Case 3:20-cv-07379 Document 1 Filed 10/21/20 Page 1 of 70 1 Elizabeth C. Pritzker (CA SBN: 146267) Jonathan K. Levine (CA SBN: 220289) 2 Bethany Caracuzzo (CA SBN: 190687) Caroline C. Corbitt (CA SBN: 305492) 3 PRITZKER LEVINE LLP 4 1900 Powell Street, Suite 450 Emeryville, CA 94608 5 Telephone: (415) 692-0772 Facsimile: (415) 366-6110 6 E-mail: [email protected]; [email protected] 7 [email protected]; [email protected] 8 Heidi M. Silton (pro hac vice forthcoming) Justin R. Erickson (pro hac vice forthcoming) 9 LOCKRIDGE GRINDAL NAUEN P.L.L.P. 10 100 Washington Avenue South, Suite 2200 Minneapolis, MN 55401 11 Telephone: (612) 339-6900 Facsimile: (612) 339-0981 12 E-mail: [email protected]; [email protected] 13 14 Counsel for Plaintiffs and the Proposed Class 15 UNITED STATES DISTRICT COURT 16 FOR THE NORTHERN DISTRICT OF CALIFORNIA 17 DANIEL CARROLL, DANIEL ) Case No. 18 EGERTER, and BRENDA KEEGAN, and ) ) 19 individually and on behalf of all others similarly situated, ) CLASS ACTION ) COMPLAINT 20 ) Plaintiffs, 21 ) JURY TRIAL DEMANDED ) 22 v. ) 23 GOOGLE LLC; GOOGLE IRELAND ) ) LIMITED; GOOGLE COMMERCE 24 LIMITED; GOOGLE ASIA PACIFIC ) ) 25 PTE. LIMITED; and GOOGLE PAYMENT CORP., ) 26 ) Defendants. ) 27 ) 28 -1- CLASS ACTION COMPLAINT Case No.: Case 3:20-cv-07379 Document 1 Filed 10/21/20 Page 2 of 70 1 Plaintiffs Daniel Carroll, Daniel Egerter and Brenda Keegan, on behalf of themselves and all 2 others similarly situated, bring this class action against Defendants Google LLC; Google Ireland Ltd.; 3 Google Commerce Ltd.; Google Asia Pacific Pte. Ltd; and Google Payment Corp. (collectively, 4 “Google” or “Defendants”), and alleges as follows: 5 INTRODUCTION 6 1. Smart mobile devices are ubiquitous in modern day life. Over 80 percent of Americans 7 own a smartphone, an increase of more than 40 percent over the past decade.1 Approximately 50 8 percent of Americans own tablet computers.2 For an increasing portion of people, smart mobile 9 devices are their primary access to the internet. One-in-five Americans accesses the internet through 10 a smartphone, but does not have traditional internet service at home.3 11 2. Consumers use smart mobile devices for many reasons. Three-quarters of Americans 12 use their smartphone to browse the internet. Nearly 70 percent use them to send and receive e-mail. 13 Others use their smartphone to access social media sites, play games, keep track of their calendar, edit 14 photos, navigate traffic, stay up-to-date on the news, and shop.4 In short, these devices are integral to 15 all aspects of life. 16 3. Like an ordinary desktop computer, smart mobile devices rely on an operating system 17 (“OS”) to function. Mobile OSs come pre-installed on tablets and smartphones. The two most popular 18 mobile OSs are Google’s Android and Apple’s iOS. Because the Apple iOS runs only on devices that 19 Apple manufactures, the Android is the dominant mobile OS for all other manufacturers, including 20 Samsung, LG, and Motorola. 21 4. Mobile applications (“apps”) are the most common way by which consumers use their 22 smart mobile devices. Apps are a type of software specifically customized for use on a smart mobile 23 24 25 1 Mobile Fact Sheet, Pew Research Center (June 12, 2019), https://www.pewresearch.org/internet/fact- 26 sheet/mobile/. 2 27 Id. 3 Id. 28 4 Which kind of smartphone apps do you use regularly, Statista, (May 2020), https://www.statista.com/forecasts/997191/smartphone-app-usage-by-type-in-the-us. -2- CLASS ACTION COMPLAINT Case No.: Case 3:20-cv-07379 Document 1 Filed 10/21/20 Page 3 of 70 1 device. In order for an app to function on a smart mobile device, it must be compatible with that 2 device’s operating system. 3 5. Consumers access mobile applications in several ways. Some applications come pre- 4 installed on their devices. Consumers can download others from an app store. Others can be 5 downloaded directly from the internet, through a process called sideloading. 6 6. The overwhelming majority of applications are downloaded through an app store. For 7 devices that use the Android OS, the dominant app store is the Google Play Store, which has more 8 than 2.56 million apps available for download or purchase. Over 90 percent of apps downloaded or 9 purchased from on an Android device come from the Google Play Store. 10 7. In theory, consumers have more options than the Google Play Store available to them. 11 Other companies, including Samsung and Amazon, have developed their own app stores. Some app 12 developers make their products available to download directly from a website. This competition 13 should lower costs and lead to greater innovation and efficiency. 