A federal judge’s disapproval of a $700 million settlement between Alphabet Inc.’s Google and various state attorneys general over Google Play app has signaled a warning to defendants negotiating similar class action agreements. Judge James Donato of the US District Court for the Northern District of California last week criticized the deal involving the tech giant’s Google Play app store, branding it as “a bag of not great.”
The Judge expressed concerns regarding the minor compensation to the 127 million consumers, who might only receive $2 each, as well as a clause that seemingly protects the Google Play Store from any legal claims for the coming seven years. Eduardo Robreno, partner at McCarter & English LLC, commented that companies must ensure that class members are adequately and fairly compensated for their injuries. This is especially important in light of strict antitrust enforcement currently being prioritized by the Biden administration.
Previous settlements submitted by Google, like the $5.5 million proposed class settlement in 2023, have been rejected in the past. Such past incidences go to show that companies need to ensure that they can defend their agreed terms and genuinely vouch for their fairness and adequacy.
The reaction to Donato serves as a reminder of the gravity of defendants’ conduct during deal negotiations. The judges will consider this while assessing the fairness of the agreements formed. Kathleen Bradish, vice president and director of legal advocacy at the American Antitrust Institute, said that states have accused Google of withdrawing colossal sums from consumers, directing them to use Google Play’s billing system for purchasing apps and app content, and preventing developers from suggesting alternate modes of purchase.
The judge has given both parties a 30-day period to validate the fairness and adequacy of the settlement. The proposal involves a distribution of $630 million to eligible consumers while allocating $70 million to the participating states. It also intends to modify Google’s business practices, simplifying the process for installing apps from outside the Google Play Store and enabling developers to steer consumers away from Google Play to alternative billing systems.
The plaintiffs’ aggressive approach to the Google deal is likely to trigger a revisitation of the settlement by the states. The severity of Judge Donato’s reaction to the clause releasing Google Play Store from future claims is expected to serve as a deterrent for attorneys considering similar terms.
Google and the states can either update the terms of the deal to address the concerns raised by Judge Donato or attempt to persuade him to reconsider his misgivings. One of the potential alterations could be an increase in payouts exceeding the $2 minimum per eligible consumer.
Google’s representation consists of firms including Morgan, Lewis & Bockius LLP, Munger, Tolles & Olson, and Hogan Lovells. The case is Utah v. Google, N.D. Cal., No. 3:21-cv-05227.