Just did some research on Playster, they are on their last leg and stopped acquiring new content a while ago. Also, we knew this was coming from Google play. I am fairly sure, not 100%, but mostly convinced that the direct account with google has to do with covering their ass and making sure they comply with laws in all the countries they operate. They can't do that if a distribution point is acting as the publisher.
I have never had a problem with D2D, but with the way they've spun this email, it left a bitter taste behind. I can see spinning it so D2D looks good, but they are bordering on delusional claims. They attempted to get their authors to write in and complain and change Google's mind, and that just wasn't going to happen. And if they genuinely cared about the stability of a company, they would have dropped Playster back in January.
I'll agree with D2D's approach was not optimal. On the other hand, I'm not sure I'm happy with Google's reasoning, either.
I'm inclined to agree that Google's position has something to do with covering its own ass, but why does its ass seem to need more cover than Kobo, Barnes and Noble, and Apple, all of which are content to deal with distributors without requiring a direct relationship with authors? Obviously, I'm not a lawyer, but I'm also not sure why dealing with authors as individuals is better. Google can block a particular author who is doing something wrong regardless of how that author accessed the platform. Outlets can even block individual titles sent in through a distributor--and do all the time. Also, in the past some distributors have been so hyper-concerned about pleasing outlets that they may have overreacted. I recall complaints where distributors blocked books that seemed to meet all the outlet guidelines.
Then there's the odd way Google rolled out the change. Yes, it was announced quite a while ago--but, if I'm remembering the chronology correctly, shortly after the agreement between Google and D2D. I doubt D2D would ever have made the agreement in the first place under those circumstances, although PublishDrive seems to have found a way to continue to distribute to Google Play under their system. (FYI, I'm trying that just to see what will happen, and Google Play is taking far more than the two business days it supposedly takes to ratify the arrangement. This is on a Google Book Partner account I've had for years, not even a new account creation.)
Thus, while I feel that D2D may have been in denial, I kind of understand the reaction.
As far as Playster is concerned, yeah, it looks as if it stopped acquiring new content in January. I'm not sure that I would expected D2D to dump it that fast, however. I've never made an ebook sale with them, but I've done pretty well in audio there, with some royalties trickling in every single month (thought I went through Findaway, not D2D). So if D2D authors were still making money from the platform, I can see D2D waiting before pulling the plug. After all, some outlets have gone under, but others have recovered, at least to some extent. How many times has the demise of Barnes and Noble been predicted, yet it's still there? And when Scribd cut its romance catalog, a lot of people thought that was the beginning of the end, yet it's still there as well.