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Google will enforce its billing system on all Play Store apps to collect 30% cut on in-app purchases

Google will start enforcing its billing system on all apps downloaded from the Play Store, in a bid to collect a 30% cut from all in-app purchases made from Play store apps, it clarified in a blog post on Monday. This move makes the Play Store policies similar to Apple’s policies for its own App Store, where all apps downloaded from the store are not allowed to circumvent Apple’s own in-app purchase system. Google said it will enforce the policy starting from January 20, 2021, and all new apps submitted after this date can only use Google’s billing system. Existing apps however, have until September 30, 2021 to comply with the changes.

Google will also prohibit apps that support in-app purchases from leading users to external payment methods. Developers can no longer use in-app browsers or other such interfaces to lead customers to an external website, thereby bypassing Google’s payment system. In-app promotions that point users to better deals outside the app will also not be allowed. This is the most Apple-like addition to its Play Store policies, since Apple doesn’t allow developers to even let users know that they can purchase things from the app on an external platform.

This development comes as Apple and Google — the two major players in the mobile OS market — recently kicked out the video-game Fortnite off their respective app stores for allowing players to purchase items directly, while circumventing the mandated in-app purchase system. Epic Games, developer of Fortnite, sued both companies.

What does this mean for app developers?

Some companies such as Netflix and Spotify currently allow their customers to pay within the app or on a website that can only be accessed externally, thereby bypassing Google’s payment policies completely. However, Google has now made it clear that it will not be lax with the implementation of the 30% cut rule policy. Developers of Netflix, Spotify and any other such app now have till September 30, 2021 to restructure their payment systems.

However, most apps on the Play store already use Google Play’s billing system, said Sameet Samat, vice president, Product Management, at Google, in a blog post. Samat said only 3% of the apps that sell digital goods are currently not using the system, who will get a year’s time to integrate it so as to not “unduly disrupt their roadmaps”.

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The blog post added that Google collects a service fee if the developer charges users to download their app or if they sell in-app digital items and “we think this is fair”.

While both Apple and Google have a similar policy on in-app payments, their ecosystems allow developers to react differently. Although an Google’s Play store can deplatform an app, the Android operating system allows users to download and install it from elsewhere, say from the developer’s website or even a separate application store.

Though removed from the Play store, Fortnite can be played by Android users by downloading the app from Epic Games’ website and installing it on their own. Users of Samsung Galaxy line of devices can also download it from the proprietary Galaxy App store.

Apple’s iOS operating system, meanwhile, does not allow the sideloading of apps. Hence, if deplatformed from Apple’s App Store, a developer has virtually no way of engaging with their existing user base anymore.

Google to make use of third-party app stores easier in Android 12

Although Google allows sideloading of apps, it discourages the same by prompting users with pop-ups on possible security risks associated with installing an app not vetted by the Play store. Earlier this year, Epic Games CEO Tim Sweeney had criticised Google for this practice, calling it a “fake open system”. He said users sideloading Fortnite were prompted with “scary” pop-ups about the risk of viruses and malware.

In Monday’s blog post, Google said it acknowledged feedback from developers on the use of third-party app stores. In the upcoming release of Android 12, it said, the company will make it easier for people to use third-party app stores while “being careful not to compromise the safety measures Android has in place”.

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Aggressive Apple: In contrast, Apple has responded to the criticism aggressively. After Epic Games sued against it (along with Google), claiming that it was behaving like a monopoly. In retaliation, Apple threatened to terminate Epic’s developer accounts — which includes Unreal Engine — and cut Epic from iOS and Mac development tools. A California court later gave temporary relief to Epic Games, ruling that Apple could not terminate Unreal Engine’s access to Apple’s operating system. However, the court held that Apple doesn’t have to allow Fortnite on its App Store. In the subsequent hearing, which also was held on Monday, the judge suggested that Apple and Epic Games go for a jury trial to settle the matter.

Resistance to the ‘app tax’

Meanwhile, resistance against Apple has picked up steam in the past few days. Several of the companies critics including Epic Games, Basecamp and Spotify banded to form the Coalition for App Fairness. One of the group’s key issues is the mandatory cut on app stores — branded as the “30% App Tax”. It’s website reads: “This app tax cuts deeply into consumer purchasing power and stifles developer revenue.”

While the “app tax” exists in both Android and iOS app ecosystems, the coalition doesn’t seem to target Google as much as it does Apple, presumably because of the ability to sideload apps on Android.


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