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Google to let certain app developers use third-party payment options, with Spotify to start

In the past, multiple Indian startup founders have pushed back against Google forcing developers to use its billing system.

Google has taken a step closer to letting app developers provide alternative payment options to users making in-app purchases. It has launched a pilot that “will allow a small number of participating developers to offer an additional billing option next to Google Play’s billing system”, according to a blog post by the tech giant on March 23. Music streaming platform Spotify is the first to sign up for the pilot, it added.

The announcement comes months after it offered the same option to developers in South Korea, in compliance with a local law aimed at opening up app stores run by Google and Apple.

“This pilot will help us to increase our understanding of whether and how user choice billing works for users in different countries and for developers of different sizes and categories.” — Sameer Samat, Google’s VP of Product Management

The mandatory use of in-app payment systems by Play Store and App Store has been a sticking point for developers who’ve complained about the “exorbitant” commissions ranging from 15 to 30 percent of the sale value of in-app digital goods and services. Despite making concessions in a few countries, both companies are facing increased regulatory scrutiny including in India where the CCI has ordered detailed antitrust investigations into their app store practices.

What is new for Spotify users?

Spotify will be introducing Google Play’s billing system alongside its current billing system as part of the multi-year agreement, the platform revealed. Android users of Spotify will be shown the two payment options side-by-side in the app. Outside the pilot, Google has an anti-steering policy that prohibits developers from leading users to third-party payment methods via app listing or in-app promotion, buttons, links, banners, etc.

“Over the coming months, Spotify will work with Google’s product and engineering teams to build this new experience, and we’ll roll out in countries around the world,” it said but did not specify which countries. An initial version of the User Choice Billing feature is set to go live on the app later this year.

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It is unclear whether Spotify, as part of Google’s pilot, will continue paying commissions on transactions carried out through alternative systems. Consider this: Even though dating apps in the Netherlands were allowed to forego Apple’s in-app purchase system, it said that developers would still have to give up a cut of the revenue without elaborating further. Regardless, the pilot is seen as a step in the right direction.

Make user choice billing the rule, not the exception: ADIF

Citing the lack of clarity on the terms and commission rates offered by the pilot, the Alliance of Digital India Foundation (ADIF), a New Delhi-based think tank, said that letting select app developers offer other payment methods “reeks of preferential treatment”.

“This is essentially “Google” choice billing and has nothing to do with “user” choice. The fact of the matter remains that this announcement does nothing to address the underlying issues and concerns: the anti-competitive nature of the policy or the impending March 31 deadline for enforcing this policy. Moreover, the announcement coming in exactly a week before this deadline, must be called out for what it is – an arrogant attempt at headline management and a blatant disregard for the concerns that are repeatedly being raised by companies and developers the world over.” — Sijo Kuruvilla George, Executive Director, ADIF

Indian developers had to intergrate their apps with Google’s Play Billing System by March 31 this year. But the deadline was deferred to October 31, 2022, after backlash from the Indian developer community and an intervention by the Competition Commission of India (CCI). However, the March deadline still stands for developers in other parts of the world, ADIF pointed out while calling for an extension.

What are other major issues hurting app developers?

In a recent event on app store regulations hosted by ADIF and the Coalition for App Fairness (CAF), panelists shed light on the issues faced by developers and recommended solutions as well.

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One-size fits all billing scheme: Match Group’s Mark Buse complained that both the app stores impose arbitrary, one-size-fits-all billing and payment schemes which might not necessarily be the right option for developers. As an example, he said that dating apps are mostly used by 21-23 years old who probably don’t have enough money to buy six-month subscriptions or would rather prefer weekly payment options. “But Apple and Google will not let companies, developers break those payments out. So for Match, we very much want to offer flexibility to the user. So where we can offer payments, we will let people pay weekly or monthly for a six-month subscription. Apple and Google do not allow that. You have to pay per their terms,” Buse said.

Delay in paying developers: Another major issue according to Buse is the delay in developers getting payment. Apple and Google take 90 days to transfer the payment to developers, “which means you as a developer, don’t have the money to pay your employee or to hire a 6th employee if you have five because they’re holding on to that money as the process,” Buse said.

Self-preferencing: The practice of putting the company’s own apps ahead of the apps of developers either by ranking them higher or by stalling improvement and bug fix updates on competing apps, was flagged as being anti-competitive by panelists.

Cutting off app developers’ from accessing customer data: App stores have critical information about consumers and pricing obtained through direct API access, and this is actually IP of businesses, Sijo George of ADIF said. Thus, limiting app developers’ access to technical and operating information about customers might keep these apps from improving.

Sherlocking Hannah Ricketts of CAF referred to a term called “sherlocking” to describe Apple’s practice of making copycat apps based on data obtained from apps made by developers and then going on to self-preference these copycat apps on the App Store.

Gatekeeping: Ricketts also pointed out that Apple and Google have complete control over their operating systems and app stores and that they do not allow developers to distribute their apps the way they want them to, such as through a browser or third-party app store.

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Shadowbanning: George said that there have been instances where apps have been banned without any notification or intimation to the developer. “When you search in the store, the apps are not visible. If you click on the direct link, the app loads up in the store. So it’s not even possible for the developer to know that the app has been banned,” George said. “These are not shady fly by night operators which we actually see flourishing on the stores as well. That’s a different problem altogether. These are legitimate businesses who have revenues, who significantly contribute the revenues of some of these stores in the first place,” George added.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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Update (25/03): Added comments from ADIF. 

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