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Google Will Enforce Its Billing System On All Play Store Apps Ensuring A 30% Cut Of Sales

Topline

Google will no longer allow app makers to circumvent the payment system built into the Google Play store, allowing it to take a 30% cut of all sales made through the platform in a similar vein to Apple’s App Store, even as the iPhone maker fights a court battle over its enforcement of a similar rule.

Key Facts

In a blog post on Monday, Google clarified its policy on the issue noting that companies that offer their apps through the Google Play Store will have to use the platform holder’s billing system.

Google said that app makers will have until September 2021 to integrate its billing system on to their apps.

Google takes a 30% cut of all sales made through its own billing system, similar to Apple and its App Store.

App makers like Netflix and Spotify have circumvented this by allowing users to enter their credit card details directly within the app and pay the app makers directly.

Unlike Apple, however, Google said it will make it easier for users to install third-party app stores on its devices starting with next year’s Android 12, something the iPhone-maker does not allow.

App developers have long complained that Apple and Google use their dominance over the smartphone market to charge the hefty fee which makes it difficult for them to compete.

Crucial Quote

In its blog post, Google defended its approach stating that it only collects “a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair. Not only does this approach allow us to continuously reinvest in the platform, this business model aligns our success directly with the success of developers.”

Chief Critic

While Google has allowed users to install third-party app stores on Android it would strongly discourage phone makers from doing so, citing security risks. While speaking about this issue earlier this year, Tim Sweeney, the CEO of Epic Games, called Android a “fake open system” for adding barriers in front of users who wanted to install Epic’s popular game Fortnite directly from the company’s website, instead of the Play Store. Sweeney noted that Google would dissuade users attempting such an install with “scary” pop-ups warning them about the risks of viruses and malware.

Key Background

Last month, Epic’s Fortnite was kicked off both Apple and Google’s app stores for allowing its players to directly purchase items in the game, bypassing the 30% cut charged by both platform holders. While Android users were still allowed to install and run the game by “sideloading” the app from Epic’s website, Apple doesn’t offer iPhone users this ability. Epic then sued both Apple and Google accusing the two tech giants of antitrust violations by using their marketplace dominance to stifle competition. Music streaming platform Spotify has also accused Apple of antitrust violations for its 30% cut citing the fact that the iPhone-maker offers its own music streaming service, which doesn’t have to pay such a fee. Google also offers a competitor to Spotify called YouTube Music.

What To Watch For

A California federal court is set to hear Epic’s claims against Apple on Monday and its ruling on the issue could set a precedent for how such issues are handled by lawmakers, courts and antitrust watchdogs around the world.

Section Title

Google’s Epic response: Android 12 will make it easier to install app stores (VentureBeat)

Google Demands Its 30% Cut From App Developers in Play Store (New York Times)

Source: Forbes – Business

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