have led to a multi-billion dollar loss.
What Happened: According to documents released on Thursday in the antitrust lawsuit by Tencent Holdings Ltd. TCEHY subsidiary Epic Games, Google launched Project Everest in 2021 to reassess its Play Store billing model, reported Bloomberg.
Google was considering different ways to avoid potential regulatory interference amidst growing pressure from regulators around the world and developers over the hefty 30% commission.
Project Everest proposed charging developers separate service fees for app listing, updates, downloads, and referrals in the Play Store.
See Also: Google Is Ending 2023 With Lost Legal Battles
However, Google predicted a “significant loss” ranging from $1 billion to $2 billion for apps and $6 billion to $9 billion for games under this model.
Instead, Google considered allowing app developers to manage payments themselves for a reduced fee. This change could have reduced the store’s annual revenue by $250 million to $1.3 billion, depending on user preference for alternate payment options.
The proposed change aligns closely with the $700 million settlement Google agreed to last week with a group of state attorneys general and consumers.
The loss to Epic Games could pose a threat to the app store duopoly between Google and Apple Inc. AAPL, which currently generates nearly $200 billion annually.
Why It Matters: From the Epic Games lawsuit against Google, it was revealed that Spotify pays minimal app store fees, sparking a battle over commission fees.
Adding to Google's problems was the fact that its CEO, Sundar Pichai, was deemed to be less credible than Epic Games CEO Tim Sweeney. One of the reasons for this was the fact that Google was found to have deleted chats in attempts to suppress evidence.
This series of events culminated in a federal jury ruling against Google, which was found to have unfairly taken advantage of antitrust barriers. This could potentially disrupt the app store duopoly of Google and Apple, with implications for the wider tech industry.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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