14 8. In reality, however, the opposite has happened. Google, using its control of the Android 15 OS, has taken a series of steps to make it nearly impossible for a consumer with a device that has a 16 licensable smart mobile OS to purchase an app from any platform other than the Google Play Store. 17 As a result, Google now has been able to maintain a monopoly over the market for the distribution of 18 apps compatible with licensable smart mobile OSs. 19 9. Google maintains its monopoly through a series of contracts with device manufacturers 20 and app developers, and by imposing technological restrictions that make it nearly impossible for 21 consumers to locate alternate ways to download apps. Google requires that device manufacturers give 22 the Google Play Store preferential treatment in order to use the Android trademark, Google’s 23 proprietary apps, including Gmail, Google Maps, and YouTube, and Google Play Services, software 24 that is necessary to keep apps running effectively. Without access to this content, device manufacturers 25 are essentially unable to market their smart mobile devices. 26 10. Google further restricts competition by prohibiting app developers from distributing 27 competing app stores through the Google Play Store. It also requires that developers use the Google 28 -3- CLASS ACTION COMPLAINT Case No.: Case 3:20-cv-07379 Document 1 Filed 10/21/20 Page 4 of 70 1 Play Store if they want to take advantage of Google’s dominant advertising platforms, including 2 Google Search. 3 11. Finally, for those lucky few consumers who are able to find an alternate way to 4 download their apps, Google has enacted a series of technological barriers that force those consumers 5 to return to the Google Play Store for their content. If a consumer attempts to download a competing 6 app store or sideload an application, Google sends the user an urgent message warning the consumer 7 of the dangers of their actions. If the consumer persists through that warning, then Google requires the 8 consumer to take a series of complicated steps so that the consumer can download content from 9 locations other than the Google Play Store. And if the consumer is able to make their way through this 10 maze and actually download the app or app store, then Google prevents the product from updating 11 automatically, causing it to run less efficiently than apps downloaded from the Google Play Store. 12 12. Having obtained control over the distribution of apps on devices with licensable smart 13 mobile OS, Google has now turned its attention to controlling the way in which consumers pay for 14 additional digital content in their apps. Google requires, for apps downloaded through the Google Play 15 Store, that the app use Google Play Billing to process any in-app purchases. Because of Google 16 controls the market for the distribution of apps, developers have no choice but to agree. 17 13. Consumers have suffered from Google’s anticompetitive conduct. Google imposes a 18 30 percent surcharge on all paid apps and in-app purchases, an amount that they could not charge in a 19 competitive market. Other app stores and payment processors have tried to offer lower prices. They 20 are unable to break through Google’s monopoly. 21 PARTIES 22 14. Plaintiff Daniel Carroll is a natural person who resides in the State of Illinois. Plaintiff 23 Carroll purchased an app through the Google Play store and also purchased in-app digital content 24 through an app purchased form the Google Play store within the last four years. 25 15. Daniel Egerter is a natural person who resides in the State of California. Plaintiff 26 Egerter purchased an app through the Google Play store and also purchased in-app digital content 27 through an app purchased form the Google Play store within the last four years. 28 -4- CLASS ACTION COMPLAINT Case No.: Case 3:20-cv-07379 Document 1 Filed 10/21/20 Page 5 of 70 1 16. Plaintiff Brenda Keegan is a natural person who resides in the State of California. 2 Plaintiff Keegan purchased an app through the Google Play store and also purchased in-app digital 3 content through an app purchased form the Google Play store within the last four years. 4 17. Defendant Google LLC is a Delaware limited liability company with its principle place 5 of business in Mountain View, California. Google LLC is the primary operating subsidiary of the 6 publicly traded holding company Alphabet Inc. The sole member of Google LLC is XXVI Holdings, 7 Inc., a Delaware corporation with its principle place of business in Mountain View, California. Google 8 LLC contracts with all app developers that distribute their apps through the Google Play Store and is 9 therefore a party to the anticompetitive contractual restrictions at issue in this suit.